The European Securities and Markets Authority (Esma) has published proposals on October 13 to deal with the fact that the majority of European Union member states have not yet approved legislation implementing the Ucits IV directive, even though the deadline to do so passed on July 1.
The European regulator says the proposals are designed to avoid difficulties, where this is possible, arising from the fact that in some cases the legislative framework for proper implementation of the directive, including cross-border regulatory measures, are not yet in place.
Without prejudice to any measures taken by the European Commission with regard to the late transposition of Ucits IV, Esma says it aims to "address the situation at an operational level in order to minimise, as far as possible, the impact on industry and investors" resulting from failing to bring the directive into national law, and is putting forward practical arrangements for cross-border operations involving one member state that has not yet transposed the directive.
According to PricewaterhouseCoopers, as of September 29 the EU member states that had not yet implemented the directive included Belgium, Finland, Greece, Hungary, Italy, Lithuania, Poland, Portugal, Romania and Spain.
Esma has identified a number of issues that could be handled by arrangements between regulators. Ucits management companies in a member state where the directive has passed into national law may not be able to benefit from the management company passport if the country where it wants to establish a fund has not transposed the directive.
Regulators in member states that have transposed the directive may have difficulties delivering notification of the marketing of Ucits established in their jurisdictions to their counterparts in countries that have not done so, while the regulator of a member state that has transposed the directive may receive a notification for marketing of a Ucits from its counterpart in a country that has not.
In addition, Esma notes that a management company in a member state where the directive has not been transposed cannot create a feeder fund to a master fund established in another EU jurisdiction, nor can it merge one of the Ucits it manages with a Ucits domiciled in another jurisdiction.
The European regulator notes that not all situations arising from failure to transpose the directive can be accommodated through practical arrangements that are "legally sound".
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