A final version of UCITS V was adopted by the European Parliament during a plenary vote on 15 April 2014, following almost two years of negotiations.

This means another revision to the regime for Undertakings for Collective Investment in Transferable Securities (“UCITS”) following the last update pursuant to Directive 2009/65/EC (“UCITS IV”). This revision is aimed specifically at increasing investor protection and consist mainly of the following three key elements, namely:

- Depositary role;
- Remuneration Manager, and
- Sanctions

Depositary Role
UCITS V sets out new criteria for depositaries and provides that entities, not being credit institutions, may act as depositary where they are (a) authorized under the laws of the Member State to carry on UCITS depositary activities; (b) subject to specific capital requirements; and (c) subject to specific minimum requirements from a prudential regulation and ongoing supervision perspective. As a result, the new criteria are better aligned with the corresponding criteria for depositaries in the AIFMD. Also the liability-regime of a depositary is now aligned with the higher standard of liability of a depositary under AIFMD. Finally, new requirements have been included with respect to delegation of depositary functions, which includes disclosure of conflicts of interest, and the introduction of a new depositary oversight function relating to cash management, which entails that the depositary, like in the AIFMD, shall monitor the cash flows of the fund.

Remuneration of Manager
UCITS V introduces new requirements re remuneration policies and restrictions for senior management and risk takers within the management company of the UCITS. Such policies and restrictions should discourage disproportionate risk taking by the UCITS and are now more aligned with AIFMD.

UCITS V introduces new administrative sanctions with maximum penalties of EUR 5 million (or 10% of its annual turnover) for a company.

Finally, UCITS V is expected to be published in the Official Journal of the EU shortly. Member States will then have a period of 18 months to amend their legislation.

For more information, contact:
Martin Eleveld, Partner Banking & Finance, HEUSSEN Lawyers & Civil law Notaries in Amsterdam
Email: martin.eleveld@heussen-law.nlor mobile: +31 (0)6 2324 5159

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