CESR feedback on level 2 measures on mergers, master-feeder structures and cross-border notification of UCITS
20 April 2010
As regards mergers of UCITS, CESR provides further clarification on the distinction between information provided to unitholders in the merging UCITS and the receiving UCITS, as well as on the content of the information to be included to allow unitholders to make an informed decision.
In this document CESR gives feedback on the responses received to the consultation on its technical advice on level 2 measures relating to mergers of UCITS, master-feeder UCITS structures and cross-border notification of UCITS
· Mergers of UCITS:
CESR’s advice on mergers of UCITS focused on the information to be provided to unitholders in the merging and receiving UCITS. In light of the broad support from the majority of respondents for its proposals in this area, CESR did not make significant changes in its final advice. CESR did however provide some clarification on the distinction to be made between information provided to unitholders in the merging UCITS and the receiving UCITS, as well as on the content of the information to be included with a view to allowing unitholders to make an informed decision. With regards to the manner of provision of the information, CESR confirmed its intention not to submit any specific advice in this area.
Master-feeder structures:
CESR’s advice in this area covered the content of the written agreements that should be put in place between the master and feeder UCITS, as well as their respective depositaries and auditors. CESR clarified certain elements of the content of these agreements, while reaffirming its view that there should at all times be equitable treatment of all unitholders. As regards the law applicable to the agreement, CESR agreed with the majority of respondents that in cross-border situations, the two parties should be free to choose whether to apply the law of the feeder or the master. CESR also set out detailed requirements on the steps to be taken in the case of a liquidation, merger or division of a master UCITS in order to satisfy the time constraints set out in the level 1 Directive. In this context, CESR considered an alternative proposal put forward by several respondents regarding liquidation of the master but ultimately took the view that this would have gone against the principle that the feeder should not have preferential treatment over other unitholders of the master UCITS and created a risk that unmanageable conflicts of interest may be generated.
· Notification procedure :
CESR took account of its existing level 3 guidelines on notification in preparing its advice, which covered the information that Member States should make available in relation to marketing in their jurisdiction of UCITS established in another Member State. Here, CESR recommended that Member States review their national requirements for the marketing of units of UCITS prior to implementation of the recast UCITS Directive in 2011. CESR also clarified certain elements of the standard notification letter and attestation. Finally, CESR took into account respondents’ concerns about possible impediments to the UCITS’ right to market its units freely in the host Member State and made corresponding adjustments to its advice
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