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The UCITS Directive recognises the possibility for UCITS to offer different share classes to investors but it does not prescribe whether, and to what extent, share classes of a given UCITS can differ from one another. ESMA has identified diverging national practices as to the types of share class that are permitted, ranging from very simple share classes (e.g. with different levels of fees) to much more sophisticated share classes (e.g. which may potentially have different investment strategies).
Following the discussion paper which was issued in December of 2014, this discussion paper seeks stakeholders’ views on ESMA’s current thinking with respect to the development of a framework for UCITS share classes throughout the EU. The paper centres on a set of high-level principles regarding share classes, which are further detailed, where necessary, by a set of operational principles. This consultation seeks detailed feedback on whether and how share classes can actually work under the principles outlined in this discussion paper.
Discussion paper on UCITS describes the nature of share classes, the reasons for their existence, and the key elements of share classes. Furthermore, it establishes common principles, both from a high-level and operational perspective, which could form the basis of a regulatory framework that all share classes should comply with. This discussion paper builds on the feedback received to the first discussion paper published last year, as well as on further input provided through engagement by ESMA with relevant stakeholders.