EP adopted Proposal on UCITS Directive (1st reading)
17 February 2000
-The European Parliament adopted the
report (co-decision, first reading) drafted by Mr. Olle Schmidt (ELDR, S) on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) with a view to regulating management companies and simplified prospectuses. This report was adopted subject to amendment.
These amendments concern, in particular, the issue of authorisation and the amount of capital:
Authorisation: the Member States' competent authorities shall not grant authorisation or withdraw authorisation from a UCITS where there is evidence that the entity has opted for the legal system of one Member State for the purpose of evading the stricter standards in force in another Member State.
Amount of capital: it has initial capital of at least EUR 150 000. In addition, it shall maintain certain capital requirements that are at least equivalent to the higher of the following amounts:
- an amount of capital to be determined in accordance with the rules laid in Directive 93/6/EEC, having regard to the nature of the services provided;
- an amount of capital to be determined by applying the following scale to the total amount of the assets managed:
- 0.1% up to EUR 1000 million managed;
- EUR 1 000 000 plus 0.02% of assets managed in excess of EUR 1000 million, subject to a ceiling of EUR 10 million.
Another amendment adopted relates to the management companies. The competent authorities of the home Member State may permit management companies to delegate specific investment decisions to intermediaries that are subject to prudential supervision, in accordance with investment-allocation criteria periodically laid down by the management companies. With respect to the prospectuses, these must include a clear and easily understandable explanation of the fund's risk profile (independent of whether or not derivatives are used and independent of the type of securities invested in).
Several technical amendments were adopted. For example, the Parliament asks that UCITS which has adequate risk management controls may invest in financial derivative instruments, provided the investment in over-the-counter financial derivatives may not result in an overall daily exposure measured by its mark to market value exceeding 30% of its total assets. Another amendment seeks to reduce the maximum amount of an investment in stock indices from 35%, as proposed by the Commission, to 20% in order to limit risk and ensure the respect of the principle of risk-spreading.
© European Parliament
