The first merger of an Irish authorised Ucits has been approved under the new merger regime for Ucits as set out in the UCITS IV directive reported law firm Dillon Eustace’s Financial Serv
The first merger of an Irish authorised Ucits has been approved under the new merger regime for Ucits as set out in the UCITS IV directive reported law firm Dillon Eustace’s Financial Services Practice Group this week. The transaction, they wrote, involved the merger of a sub-fund of an Irish Ucits unit trust (“Merging Fund”) with a sub-fund of a Lux-domiciled SICAV authorised under Luxembourg law (“Receiving Fund”). Dillon Eustace acted for the Merging Fund. The deal was approved by the Ireland’s Central Bank on 1 September and implemented on 21 October confirmed the law firm. There are three different forms of merger that can be pursued under UCITS IV.
Firstly, one or more UCITS or sub-funds, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing UCITS or sub-fund in exchange for the issue to their unitholders of units of the receiving UCITS, and if applicable a cash payment not exceeding 10 per cent of the NAV of those units.
The second option is the same but applies to two or more UCITS or sub-funds involved in the merger. Thirdly, one or more UCITS or sub-funds, which continue to exist until the liabilities have been discharged, transfer their net assets to another sub-fund of the same UCITS, to a UCITS fund they form or to another existing UCITS or sub-fund (the “Receiving UCITS”). It was this third option that Dillon Eustace followed in the recent merger. They believe that this will likely be the most popular choice with fund promoters because it means the liabilities of merging funds aren’t transferred to the receiving fund. Details of the Irish Ucits involved in this inaugural merger are not known.
