The European Securities and Markets Authority (ESMA) on Thursday 13 October released its guidance on cross-border operations between Member States and the role of master/feeder funds.
The European Securities and Markets Authority (ESMA) on Thursday 13 October released its guidance on cross-border operations between Member States and the role of master/feeder funds. To summarise, the guidance says it will not allow a Ucits management company with a master fund established in a Member State which has transposed the revised UCITS Directive, to create feeder funds in other EU jurisdictions that haven’t likewise transposed the Directive. Furthermore, restrictions will also apply to the use of a management company passport if the Member State in which a company wishes to market its fund(s) has not signed up to the new Directive. Mergers of a company’s UCITS fund would also be off limits unless both jurisdictions adopt the Directive.
In the guidance, it wrote: “ESMA is of the view that master feeder structures should not be permitted if one of the two MS in which the UCITS are established has not transposed the Directive since this matter cannot be addressed solely on the basis of the direct applicability of the Directive.” A number of EU countries (France, Italy, Spain, Belgium, Switzerland) missed the original 1 July 2011 deadline to implement UCITS IV. The successful passporting of a fund between two Member States will only be permissible if ESMA deems the chosen jurisdiction, other than the home country, materially complies with the new Directive.