A Questions and Answers paper (the “Q&A paper”) on the Key Investor Information Document (the “KIID”) to be produced by each UCITS in accordance with UCITS IV has been released by the European Securities and Markets Authority (“ESMA”).

The purpose of the Q&A paper is to help supervisory authorities in member states to adopt common approaches and practices when applying the provisions of the UCITS Directive and its implementing measures. It is hoped that the Q&A paper will also provide clarity to UCITS management companies and the boards of self-managed investment companies (“SMICs”) when they are considering and implementing the content of the UCITS Directive in this regard. The Q&A paper will be updated on a continuous basis as further questions are submitted to ESMA for review.

Currently, the Q&A paper consists of six questions dealing with:

  1. the preparation of KIIDs by UCITS that are no longer marketed to the public or by UCITS in liquidation;
  2. communication of the KIID to investors;
  3. the treatment of UCITS with share or unit classes;
  4. past performance of a UCITS and how this should be disclosed in the KIID;
  5. the use of clear language in the KIID; and
  6. whether the name of the investment manager(s) of the UCITS needs to be disclosed in the KIID.

What This Means For You

The Q&A paper should provide clarity to UCITS management companies and the boards of SMICs when considering and approving KIIDs. Given the liability applicable where there are misstatements in KIIDs and the onerous obligations on UCITS which constitute substantial platforms, this added clarity is very welcome.