On 1 February 2016, ESMA released its Q&A on the application of UCITS V. Fortunately, ESMA has allowed UCITS and UCITS management companies additional time to update fund documents in light of the requirements under UCITS V.

The European Securities and Markets Authority (“ESMA”) published its Q&A on the application of the UCITS V Directive (“UCITS V”) which introduces rules on remuneration policies and sanctions, and strengthens the depositary regime (the “Q&A”). The Q&A is designed to promote common supervisory approaches and practices in the application of UCITS V and its implementing measures.

We have summarised the key points of the Q&A which sets out ESMA’s guidance on the timeframe for the implementation of UCITS V.

KIIDs and Prospectus Updates – Remuneration Information

Under UCITS V, Key Investor Information Documents (“KIIDs”) are required to include a statement regarding the remuneration policy of the relevant UCITS, and the relevant prospectus is required to include remuneration related information. An updated KIID is to be made available within 35 days of 31 December each year, while key elements of a prospectus must be kept up to date at all times.

The Q&A clarifies that UCITS V related amendments to KIIDs can be made at the next annual update after the 18 March 2016 deadline (the “Deadline”), or on the first occasion after that date on which a KIID is, for another purpose, revised or replaced. A prospectus need only be updated if it is revised for another purpose and in any event by 18 March 2017.

These requirements are subject to national laws and requirements in the home Member State of the relevant UCITS.

UCITS management companies are advised to publish information on their remuneration arrangements on a relevant website as soon as it is available.

Annual Report – Remuneration Information

The Annual Reports of UCITS are required to include remuneration related information, and must be published within 4 months from the end of the period to which they relate.

The Q&A confirms it is not necessary to include such information in any Annual Report relating to a period that ends before the Deadline. For Annual Reports prepared on or after the Deadline, but before a UCITS management company has completed its first annual performance period (under UCITS V), remuneration related information should be included on a best efforts basis.

Update to Depositary Agreements – Depositary Liability

Depositary agreements must be updated to reflect the provisions of UCITS V, particularly in relation to the new cash monitoring and asset verification provisions and the more stringent provisions surrounding depositary liability.

The Q&A strongly recommends that existing depositary agreements be amended promptly in accordance with transitional arrangements under the UCITS Level 2 Regulations which requires implementation within a 6 month period, expiring towards the end of June 2016. ESMA has clarified that provisions of agreements which set out the detail relating to depositary liability, and which conflict with the UCITS V depositary liability provisions, will be void with effect from the Deadline.


There is now to a certain extent some relief and breathing space for UCITS and UCITS management companies following the publication of the Q&A and guidance on the timeframe for the implementation of remuneration disclosures. However, as the Deadline is fast approaching, UCITS and their depositaries are expected to update their depositary agreements in light of UCITS V as a matter of priority.