The CSSF Circular 14/591 regarding the protection of investors in case of a material change to an open-ended undertaking for collective investment (the “Circular”) explicitly lays down the administrative practice and provides clarifications in relation to the protection of investors in case of a material change to an open-ended undertaking for collective investment (the “UCI”).

Up to today the situation was indeed not entirely clear on the Luxembourg market.

Now, in that respect, the CSSF requires that sufficient time shall be provided to the investors in case of a material change to an open-ended UCI, in order for them to take an informed decision on the envisaged change.

A definition of “material change” is however not given by the CSSF.

According to the Circular, each open-ended UCI should analyze any contemplated change as to the impact it may have on its investors and submit the proposed change to the CSSF.

The CSSF reserves the right to assess, on a case-by-case basis and based on the information provided, whether such change should be deemed material and, where appropriate, to request a notification to the investors.

The material change may, in principle, not be implemented until after the expiration of the notification period which should be of one month.

In the event the investors disagree with such material change, they shall be given the possibility to redeem or repurchase their units free of redemption or repurchase charges.

The CSSF finally clarifies that any existing, written requirements (for example in the prospectus of the relevant UCI) will naturelly be further applicable and that this Circular only sets down additional obligations on the UCIs.