On 22 December 2010, HM Treasury and the FSA published a joint consultation on the implementation of the UCITS Directive (2009/65/EC) (“UCITS IV”) into UK legislation and regulation.

The consultation sets out details of how HM Treasury and the FSA will implement the requirements of UCITS IV in the following areas:

  • the simplified notification procedure;  
  • the management company passport;  
  • investor disclosure;  
  • master-feeder structures;  
  • fund mergers; and  
  • improved supervisory co-operation.  

The consultation also includes details of consequential amendments to the Financial Services and Markets Act 2000 (“FSMA”) and a possible extension of the FSA’s disciplinary powers relating to contraventions of the UCITS IV requirements.  

With the consultation, the FSA also published drafts of the following:  

  • The Undertakings for Collective Investment in Transferable Securities Regulations 2011. These draft regulations include material (in Part 4) on implementing UCITS IV’s requirements on mergers and amendments to relevant primary legislation, in particular FSMA and the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228).  
  • UCITS Directive Instrument 2011. This draft instrument sets out amendments to the FSA Handbook, in particular the Collective Investment Schemes sourcebook (COLL), the Conduct of Business sourcebook (COBS) and the Supervision manual (SUP).  
  • The consultation explains how HM Treasury and the FSA intend to implement UCITS IV’s requirements, largely through the above Regulations and Instrument, but does not include any proposals to modify the regulatory regime under the FSA rules for other categories of UK authorised investment funds. The FSA is considering what changes might be appropriate to make to the regime for non-UCITS retail schemes (“NURS”) reflecting the UCITS requirements. It aims to consult on any changes relating to NURSs during the first half of 2011, although it does not expect new rules to be in place before July 2011.  

This consultation also confirms the announcement made in November 2010 that the government is to launch a new tax transparent vehicle, suitable for UCITS IV master funds. The government also proposes to consult with industry to ensure there are no adverse UK tax consequences for a foreign UCITS fund as a result of having a UK management company.  

Comments are invited on this consultation until 21 March 2011. (UCITS IV must be transposed into UK law by 1 July 2011.)