On 23 July 2014 the Council of the European Union has formally approved the proposal for a directive of the European Parliament and of the Council amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities as regards depositary functions, remuneration policies and sanctions (the “UCITS V Directive”).

The UCITS V Directive focuses on three main areas:

  1. a new depositary regime which includes a clarification of depositary eligibility, duties, responsibilities and liabilities, and a set of rules under which tasks and responsibilities can be delegated — mainly focusing on the sub-custodian network;
  2. rules governing remuneration policies of UCITS managers that shall be applied to key members of the UCITS managerial staff; and
  3. the harmonisation of the minimum administrative sanctions regime across member states.

One of the purposes of the UCITS V Directive is to align the UCITS regime with the depositary rules and rules on remuneration and sanctions provisions under the existing Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers, the so-called AIFMD.

The UCITS V Directive shall enter into force 20 days after the date of publication in the EU’s Official Journal. EU Member States will then have 18 months from that date to transpose it into national law, and depositories will be given an additional 24-month transition period after the transposition deadline.