ALFI Welcomes Commission’s Proposed Revision Of UCITS Directive

by Ulrika Lomas, for LawAndTax-News.com, Brussels

19 August 2008

The Association of the Luxembourg Fund Industry (ALFI) recently welcomed the proposal for a revision of the UCITS directive adopted on 16th July 2008 by the European Commission.

The draft directive proposes five major changes to existing UCITS legislation in the fields of cross-border notification of UCITS in other Member States, the simplified prospectus (now called key investor disclosure), cross- border mergers, pooling and supervisory cooperation.

In a statement, ALFI observed that:

"These changes will greatly improve the competitiveness of the UCITS product to the benefit of investors mostly via reducing costs (notification, mergers, pooling) and providing a harmonized, shorter and more readable simplified prospectus."

The Association continued: "ALFI also welcomes the fact that the issue of the management company passport is dealt with separately. ALFI sees the merit of a management company passport provided this does not lead UCITS funds to become "empty shells"."

Claude Kremer, Chairman of ALFI went on to observe that "a careful balance needs to be achieved between the benefits for a management company of managing a UCITS on a remote basis and the need, in the best interest of investor protection, to ensure effective fund supervision, oversight and substance at the fund's location".

ALFI concluded by announcing that it supports the Commission in delivering a mandate to CESR in order for European regulators to recommend a solution to the management company issue that will be acceptable to all interested parties.

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