Houthoff-Investment-Management-Group-News-Update-March-2011 by shuifanglj

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									                                                                          7 March 2011




                INVESTMENT MANAGEMENT GROUP

                I.   IMPLEMENTATION UCITS IV IN DUTCH                      Therefore it is possible that they will not be
                     FINANCIAL SUPERVISION ACT                             implemented as currently drafted.
                1. On 2 February 2011, the Ministry of Finance
                                                                    II.    THE PROSPOSAL
                     sent the Second Chamber of Parliament its
                     proposal for an act implementing Directive     Subfunds
                     2009/65/EC on the coordination of laws,
                                                                    4. The Proposal introduces the concept of the
                     regulations and administrative provisions
                                                                           subfund. A subfund is an investment
                     relating to undertakings for collective
                                                                           compartment within an existing UCITS. The
                     investments in transferable securities
                                                                           Proposal implements the practice of treating
                     (recast) (the “UCITS IV Directive”) in the
                                                                           subfunds as separate collective investment
                     Dutch Financial Supervision Act (the “FSA”)
                                                                           schemes (beleggingsinstellingen). The
                     (the “Proposal”). In addition, a draft for a
                                                                           provisions applicable to collective
                     general administrative measure (algemene
                                                                           investment schemes or unit trusts
                     maatregel van bestuur) for the further
                                                                           (beleggingsfondsen) will also apply to
                     implementation of the UCITS IV Directive
                                                                           subfunds.
                     and the Proposal was published for
                     consultation.                                  5. As a result, the provisions regarding, among
                                                                           others, the claims order for claims on a
                2. This news update summarizes the following
                                                                           collective investment scheme’s assets (rang
                     notable amendments to the FSA resulting
                                                                           regeling) will also apply to subfunds. This
                     from the Proposal and the general
                                                                           increases the protection of interests of
                     administrative measure:
                                                                           participants in a subfund.

                     a.      subfunds (subfondsen);
                                                                    6. For reasons of efficiency and cost, collective
                                                                           investment schemes consisting of subfunds
                     b.      the EU passport for managers;
                                                                           are required to include the information on
                     c.      master/feeder constructions;                  the subfunds in their prospectus, annual
                                                                           accounts, annual reports, and half year
                     d.      merger of UCITS (nationally and
                                                                           accounts. Furthermore, the assets of a
                             cross border); and
                                                                           subfund can be held by the depositary of
                                                                           the UCITS of which it is a part instead of a
                     e.      key investor information.
                                                                           separate depositary being required.
                3. It should be noted that both the text of the
                     Proposal and the general administrative
                     measure are still subject to amendments.
105/3720078.1
                                                                      7 March 2011




                EU Passport for managers                            10. An EU manager can manage a UCITS or
                                                                        offer units in a UCITS managed by it
                7. Under the Proposal, the licence of a
                                                                        through a branch office in the Netherlands:
                    manager to manage UCITS and offer units
                    in UCITS in the Netherlands (“Dutch                 a.     immediately after notification to that
                    manager”) can be “passported” within the                   effect by the AFM; or
                    EU after having obtained the prior approval
                                                                        b.     within two months of receipt of the
                    of the relevant supervisory authority in the
                                                                               notification of the competent authority
                    Netherlands, the Autoriteit Financiële
                                                                               of their home EU member state that it
                    Markten (“AFM”), or after having notified the
                                                                               has forwarded the notification to the
                    AFM. Similarly, a license of a manager to
                                                                               AFM.
                    manage UCITS and offer units in UCITS by
                    another EU member state (“EU manager”)
                                                                    11. However, the management of a Dutch
                    can be “passported” into the Netherlands.
                                                                        UCITS by an EU manager requires the
                                                                        approval of the AFM. The approval process
                8. The applicable procedures and information
                                                                        will take approximately two months. The
                    requirements depend on whether the
                                                                        AFM will provide its consent unless:
                    manager intends to undertake the activities
                    through a branch office or the provision of
                                                                        a.     the manager does not have a licence
                    cross border services.
                                                                               for the management of the type of
                                                                               UCITS concerned; or
                Procedures for services through a branch office

                                                                        b.     the manager or the Dutch UCITS will
                9. The managing of a UCITS or the offering of
                                                                               not be able to comply with the
                    units in a UCITS by a Dutch manager in
                                                                               applicable provisions on its conduct
                    other EU member states through a branch
                                                                               (gedragstoezicht).
                    office, requires the prior approval of the
                    AFM. In principle, the Dutch manager
                                                                    12. Presumably the AFM will grant its approval
                    should be able to establish its branch office
                                                                        within the two month waiting period set out
                    and start business immediately after having
                                                                        in paragraph 11. However, neither the
                    received a notification of the competent
                                                                        Proposal nor the explanatory notes thereto
                    authority in the relevant EU member state
                                                                        provide additional details in this respect.
                    or within two months of the receipt of the
                    AFM’s consent. The process should               Procedures for service through cross border
                    ultimately take up to a maximum of four         services
                    months.
                                                                    13. The provision of cross border services or the
                                                                        cross border offering of units in a Dutch
105/3720078.1
                                                                    7 March 2011




                   UCITS within the EU by a Dutch manager         Dutch requirements applicable to EU managers
                   are subject to a lighter notification
                                                                  17. EU managers managing a Dutch UCITS or
                   procedure.
                                                                     managing or offering units in UCITS in the
                14. The Dutch manager can offer the units in         Netherlands through a branch office are
                   the Dutch UCITS managed by it in another          subject to certain Dutch requirements, in
                   EU member state upon receipt of notification      particular to rules of conduct with respect to
                   from the AFM that it has informed the             complaints procedures, conflict of interests,
                   competent authority of the relevant EU            conduct of business and delegation of
                   member state. The notification should take        services. The EU manager providing cross
                   place within 10 working days.                     border services in the Netherlands is subject
                                                                     to fewer Dutch regulations.
                15. The Dutch manager intending to provide
                   cross border services in another EU            Master/Feeder UCITS
                   member state should notify the AFM thereof.
                                                                  18. The Proposal introduces the master UCITS
                   The AFM must forward the complete
                                                                     and the feeder UCITS into the FSA allowing
                   notification to the competent authorities of
                                                                     groups of UCITS to substantially pool their
                   the relevant member state with a copy to the
                                                                     assets. To qualify as a feeder UCITS at
                   Dutch manager within one month.
                                                                     least 85% of the invested assets (vermogen)
                16. The Proposal does not contain any                of a UCITS must be invested in a master
                   provisions as to when the Dutch manager           UCITS.
                   may commence its cross border services or
                                                                  19. A Dutch UCITS requires AFM approval to
                   when the EU manager can commence its
                                                                      become a feeder UCITS. In addition, the
                   cross border activities in the Netherlands.
                                                                      decision to become a feeder UCITS triggers
                   However, based on the UCITS IV Directive
                                                                      an obligation for the intended feeder UCITS
                   a manager can commence the provision of
                                                                      to enable its unit holders to offer their units
                   its services once the competent authority of
                                                                      in the intended feeder UCITS for
                   its home member state has notified the
                                                                      redemption or repurchase by the intended
                   competent authority of the relevant EU
                                                                      feeder UCITS at cost price.
                   member state (i.e. ultimately within one
                   month after having notified the competent
                                                                  20. To ensure that the feeder UCITS has
                   authority of its home member state).
                                                                     sufficient and correct information on the
                   However, if the manager has also submitted
                                                                     master UCITS, agreements for the
                   a request for approval to manage a UCITS
                                                                     exchange of information must be entered
                   to the competent authorities of the relevant
                                                                     into between:
                   member state, a longer term can apply
105/3720078.1
                                                                     7 March 2011




                    a.    the feeder UCITS and the master          Merger of UCITS
                          UCITS (unless they are part of a
                                                                   24. The possibility to merge different UCITSs
                          group in which case internal
                                                                       and/or their subfunds nationally and cross
                          regulations suffice);
                                                                       border is intended to stimulate the internal
                    b.    the custodians of the feeder UCITS           market and create economies of scale.
                          and the master UCITS; and                    Under the Proposal two or more UCITSs
                                                                       can merge:
                    c.    the accountants of the feeder UCITS
                          and the master UCITS.                    a. through a legal merger whereby (i) an
                                                                       existing UCITS (the ”receiving UCITS“)
                21. In view of the connection between a feeder
                                                                       acquires all the assets and liabilities of
                    UCITS and a master UCITS, the manager
                                                                       another UCITS who will then dissolve
                    of a feeder UCITS is entitled to suspend the
                                                                       (“merging UCITS”), or (ii) a new UCITS
                    redemption, repurchase or repayment of or
                                                                       incorporated by the merging UCITS (for the
                    subscription for the feeder UCITS’ units, if
                                                                       purpose of and as a result of the merger)
                    the master UCITS, whose units it holds,
                                                                       will acquire the assets and liabilities of at
                    temporarily suspends the redemption,
                                                                       least two merging UCITS; or
                    repurchase or repayment of or subscription
                    for its units.                                 b. through the joining of the assets of a
                                                                       merging UCITS and a receiving UCITS,
                22. In addition, depending on the circumstances
                                                                       whereby the merging UCITS will not be
                    the liquidation or merger of a master UCITS
                                                                       dissolved until its liabilities have been
                    may trigger the liquidation of its feeder
                                                                       settled (“asset merger”).
                    UCITS.
                                                                   25. A merging Dutch UCITS must notify the
                23. Generally, in the Netherlands a UCITS will
                                                                       AFM of an intended merger and obtain its
                    have the tax status of fiscale
                                                                       prior approval before implementing the
                    beleggingsinstelling (FBI) -taxed at a 0%
                                                                       merger.
                    corporate income tax rate- or vrijgestelde
                    beleggingsinstelling (VBI) - exempt of         26. The merging and the receiving UCITS must
                    corporate income tax. To qualify as FBI,           inform their unit holders about the intended
                    certain detailed requirements apply,               merger after the AFM and, if applicable, the
                    including requirements as to directors and         other relevant competent authority of an EU
                    shareholders. As a result of those                 member state have consented to the
                    requirements, it may not always be possible        merger.
                    for a master UCITS to qualify as FBI.
105/3720078.1
                                                                        7 March 2011




                27. The merging UCITS must enable its               31. The Proposal provides that it enters into
                    unitholders to have their units redeemed,            force on 1 July 2011. If the Proposal is
                    repurchased or to exchange them for units            published in the State Gazette (Staatsblad)
                    in a similar UCITS managed by the same               after 1 July 2011, the Proposal will enter
                    manager or an affiliated manager prior to            into force the day after its publication. The
                    the execution of the merger.                         draft general administrative measure
                                                                         provides that it will enter into force the day
                Key investor information
                                                                         after its publication in the State Gazette.

                28. Key investor information as prescribed by
                                                                    If you have any queries regarding this
                    the EU Commission’s Regulation 583/2010
                                                                    newsletter, please do not hesitate to contact one
                    will be required for the offering of units in
                                                                    of our investment management specialists or tax
                    collective investment schemes. The key
                                                                    specialists.
                    investor information format will be a
                    harmonised format within the EU to ensure       Contact
                    adequate investor protection and guarantee
                    the comparability of information.

                29. Under the Proposal and the draft general
                    administrative measure, the requirement to
                    draw up and provide key investor
                    information applies to the offering of all
                    units not only units in UCITS. This is          Oscar van Angeren
                    intended to further facilitate investors and
                                                                    T    (+31)(0)20 60 5 6539
                    allow them to make comparisons between          M    (+31)(0)6 53 54 16 35
                    various types of units.                         E    o.van.angeren@houthoff.com


                Implementation

                30. The provisions of the UCITS IV Directive
                    should be implemented and be applied by
                    the Member States as of 1 July 2011.
                    Considering the late date at which the
                    Ministry of Finance has sent the proposal to    Hugo Oppelaar
                    the Parliament it remains to be seen
                                                                    T    (+31)(0)20 60 56 983
                    whether the deadline will be met.               M    (+31)(0)6 51 82 99 77
                                                                    E    h.oppelaar@houthoff.com
105/3720078.1
                                            7 March 2011




                Freek Snel

                T   (+31)(0)20 60 56 527
                M   (+31)(0)6 43 55 08 53
                E   f.snel@houthoff.com
105/3720078.1

								
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