Clarification Of The UCITS v Independence Rules, Priips Impacts And The Application Of ESMA's Opinion On Share Classes Of UCITS

On 6 July 2017 the CSSF published the updated versions of its Frequently Asked Questions (FAQ) documents on the UCI Law.

This update was long awaited by the Luxembourg fund industry especially because it provides additional guidance on the independence requirements applying to the depositary bank and the management company (ManCo) of the UCITS laid down in Chapter 4 of the Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 (Level 2).

New Section 5 on independence requirements

The CSSF clarifies the following:

If the UCITS has designated a Chapter 15 ManCo, the independence requirements apply between the ManCo and the depositary. If the UCITS is a self-managed SICAV, the requirements apply between the UCITS and the depositary. The FAQ specifies the concept of management body applied to Luxembourg company law: → S.à.r.l.: EN: managers, FR: gérants, DE: Geschäftsführer, or EN: board of managers, FR: conseil de gérance, DE: Geschäftsführung

→ S.C.A.: EN: managers, FR: gérants, DE: Geschäftsführer

→ S.A. (i) Monistic: EN: board of directors, FR: conseil d'administration, DE: Verwaltungsrat, or (ii) Dualistic: EN: management board, FR: directoire, DE: Vorstand

The CSSF specifies that when the appointed member of the management body is a legal entity, the independence requirements shall be assessed at the level of the management body of such legal entity.

The FAQ specifies that the concept of "body in charge of the supervisory functions" is to be understood as the supervisory board ( FR: conseil de surveillance, DE: Aufsichtsrat) of a dualistic S.A. established in Luxembourg. When the depositary of a UCITS is established as a Luxembourg branch of an entity having its registered office in another EU Member State, the independence requirements are assessed at the level of the ManCo (or the self-managed SICAV) established in Luxembourg with regard to the management body (where applicable, its supervisory board) of the head office of the depositary and the employees of the depositary (both at the level of its head office and of the Luxembourg branch). When the management company of a UCITS is established as a Luxembourg branch of a management company having its registered office in another EU Member State (and has therefore no legal personality in Luxembourg) the independence requirements are assessed at the level of the depositary established in Luxembourg with regard to the management body (where applicable its supervisory board) of...

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