European Parliament legislative resolution on the proposal for a European Parliament and Council directive amending Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) with a view to regulating management companies and simplified prospectuses (COM(1998) 451 — C4-0465/1998 — 1998/0242(COD))
Date: 2000-02-17
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: approximation of laws, financial legislation, free movement of capital, investment company, securities

C 339/228

Official Journal of the European Communities

EN

29.11.2000

Thursday 17 February 2000

II.
Proposal for a European Parliament and Council directive amending Council Directive 85/611/EEC
on the coordination of laws, regulations and administrative provisions relating to undertakings for
collective investments in transferable securities (UCITS) with a view to regulating management
companies and simplified prospectuses (COM(1998) 451 + C4-0465/1998 + 1998/0242(COD))

The proposal was amended as follows:

TEXT PROPOSED
BY THE COMMISSION (1)

AMENDMENTS
BY PARLIAMENT

(Amendment 22)
Recital 15a (new)

(15a) Whereas a codification of the Community legisla-
tion relating to UCITS will have to be prepared immedi-
ately after the adoption of the modifications to Directive
85/611/EEC contained in this Directive;

(Amendment 23)
ARTICLE 1(1)
Article 1a(2) (Directive 85/611/EEC)

2. management company shall mean any company the regu-
lar business of which is the management of unit trusts/
common funds and of investment companies (collective
portfolio management);

2. management company shall mean any company the regu-
lar business of which is the management of the assets of
unit trusts/common funds and of investment companies
(collective portfolio management) including the activities
mentioned in Annex II;

(Amendment 24)
ARTICLE 1(3)
Article 5(4a) (new) (Directive 85/611/EEC)

4a.
The competent authorities shall not grant authorisa-
tion, or shall withdraw authorisation from a UCITS,
where factors such as the content of programmes of
operations, the geographical distribution or the activities
actually carried on indicate clearly that the entity has
opted for the legal system of one Member State for the
purpose of evading the stricter standards in force in
another Member State within the territory of which it
intends to carry on or does carry on the greater part of
its activities.

(Amendment 41/rev.)
ARTICLE 1(3)
Article 5a(1), first two indents (Directive 85/611/EEC)

2 it has sufficient initial capital of the following amount:

(a)

if it is authorised to manage only unit trusts/common funds
and investment companies, € 50 000;

(1) OJ C 272, 1.9.1998, p. 7.

2 it has initial capital of at least € 150 000. In addition,
it shall maintain certain capital requirements that are
at least equivalent to the higher of the following
amounts:

(a) an amount of capital to be determined in accor-
dance with the rules laid down in Directive 93/6/
EEC, having regard to the nature of the services
provided;

29.11.2000

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Official Journal of the European Communities

C 339/229

TEXT PROPOSED
BY THE COMMISSION

Thursday 17 February 2000

AMENDMENTS
BY PARLIAMENT

(b)

its authorisation covers also the discretionary portfolio
if
management service mentioned in Article 5(3), first indent,
in addition to the capital mentioned in the previous letter
(a), an amount of capital to be determined in accordance
with the rules laid down in Article 3, paragraphs 1 and 2
of Directive 93/6/EEC (1) having regard to the nature of the
service in question;

(b) an amount of capital to be determined by apply-
ing the following scale to the total amount of the
assets managed:
+ 0,1 % up to € 1 000 million managed;
+ € 1 million plus 0,02 % of assets managed in
excess of € 1 000 million, subject to a ceiling
of € 10 million.

. the persons who effectively direct the business of a management
company are of sufficiently good repute and are sufficiently
experienced also in relation to the type of UCITS managed by
the management company. The direction of a management com-
pany’s business must be decided by at least two persons meeting
these conditions;

(1) OJ L 141, 11.6.1993, p. 1.

(Amendment 35)
ARTICLE 1(3)
Article 5a(3) (Directive 85/611/EEC)

3.
An applicant shall be informed, within six months of the
submission of a complete application, whether or not authori-
sation has been granted. Reasons shall be given whenever an
authorisation is refused.

3.
An applicant shall be informed, within six months of the
submission of a complete application, whether or not authori-
sation has been granted. Reasons shall be given whenever an
authorisation is
refused. After authorisation has been
refused in one Member State, it may not be applied for
in another Member State. The parallel submission of appli-
cations in more than one Member State shall not be per-
mitted.

(Amendment 25)
ARTICLE 1(3)
Article 5f(1), 2nd subparagraph (Directive 85/611/EEC)

In particular, the competent authorities of the home Member
State having regard also to the nature of the UCITS managed
by a management company, shall require that each such com-
pany has sound administrative and accounting procedures,
control and safeguard arrangements for electronic data proces-
sing and adequate internal control mechanisms ensuring, inter
alia, that the assets of the unit trusts/common funds or of the
investment companies managed by the management company
are invested according to the fund rules or the instruments of
incorporation and the legal provisions in force.

In particular, the competent authorities of the home Member
State, having regard also to the nature of the UCITS managed
by a management company, shall require that each such com-
pany has sound administrative and accounting procedures,
control and safeguard arrangements for electronic data proces-
sing and adequate internal control mechanisms ensuring, inter
alia, that each transaction involving the fund may be
reconstructed according to its origin, the parties to it, its
nature, and the time and place at which it was effected
and that the assets of the unit trusts/common funds or of the
investment companies managed by the management company
are invested according to the fund rules or the instruments of
incorporation and the legal provisions in force.

(Amendment 26)
ARTICLE 1(3)
Article 5f(2), 2nd subparagraph (new) (Directive 85/611/EEC)

The competent authorities of the home Member State
may, irrespective of a prior approval from the client of a
management company, approve the activities of the man-
agement company referred to in the above three indents
provided that the provisions of Article 10(2) are complied
with.

C 339/230

Official Journal of the European Communities

EN

29.11.2000

Thursday 17 February 2000

TEXT PROPOSED
BY THE COMMISSION

AMENDMENTS
BY PARLIAMENT

(Amendment 27)

ARTICLE 1(3)
Article 5g(1) and (2), introduction
and 1st and 2nd indents (Directive 85/611/EEC)

1. When a Member State permits a management company to
delegate to third parties, on the basis of specific mandates and for
the purpose of a more efficient conduct of the company’ s business,
to carry out on its behalf one or more of the functions included in
the activity of collective portfolio management mentioned in Annex II,
each mandate must be submitted to the competent authorities for
prior approval.

The competent authorities of

1.
the home Member
State may permit management companies to delegate spe-
cific investment decisions
that are
subject
in accordance with
investment-allocation criteria periodically laid down by
the management companies.

to prudential supervision,

to intermediaries

The competent authorities shall approve the mandate
2.
only after having verified the compliance with the following
pre-conditions:

The competent authorities shall approve the mandate
2.
only after having verified the compliance with all the following
pre-conditions:

2 the mandate shall not prevent the effectiveness of supervi-

2 the mandate shall not prevent the effectiveness of supervi-

sion over the management company,

sion over the management company,

2 in order to prevent conflicts of interest, the mandate shall not
be given to the depository and to persons having qualifying
holdings in the management company’ s or the depositary’ s
capital or to any other person whose interests may conflict with
those of the management company or the unit-holders,

2 where the mandate is given to a third-country inter-
mediary, cooperation between the prudential supervi-
sory authorities must be ensured regarding the dele-
gating party and the party delegated to act,

+ the mandate shall not be given to the depositary,

(Amendment 28)

ARTICLE 1(3)
Article 6a(4) (Directive 85/611/EEC)

Before the branch of a management company com-
4.
mences business, the competent authorities of the host Member
State shall, within two months of receiving the information
referred to in paragraph 2, prepare for the supervision of the
management company and,
indicate the condi-
tions, including the rules mentioned in Articles 44 and 45 in
force in the host Member State and the rules of conduct to be
respected in the case of provision of the portfolio management
service mentioned in Article 5(3), under which, in the interest
of the general good, that business must be carried on in the
host Member State.

if necessary,

Before the branch of a management company com-
4.
mences business, the competent authorities of the host Member
State shall, within two months of receiving the information
referred to in paragraph 2, prepare for the supervision of the
management company and,
indicate the condi-
tions, including the rules mentioned in Articles 44 and 45 in
force in the host Member State and the rules of conduct to be
respected in the case of provision of the portfolio management
service mentioned in Article 5(3) and of investment advisory
services and custody, under which, in the interest of the gen-
eral good, that business must be carried on in the host Member
State.

if necessary,

(Amendment 29)

ARTICLE 1(6)
Article 28(1) (Directive 85/611/EEC)

1.
Both the simplified and the full prospectuses must include
the information necessary for investors to be able to make an
informed judgement of the investment proposed to them.

1.
Both the simplified and the full prospectuses must include
the information necessary for investors to be able to make an
informed judgement of the investment proposed to them and,
in particular, of the risks attached thereto.

29.11.2000

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Official Journal of the European Communities

C 339/231

TEXT PROPOSED
BY THE COMMISSION

Thursday 17 February 2000

AMENDMENTS
BY PARLIAMENT

(Amendment 30)
ARTICLE 1(6)
Article 28 (1), 2nd subparagraph (new) (Directive 85/611/EEC)

The prospectuses must also include a clear and easily
the fund’s risk profile
understandable explanation of
(independent of whether or not derivatives are used and
independent of the type of securities invested in).

(Amendment 31)
ARTICLE 1(7)
Article 29(2a) (new) (Directive 85/611/EEC)

The provisions on rules of conduct to be observed
2a.
in connection with the sale of shares for investment pur-
poses and on information concerning safeguard systems
set out in Articles 11 and 12 of the ISD shall apply mutatis
mutandis.

(Amendment 32)
ANNEX I, ‘Investment information’, 5th indent (new) (Directive 85/611/EEC)

+ a brief assessment of the fund’s risk profile.

European Parliament legislative resolution on the proposal for a European Parliament and Council
directive amending Council Directive 85/611/EEC on the coordination of laws, regulations and
administrative provisions relating to undertakings for collective investment in transferable securi-
ties (UCITS) with a view to regulating management companies and simplified prospectuses
(COM(1998) 451 + C4-0465/1998 + 1998/0242(COD))

(Codecision procedure: first reading)

The European Parliament,

2 having regard to the Commission proposal

to the European Parliament and the Council

(COM(1998) 451) (1),

2 having regard to Article 251(2) of the EC Treaty and Article 47(2) of the EC Treaty, pursuant to which

the Commission submitted the proposal to Parliament (C4-0465/1998),

2 having regard to Rule 67 of its Rules of Procedure,

2 having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of

the Committee on Legal Affairs and the Internal Market (A5-0025/2000),

1.

Approves the Commission proposal as amended;

Asks to be consulted again should the Commission intend to amend its proposal substantially or

2.
replace it with another text;

3.

Instructs its President to forward its position to the Council and Commission.

(1) OJ C 272, 1.9.1998, p. 7.