Opinion of the Commission pursuant to Article 251 (2), third subparagraph, point (c) of the EC Treaty, on the European Parliament's amendments to the Council's common position regarding the proposal for a Directive of the European Parliament and of the Council 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 regard to investments of UCITS - amending the proposal of the Commission pursuant to Article 250 (2) of the EC Treaty
Date: 2001-11-21
Institutions: European Commission
Subjects: approximation of laws, financial legislation, free movement of capital, investment company, securities

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.11.2001
COM(2001) 686 final

1998/0243(COD)

OPINION OF THE COMMISSION

pursuant to Article 251 (2), third subparagraph, point (c) of the EC Treaty,
on the European Parliament's amendments
to the Council's common position regarding the
proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

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 regard to investments of UCITS

AMENDING THE PROPOSAL OF THE COMMISSION
pursuant to Article 250 (2) of the EC Treaty 

1998/0243(COD)

OPINION OF THE COMMISSION

pursuant to Article 251 (2), third subparagraph, point (c) of the EC Treaty,
on the European Parliament's amendments
to the Council's common position regarding the
proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

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 regard to investments of UCITS

1. 

BACKGROUND

On 17 July 1998 the Commission sent to the European Parliament and the Council a proposal
for a directive1 to amend Directive 85/611/EEC2 on the coordination of laws, regulations and
administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable
securities (UCITS), with regard to investments of UCITS.

The Economic and Social Committee delivered its opinion at its 361st plenary session on 24
and 25 February 19993. At the request of the Council, the European Central Bank delivered its
opinion on 16 March 19994.

On  17 February 2000  the  European  Parliament  adopted    its  legislative  resolution  on  first
reading5,comprising 24 amendments to the Commission proposal.

On 30 May 2000  the  Commission  adopted  an  amended  proposal6  taking  account  of  its
consultation of Parliament and the Economic and Social Committee.

The Council adopted its common position7 on 5 June 2001.

On 28 June 2001 the Commission adopted its communication to the European Parliament8 on
the Council’s common position.

On 23 October 2001 the European Parliament voted on second reading one amendment to the
common position.

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6

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8

COM (1998) 449 final (OJ C 280, 9.9.1998, p. 6).
OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive 2000/64/EC (OJ L 290, 17.11.2000,
p. 27).
OJ C 116, 28.4.1999, p. 44.
OJ C 285, 7.10.1999, p. 9.
OJ C 339, 29.11.2000, p. 220, Rapporteur: O. Schmidt.
COM (2000) 329 final (OJ C 311 E, 31.10.2000, p. 302).
OJ C 297, 23.10.2001, p. 35.
SEC(2001)1003 final.

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2. 

PURPOSE OF THE PROPOSAL

The  main  purpose  of  the  proposal  is  to  promote  further  the  cross-border  sale  of  units  in
collective  investment  undertakings  covered  by  Community  harmonisation  and  to  modernise
their  investment  techniques  with  a  view  to  boosting  yields  and  competitiveness.  This  is
achieved  by  extending  the  freedom  to  sell  throughout  the  Union  to  collective  investment
undertakings investing in certain financial assets other than transferable securities in the strict
sense, such as units of other collective investment undertakings, money market instruments,
bank deposits and financial derivatives. New transparency rules will ensure that investors are
properly informed.

Together  with  a  joint  proposal  regulating  management  companies  and  the  introduction  of  a
simplified prospectus9, this proposal forms part of the Financial Services Action Plan10, which
is due to be completed by 2005. 

3. 

COMMISSION OPINION ON PARLIAMENT’S AMENDMENTS

On second reading, the European Parliament adopted a single amendment (Amendment 3) to
the Council’s common position.

For the reasons set out below, the Commission can accept this amendment.

Initially, Amendment 1 was approved by the European Parliament’s Committee on Economic
and  Monetary  Affairs.  However,  this  was  not  adopted  because  it  was  superseded  by  the
(nearly  identical)  Amendment  3,  which  was  adopted  instead  and  contains  two  different
provisions.

First,  paragraph  1  requests  the  European  Commission  to  carry  out  a  five  point  review
programme  of  analyses  and  possible  proposals  for  further  modifications  to  the  UCITS
Directives, within three years of the entry into force of the present Directive.

Second, according to paragraph 2, Member States may grant UCITS existing on the date of
entry into force of this Directive a period of no more than 60 months from that date to comply
with the new national legislation.

Despite  the  tight  timeframe,  the  Commission  welcomes  the  review  exercise  contained  in
paragraph 1, which it considers as a valuable contribution to the steps which need to be taken
in  order  to  keep  pace  with  evolving  market  practice  and  further  modernise  the  UCITS
Directives.

Regarding the 60-month transition clause introduced by paragraph 2, the Commission would
have  preferred  a  shorter  period,  in  order  to  achieve  a  quicker  incorporation  of  the  new
investment  rules  for  all  harmonised  European  investment  funds.  However,  given  that
Amendment  3 
the  overall
“grandfathering” period as compared with earlier draft amendments (one of which went as far
as to propose unlimited grandfathering), the Commission can accept the final transition clause
of Amendment 3 with a view to reaching a compromise and achieving swift adoption of the
UCITS Directives.

thereby  shortening 

incorporates  a 

timeframe, 

revised 

9

10

Commission initial proposal (COM(1998) 451 final) and amended proposal (COM(2000) 331 final): OJ
C 311 E, 31.10.2000, p. 273. Council’s Common Position: OJ C 297, 23.10.2001, p. 10.
COM(1999)232, 11.05.1999.

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4. 

CONCLUSIONS

The Commission therefore fully accepts the amendment voted by the European Parliament on
second reading.

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