Directive 2001/108/EC of the European Parliament and of the Council of 21 January 2002 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
Date: 2002-01-21
Institutions: Council of the European Union, European Parliament
Subjects: application of EU law, approximation of laws, investment company, investment transaction, securities

13.2.2002

EN

Official Journal of the European Communities

L 41/35

DIRECTIVE 2001/108/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 21 January 2002

amending Council Directive 85/611/EEC on the coordination of laws, regulations and adminis-
trative provisions relating to undertakings for collective investment in transferable securities
(UCITS), with regard to investments of UCITS

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 47(2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social
Committee (2),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (3),

Whereas:

(1)

(2)

(3)

The scope of Council Directive 85/611/EEC (4) was
confined initially to collective investment undertakings
of the open-ended type which promote the sale of their
units to the public in the Community and the sole object
of which is investment in transferable securities (UCITS).
It was envisaged in the preamble to Directive 85/
611/EEC that collective investment undertakings falling
outside its scope would be the subject of coordination at
a later stage.

Taking into account market developments, it is desirable
that the investment objective of UCITS be widened in
order to permit them to invest in financial instruments,
other than transferable securities, which are sufficiently
liquid. The financial instruments which are eligible to be
investment assets of the portfolio of the UCITS are listed
in this Directive. The selection of
investments for a
portfolio by means of an index is a management tech-
nique.

The definition of transferable securities included in this
Directive is valid only for this Directive and in no way
affects the various definitions used in national legislation
for other purposes such as taxation. Consequently,
shares and other securities equivalent to shares issued by
bodies such as building societies and industrial and
provident societies, the ownership of which cannot in
practice be transferred except by the issuing body
buying them back, are not covered by this definition.

(5)

(6)

(7)

(8)

(4)

Money market
those transferable
instruments which are normally not traded on regulated
markets but dealt in on the money market, for example

instruments cover

(9)

(1) OJ C 280, 9.9.1998, p. 6 and OJ C 311 E, 31.10.2000, p. 302.
(2) OJ C 116, 28.4.1999, p. 44.
(3) Opinion of the European Parliament of 17 February 2000 (OJ C
339, 29.11.2000, p. 220), Council Common Position of 5 June
2001 (OJ C 297, 23.10.2001, p. 35) and Decision of the European
Parliament of 23 October 2001. Council Decision of 4 December
2001.

(4) OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive
2000/64/EC of the European Parliament and of the Council (OJ L
290, 17.11.2000, p. 27).

treasury and local authority bills, certificates of deposit,
commercial paper, medium-term notes and bankers'
acceptances.

is useful

to ensure that

the concept of regulated
It
market in this Directive corresponds to that in Council
Directive 93/22/EEC of 10 May 1993 on investment
services in the securities field (5).

It is desirable to permit a UCITS to invest its assets in
units of UCITS and/or other collective investment under-
takings of the open-ended type which also invest in
liquid financial assets mentioned in this Directive and
which operate on the principle of risk spreading. It is
necessary that UCITS or other collective investment
undertakings in which a UCITS invests be subject to
effective supervision.

The development of opportunities for a UCITS to invest
in UCITS and in other collective investment undertak-
It is therefore essential to
ings should be facilitated.
ensure that such investment activity does not diminish
investor protection. Owing to the enhanced possibilities
for UCITS to invest in the units of other UCITS and/or
collective investment undertakings, it is necessary to lay
down certain rules on quantitative limits, the disclosure
of information and prevention of the cascade phenom-
enon.

To take market developments into account and in
consideration of
the completion of economic and
monetary union it is desirable to permit UCITS to invest
in bank deposits. To ensure adequate liquidity of invest-
ments in deposits, these deposits are to be repayable on
demand or have the right
the
deposits are made with a credit institution the registered
office of which is located in a non-Member State, the
credit institution should be subject to prudential rules
equivalent to those laid down in Community legislation.

to be withdrawn.

If

In addition to the case in which a UCITS invests in bank
deposits according to its fund rules or instruments of
incorporation, it may be necessary to allow all UCITS to
hold ancillary liquid assets, such as bank deposits at
sight. The holding of such ancillary liquid assets may be
justified, for example, in the following cases: in order to
cover current or exceptional payments; in the case of
sales, for the time necessary to reinvest in transferable

(5) OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive

2000/64/EC.

L 41/36

EN

Official Journal of the European Communities

13.2.2002

securities, money market instruments and/or in other
financial assets provided for in this Directive;
for a
period of time strictly necessary when, because of unfav-
ourable market conditions, the investment in transfer-
able securities, money market instruments and in other
financial assets must be suspended.

(10)

For prudential reasons it is necessary to avoid excessive
concentration by a UCITS in investments which expose
them to counterparty risk to the same entity or to
entities belonging to the same group.

(11) UCITS should be explicitly permitted, as part of their
general investment policy and/or for hedging purposes
in order to reach a set financial target or the risk profile
indicated in the prospectus, to invest in financial deriva-
tive instruments. In order to ensure investor protection,
it is necessary to limit the maximum potential exposure
relating to derivative instruments so that it does not
exceed the total net value of the UCITS's portfolio. In
order to ensure constant awareness of the risks and
commitments arising from derivative transactions and to
check compliance with investment limits, these risks and
commitments will have to be measured and monitored
on an ongoing basis. Finally, in order to ensure investor
protection through disclosure, UCITS should describe
their
limits
governing their derivative operations.

and investment

techniques

strategies,

(12) With regard to over-the-counter (OTC) derivatives, addi-
tional requirements should be set in terms of the eligi-
bility of counterparties and instruments,
liquidity and
ongoing assessment of the position. The purpose of such
additional requirements is to ensure an adequate level of
investor protection, close to that which they obtain
when they acquire derivatives dealt
in on regulated
markets.

(13) Operations in derivatives may never be used to circum-
vent the principles and rules set out in this Directive.
With regard to OTC derivatives,
risk-
spreading rules should apply to exposures to a single
counterparty or group of counterparties.

additional

(14)

Some portfolio management techniques for collective
investment undertakings investing primarily in shares
and/or debt securities are based on the replication of
stock indices and/or debt-security indices. It is desirable
to permit UCITS to replicate well-known and recognised
stock indices and/or debt-security indices. It may there-
fore be necessary to introduce more flexible risk-
spreading rules for UCITS investing in shares and/or
debt securities to this end.

(15)

Collective investment undertakings falling within the
scope of this Directive should not be used for purposes
other than the collective investment of the money raised
from the public according to the rules laid down in this

In the cases identified by this Directive a
Directive.
UCITS may have subsidiaries only when necessary to
carry out effectively on behalf of that UCITS certain
activities, also defined in this Directive. It is necessary to
ensure an effective supervision of UCITS. Therefore the
establishment of a subsidiary of a UCITS in a third
country should be permitted only in the cases and under
the conditions identified in the Directive. The general
obligation to act solely in the interests of unit-holders
and, in particular, the objective of increasing cost effi-
ciencies, never justify a UCITS undertaking measures
which may hinder the competent authorities from exer-
cising effectively their supervisory functions.

(16)

There is a need to ensure the free cross-border
marketing of the units of a wider range of collective
investment undertakings, while providing a uniform
minimum level of investor protection. Therefore, only a
binding Community Directive
laying down agreed
minimum standards can achieve the desired objectives.
This Directive effects only the minimum harmonisation
required and does not go beyond what is necessary in
order to achieve the objectives pursued in accordance
with the third paragraph of Article 5 of the Treaty.

(17)

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down
the procedures for the exercise of implementing powers
conferred on the Commission (1).

(18)

The Commission may consider proposing codification in
due course after the adoption of the proposals,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 85/611/EEC is hereby amended as follows:

1.

in Article 1(2), the first indent shall be replaced by the
following:

‘— the sole object of which is the collective investment in
transferable securities and/or in other liquid financial
assets referred to in Article 19(1) of capital raised from
the public and which operates on the principle of
risk-spreading and’;

2.

in Article 1 the following paragraphs shall be added:

For

‘8.
securities” shall mean:

the purposes of

this Directive,

“transferable

— shares in companies and other securities equivalent to

shares in companies (“shares”),

— bonds and other forms of securitised debt (“debt securi-

ties”),

(1) OJ L 184, 17.7.1999, p. 23.

13.2.2002

EN

Official Journal of the European Communities

L 41/37

— any other negotiable securities which carry the right to
acquire any such transferable securities by subscription
or exchange,

incorporation, be invested in aggregate in units
of other UCITS or other collective investment
undertakings, and/or

excluding the techniques and instruments referred to in
Article 21.

9.
For the purposes of this Directive “money market
instruments” shall mean instruments normally dealt in on
the money market which are liquid, and have a value
which can be accurately determined at any time.’;

3. Article 19(1)(a) shall be replaced by the following:

‘(a) transferable securities and money market instruments
admitted to or dealt in on a regulated market within
the meaning of Article 1(13) of the ISD, and/or’;

4.

in Article 19(1)(b) and (c), the words ‘and money market
instruments’ shall be added after the words ‘transferable
securities’;

5.

in Article 19(1):

— the terms ‘and/or’ shall be added to the end of point

(d),

— the following points shall be added:

‘(e) units of UCITS authorised according to this
Directive and/or other collective investment under-
takings within the meaning of the first and second
indent of Article 1(2), should they be situated in a
Member State or not, provided that:

— such other collective investment undertakings
are authorised under laws which provide that
they are subject to supervision considered by
the UCITS' competent authorities to be equiva-
lent to that laid down in Community law, and
that cooperation between authorities is suffi-
ciently ensured,

— the level of protection for unit-holders in the
other collective investment undertakings
is
equivalent to that provided for unit-holders in
a UCITS, and in particular that the rules on
assets
lending, and
uncovered sales of transferable securities and
money market instruments are equivalent to
the requirements of this Directive,

segregation, borrowing,

— the business of the other collective investment
undertakings is reported in half-yearly and
annual reports to enable an assessment to be
made of the assets and liabilities, income and
operations over the reporting period,

— no more than 10 % of the UCITS' or the other
assets,
investment
collective
whose
can,
is
according to their fund rules or instruments of

contemplated,

undertakings'

acquisition

(f) deposits with credit institutions which are repayable
on demand or have the right to be withdrawn, and
maturing in no more than 12 months, provided
that the credit institution has its registered office in
a Member State or, if the registered office of the
credit institution is situated in a non-Member State,
provided that
rules
considered by the UCITS' competent authorities as
equivalent to those laid down in Community law,
and/or

to prudential

is subject

it

(g) financial derivative instruments, including equiva-
lent cash-settled instruments, dealt in on a regu-
lated market referred to in subparagraphs (a), (b)
financial derivative instruments
and (c); and/or
dealt
(“OTC derivatives”),
provided that:

in over-the-counter

— the underlying consists of instruments covered
by this paragraph,
interest
rates, foreign exchange rates or currencies, in
which the UCITS may invest according to its
investment objectives as stated in the UCITS'
fund rules or instruments of incorporation,

financial

indices,

— the counterparties to OTC derivative transac-
tions are institutions
to prudential
supervision, and belonging to the categories
approved by the UCITS' competent authorities,
and

subject

— the OTC derivatives are subject to reliable and
verifiable valuation on a daily basis and can be
sold, liquidated or closed by an offsetting trans-
action at any time at their fair value at the
UCITS'

initiative, and/or

(h) money market instruments other than those dealt
in on a regulated market, which fall under Article
1(9), if the issue or issuer of such instruments is
the purpose of protecting
itself
investors and savings, and provided that they are:

regulated for

— issued or guaranteed by a central, regional or
local authority or central bank of a Member
State, the European Central Bank, the European
Union or the European Investment Bank, a
non-Member State or, in the case of a Federal
State, by one of the members making up the
federation, or by a public international body to
which one or more Member States belong, or

— issued by an undertaking any securities of
which are dealt
in on regulated markets
referred to in subparagraphs (a), (b) or (c), or

L 41/38

EN

Official Journal of the European Communities

13.2.2002

— issued or guaranteed by an establishment
subject to prudential supervision, in accordance
with criteria defined by Community law, or by
an establishment which is
to and
complies with prudential rules considered by
the competent authorities to be at least as strin-
gent as those laid down by Community law; or

subject

— issued by other bodies belonging to the catego-
ries approved by the UCITS' competent author-
ities provided that investments in such instru-
ments are subject to investor protection equiva-
lent to that laid down in the first, the second or
the third indent and provided that the issuer is
a company whose capital and reserves amount
to at least EUR 10 million and which presents
and publishes its annual accounts in accord-
ance with Directive 78/660/EEC (*), is an entity
which, within a group of companies which
is
includes one or several
dedicated to the financing of the group or is an
entity which is dedicated to the financing of
securitisation vehicles which benefit
from a
banking liquidity line.

listed companies,

(*) Fourth Council Directive 78/660/EEC of 25 July
1978 based on Article 54(3)(g) of the Treaty on
the annual accounts of certain types of compa-
nies (OJ L 222, 14.8.1978, p. 11). Directive as
last amended by Directive 1999/60/EC (OJ L
162, 26.6.1999, p. 65).’;

the purpose of

provided that such techniques and instruments are used
for
efficient portfolio management.
When these operations concern the use of derivative
instruments,
these conditions and limits shall conform
to the provisions laid down in this Directive.

Under no circumstances shall these operations cause the
UCITS to diverge from its investment objectives as laid
down in the UCITS'
incor-
fund rules,
poration or prospectus.

instruments of

A UCITS shall ensure that

3.
its global exposure
relating to derivative instruments does not exceed the
total net value of its portfolio.

The exposure is calculated taking into account
the
current value of the underlying assets, the counterparty
risk, future market movements and the time available to
shall also apply to the
liquidate the positions. This
following subparagraphs.

derivative

laid down in Article 22(5),

A UCITS may invest, as a part of its investment policy
and within the limit
in
the
instruments
financial
exposure to the underlying assets does not exceed in
aggregate the investment limits laid down in Article 22.
The Member States may allow that, when a UCITS
invests in index-based financial derivative instruments,
these investments do not have to be combined to the
limits laid down in Article 22.

provided

that

6.

in Article 19(2)(a), the words ‘and money market instru-
ments’ shall be added after the words ‘transferable secur-
ities’;

When a transferable security or money market instru-
ment embeds a derivative, the latter must be taken into
account when complying with the requirements of this
Article.

7. Article 19(2)(b) and (3) shall be deleted;

8. Article 20 shall be deleted;

9. Article 21 shall be replaced by the following:

‘Article 21

The Member States shall send the Commission full
4.
information and any subsequent changes in their regula-
tion concerning the methods used to calculate the risk
exposures mentioned in paragraph 3,
including the risk
exposure to a counterparty in OTC derivative transac-
tions, no later than 13 February 2004. The Commission
information to the other Member
shall
States.
subject of
exchanges of views within the Contact Committee in
accordance with the procedure laid down in Article
53(4).’;

Such information will

forward that

the

be

The management or

1.
investment company must
employ a risk-management process which enables it to
monitor and measure at any time the risk of the posi-
tions and their contribution to the overall risk profile of
the portfolio; it must employ a process for accurate and
independent assessment of the value of OTC derivative
instruments.
It must communicate to the competent
authorities regularly and in accordance with the detailed
the types of derivative instru-
rules they shall define,
ments, the underlying risks, the quantitative limits and
the methods which are chosen in order to estimate the
risks associated with transactions in derivative instru-
ments regarding each managed UCITS.

The Member States may

2.
authorise UCITS to
employ techniques and instruments relating to transfer-
able securities and money market instruments under the
conditions and within the limits which they lay down

10. Article 22 shall be replaced by the following:

‘Article 22

1.
its
A UCITS may invest no more than 5 % of
assets in transferable securities or money market instru-
ments issued by the same body. A UCITS may not
invest more than 20 % of
its assets in deposits made
with the same body.

The risk exposure to a counterparty of the UCITS in an
OTC derivative transaction may not exceed:

— 10 % of its assets when the counterpart is a credit

institution referred to in Article 19(1)(f), or

— 5 % of its assets,

in other cases.

13.2.2002

EN

Official Journal of the European Communities

L 41/39

2. Member States may raise the 5 % limit laid down
in the first sentence of paragraph 1 to a maximum of
10 %. However, the total value of the transferable secur-
ities and the money market
instruments held by the
UCITS in the issuing bodies in each of which it invests
more than 5 % of its assets must not then exceed 40 %
of the value of its assets. This limitation does not apply
to deposits and OTC derivative transactions made with
to prudential supervision.
financial

institutions subject

Notwithstanding the individual limits laid down in para-
graph 1, a UCITS may not combine:

— investments

in transferable

securities or money

market instruments issued by,

— deposits made with, and/or

— exposures arising from OTC derivative transactions

undertaken with

a single body in excess of 20 % of its assets.

first

The Member States may raise the 5 % limit

laid
3.
sentence of paragraph 1 to a
down in the
maximum of 35 % if
the transferable securities or
money market instruments are issued or guaranteed by
a Member State, by its local authorities, by a non-
member State or by public international bodies
to
which one or more Member States belong.

4. Member States may raise the 5 % limit laid down
in the first sentence of paragraph 1 to a maximum of
25 % in the case of certain bonds when these are issued
by a credit institution which has its registered office in
a Member State and is subject by law to special public
supervision designed to protect bond-holders. In partic-
ular, sums deriving from the issue of these bonds must
be invested in conformity with the law in assets which,
during the whole period of validity of the bonds, are
capable of covering claims attaching to the bonds and
which,
in the event of failure of the issuer, would be
used on a priority basis for the reimbursement of the
principal and payment of the accrued interest.

When a UCITS invests more than 5 % of its assets in
the bonds referred to in the first subparagraph and
these invest-
issued by one issuer,
ments may not exceed 80 % of the value of the assets
of the UCITS.

the total value of

The Member States shall send the Commission a list of
the aforementioned categories of bonds together with
the categories of issuers authorised,
in accordance with
the laws and supervisory arrangements mentioned in the
first subparagraph, to issue bonds complying with the
criteria set out above. A notice specifying the status of
the guarantees offered shall be attached to these lists.
The Commission shall
immediately forward that infor-
mation to the other Member States together with any
comments which it considers appropriate, and shall
make the information available to the public. Such

communications may be the subject of exchanges of
views within the Contact Committee in accordance with
the procedure laid down in Article 53(4).

The

transferable

and money market
securities
5.
instruments referred to in paragraphs 3 and 4 shall not
be taken into account for the purpose of applying the
limit of 40 % referred to in paragraph 2.

The limits provided for in paragraphs 1, 2, 3 and 4
may not be combined, and thus investments in transfer-
able securities or money market instruments issued by
the same body or in deposits or derivative instruments
in accordance with
made with this body carried out
paragraphs 1, 2, 3 and 4 shall under no circumstances
exceed in total 35 % of the assets of the UCITS.

Companies which are included in the same group for
the purposes of consolidated accounts, as defined in
accordance with Directive 83/349/EEC (*) or in accord-
ance with recognised international accounting rules, are
regarded as a single body for the purpose of calculating
the limits contained in this Article.

Member States may allow cumulative investment
transferable securities and money market
within the same group up to a limit of 20 %.

in
instruments

(*) Seventh Council Directive 83/349/EEC of 13 June
1983 based on the Article 54(3)(g) of the Treaty on
consolidated accounts (OJ L 193, 18.7.1983, p. 1).
Directive as last amended by the 1994 Act of Acces-
sion.’;

11. the following Article shall be inserted:

‘Article 22a

1. Without prejudice to the limits
laid down in
Article 25, the Member States may raise the limits laid
down in Article 22 to a maximum of 20 % for invest-
ment in shares and/or debt securities issued by the same
body when, according to the fund rules or instruments
of
investment
policy is to replicate the composition of a certain stock
or debt securities index which is recognised by the
competent authorities, on the following basis:

incorporation,

the aim of

the UCITS'

— its composition is sufficiently diversified,

— the index represents an adequate benchmark for the

market to which it refers,

— it is published in an appropriate manner.

2. Member States may raise the limit laid down in
paragraph 1 to a maximum of 35 % where that proves
to be justified by exceptional market conditions
in
particular in regulated markets where certain transferable
are highly
securities or money market
dominant. The investment up to this
is only
permitted for a single issuer.’;

instruments

limit

L 41/40

EN

Official Journal of the European Communities

13.2.2002

12.

in Article 23(1), the words ‘and money market instru-
ments’ shall be added after the words ‘transferable secur-
ities’;

13. Article 24 shall be replaced by the following:

‘Article 24

A UCITS may acquire the units of UCITS and/or
1.
other collective investment undertakings referred to in
Article 19(1)(e), provided that no more than 10 % of its
assets are invested in units of a single UCITS or other
collective investment undertaking. The Member States
may raise the limit to a maximum of 20 %.

Investments made in units of collective investment
in

2.
undertakings other
aggregate, 30 % of the assets of the UCITS.

than UCITS may not exceed,

The Member States may allow that, when a UCITS has
acquired units of UCITS and/or other collective invest-
ment undertakings, the assets of the respective UCITS or
other collective investment undertakings do not have to
be combined for the purposes of the limits laid down in
Article 22.

the

3. When a UCITS invests in the units of other UCITS
and/or other collective investment undertakings that are
managed, directly or by delegation, by
same
management company or by any other company with
which the management company is linked by common
management or control, or by a substantial direct or
indirect holding,
that management company or other
company may not charge subscription or redemption
fees on account of the UCITS's investment in the units
of such other UCITS and/or collective investment under-
takings.

disclose

prospectus

invests a substantial proportion of

in other UCITS and/or
in

its
A UCITS that
investment
collective
assets
the
its
shall
undertakings
maximum level of
fees that may be
the management
charged both to the UCITS itself and to the other
UCITS and/or
in
which it intends to invest. In its annual report it shall
indicate the maximum proportion of management fees
charged both to the UCITS itself and to the UCITS
and/or other collective investment undertaking in which
it invests.’;

investment undertakings

collective

14. the following Article shall be inserted:

‘Article 24a

transactions

The prospectus shall

1.
indicate in which categories
of assets a UCITS is authorised to invest.
shall
mention if
in financial derivative instru-
it must include a
ments are authorised;
prominent statement indicating if these operations may
be carried out for the purpose of hedging or with the
aim of meeting investment goals, and the possible
outcome of the use of
financial derivative instruments
on the risk profile.

in this event,

It

2. When a UCITS invests principally in any category
of assets defined in Article 19 other than transferable
securities and money market instruments or replicates a
stock or debt securities index in accordance with Article
its prospectus and, where necessary, any other
22a,
literature must include a prominent state-
promotional
ment drawing attention to the investment policy.

3. When the net asset value of a UCITS is likely to
have a high volatility due to its portfolio composition
techniques that may be
or the portfolio management
its prospectus and, where necessary, any other
used,
promotional
literature must include a prominent state-
ment drawing attention to this characteristic.

Upon request of an investor,

4.
the management
company must also provide supplementary information
relating to the quantitative limits that apply in the risk
management of the UCITS, to the methods chosen to
this end and to the recent evolution of the main instru-
ment categories' risks and yields.’;

15.

in Article 25(2):

1. the third indent shall be replaced by the following:

‘— 25 % of

the units of any single UCITS and/or
other collective investment undertaking within
the first and second indent of
the meaning of
Article 1(2),’;

2. the following indent shall be added:

‘— 10 % of

the money market

instruments of any

single issuing body,’;

16.

in Article 25(2), the second sentence shall be replaced
by the following:

‘The limits laid down in the second, third and fourth
indents may be disregarded at the time of acquisition if
at that time the gross amount of the debt securities or
of the money market instruments, or the net amount of
the securities in issue, cannot be calculated.’;

17.

in Article 25(3)(a),
instruments’
market
‘transferable securities’;

(b) and (c)

shall be added after

the words ‘and money
the words

18. Article 25(3)(e) shall be replaced by the following:

‘(e) shares held by an investment company or invest-
ment companies in the capital of subsidiary compa-
nies carrying on only the business of management,
advice or marketing in the
the
subsidiary is located, in regard to the repurchase of
units at unit-holders' request exclusively on its or
their behalf.’;

country where

19. Article 26(1) shall be replaced by the following:

UCITS need not comply with the limits laid down
‘1.
in this
section when exercising subscription rights
attaching to transferable securities or money market
instruments which form part of their assets.

13.2.2002

EN

Official Journal of the European Communities

L 41/41

risk
While ensuring observance of
spreading, the Member States may allow recently author-
ised UCITS to derogate from Articles 22, 22a, 23 and
24 for six months following the date of their author-
isation.’;

the principle of

20. Article 41(2) shall be replaced by the following:

‘2.
Paragraph 1 shall not prevent such undertakings
from acquiring transferable securities, money market
instruments or other financial instruments referred to in
(g) and (h) which are not fully paid.’;
Article 19(1)(e),

21. Article 42 shall be replaced by the following:

‘Article 42

Neither:

— an investment company, nor

— a management company or depositary acting on

behalf of a unit trust

may carry out uncovered sales of transferable securities,
money market
instru-
instruments or other
ments referred to in Article 19(1)(e), (g) and (h).’;

financial

22. after Article 53 the following Article shall be inserted:

‘Article 53a

1.
In addition to its functions provided for in Article
53(1), the Contact Committee may also meet as a Regu-
latory Committee within the meaning of Article 5 of
Decision 1999/468/EC (*)
the Commission in
regard to the technical modifications to be made to this
Directive in the following areas:

to assist

— clarification of

to ensure
uniform application of this Directive throughout the
Community,

the definitions in order

— alignment of terminology and the framing of defini-
tions in accordance with subsequent acts on UCITS
and related matters.

reference

2. Where
to this paragraph,
Articles 5 and 7 of Decision 1999/468/EC shall apply,
having regard to the provisions of Article 8 thereof.

is made

amended and proposals for amendments, where appropriate.
The report shall

in particular:

(a) analyse how to deepen and broaden the single market
in particular with regard to cross-border
for UCITS,
marketing of UCITS (including third-party funds),
the
functioning of the passport for management companies,
the functioning of the simplified prospectus as an infor-
mation and marketing tool, the review of the scope of
improved
ancillary activities and the possibilities
collaboration of supervisory authorities with respect
to
common interpretation and application of the Directive;

for

types of products (e.g.

the Directive in terms of how it
(b) review the scope of
applies to different
institutional
funds, real-estate funds, master-feeder funds and hedge
funds); the study should in particular focus on the size
of
the regulation, where
applicable, of these funds in the Member States and an
evaluation of the need for further harmonisation of these
funds;

for such funds,

the market

(c) evaluate the organisation of funds,

including the delega-
tion rules and practices and the relationship between
fund manager and depositary;

(d) review the investment rules for UCITS, for example the
use of derivatives and other instruments and techniques
relating to securities, the regulation of index funds, the
regulation of money market
the
regulation of ‘fund of fund’
investments, as well as the
various investment limits;

instruments, deposits,

(e) analyse the competitive situation between funds managed
by management companies and ‘self-managed’ investment
companies.

In preparing its report,
the Commission shall consult as
widely as possible with the various industries concerned and
with consumer groups and supervisory bodies.

2. Member States may grant UCITS existing on the date
of entry into force of this Directive a period of not more
than 60 months from that date in order to comply with the
new national

legislation.

The period provided for
1999/468/EC shall be set at three months.

in Article 5(6) of Decision

3.

The Committee shall adopt its rules of procedure.

Article 3

(*) OJ L 184, 17.7.1999, p. 23.’

Article 2

No later than 13 August 2003 Member States shall adopt
the laws, regulations and administrative provisions necessary
for them to comply with this Directive. They shall forthwith
inform the Commission thereof.

1.
No later than 13 February 2005, the Commission shall
forward to the European Parliament and the Council a
application of Directive 85/611/EEC as
report on the

They shall apply these measures no later than 13 February
2004.

L 41/42

EN

Official Journal of the European Communities

13.2.2002

adopt

they shall
When Member States
contain a reference to this Directive or shall be accompanied
by such reference on the occasion of their official publica-
tion. The methods of making such a reference shall be laid
down by the Member States.

these measures

This Directive is addressed to the Member States.

Article 5

Done at Brussels, 21 January 2002.

Article 4

For the European Parliament

For the Council

This Directive shall enter into force on the date of its publi-
cation in the Official Journal of the European Communities.

The President

P. COX

The President

M. ARIAS CAÑETE