Interpretative Communication from the Commission - Respective powers retained by the Home Member State and the Host Member State in the marketing of UCITS pursuant to Section VIII of the UCITS Directive
Date: 2007-03-19
Institutions: European Commission
Subjects: European Commission, domestic market, financial market, interpretation of the law, investment protection, investment transaction, securities

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.3.2007 
COM(2007) 112 final 

INTERPRETATIVE COMMUNICATION FROM THE COMMISSION 

Respective powers retained by the Home Member State and the Host Member State in 
the marketing of UCITS pursuant to Section VIII of the UCITS Directive 

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INTERPRETATIVE COMMUNICATION FROM THE COMMISSION 

Respective powers retained by the Home Member State and the Host Member State in 
the marketing of UCITS pursuant to Section VIII of the UCITS Directive 

Introduction 

(Text with EEA relevance) 

The UCITS Directive1 created the first European retail financial product. By harmonising the 
features  of  collective  investment  undertakings,  the  UCITS  Directive  paved  the  way  for 
effective cross-border competition and uniformly high level of protection of investors in the 
EU. The free marketing of UCITS in a Member State other than the one in which it is situated 
is based on the "notification" procedure2: a UCITS complying with the common basic rules3 
of the Directive can be authorised by its Home Member State authority. This authorisation to 
market UCITS units is valid in all Member States, subject to notification to the Host Member 
State authority in accordance with the procedure set out in Articles 44 to 46 of the Directive. 
The  Host  Member  State  authority  can  object  to  such  marketing  if  it  considers  that  the 
arrangements made for the marketing of the units do not comply with the local rules in force 
in the Host Member State which do not fall within the field governed by the Directive.  

The notification procedure has been widely availed of, with more than 29,000 notifications to 
date. However, difficulties have arisen in respect of its smooth functioning4. In particular, the 
formalities,  length  and  complexity  of  the  notification  procedure  may  vary  greatly  from  one 
Member  State  to  the  other.  If  some  of  these  variations  can  be  explained  by  different 
administrative  practices,  many  of  them  also  result  from  diverging  interpretations  of  the 
Directive.  

To  remedy  this  situation,  the  Commission  and  the  Committee  of  European  Securities 
regulators  (CESR)5  have  embarked  since  2004  on  a  series  of  initiatives6.  Diverging 

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Council  Directive  85/611/EEC  of  20  December  1985  on  the  coordination  of  laws,  regulations  and 
administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities 
(UCITS), OJ n°L375, 31.12.1985, p. 3, as amended (the "UCITS Directive" or the "Directive"). 
Sometimes  referred  to  as  the  "passport  procedure".  This  communication  focuses  on  the  notification 
procedure  applicable  to  the  marketing  cross-border  of  UCITS  units,  not  on  the  one  applicable  to 
management companies . 
See Recitals 4 & 5 of the Directive. 
See,  notably,  Commission  Green  paper  on  the  enhancement  of  the  legal  framework  for  investment 
funds,  COM  (2005)  314,  final,  14.7.2005,  and  European  Parliament  resolution  on  asset  management 
(2006/2037(INI)), 27.4.2006. 

Established under Commission decision 2001/527/EC of 6 June 2001, (OJ n° L191, 13.7.2001, p.43), 
CESR  acts  as  an  advisory  group  to  assist  the  European  Commission  in  the  securities  field.  It  also 
contributes  to  more  consistent  and  timely  implementation  of  EC-legislation  in  Member  States  by 
securing more effective cooperation between national supervisory authorities.  
cf CESR guidelines n°04/434b of 3 February 2005 for supervisors regarding the transitional provisions 
of  the  amending  UCITS  Directives  2001/107/EC  and  2001/108/EC,  draft  Commission  proposal  for  a 
comitology  instrument  clarifying  the  assets  eligible  for  investment  (under  discussion)  or  draft  CESR 
guidelines n°06/120b of 29 June 2006 to simplify the notification procedure of UCITS.. 

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interpretations  of  the  respective  responsibilities  of  the  Host  Member  State  and  the  Home 
Member State have been identified as a key factor contributing to legal uncertainty.  

To  remedy  this  situation,  the  Commission  believes  that  the  consequences  of  Article  44(1) 
setting  out  the  respective  responsibilities  of  the  Home  Member  State  and  the  Host  Member 
State need to be recalled. Article 44 (1) provides that: 

"A  UCITS  which  markets  its  units  in  another  Member  State  must  comply  with  the  laws, 
regulations and administrative provisions in force  in  that  State  which  do  not  fall  within  the 
field governed by this Directive.” 

Views differ as to the implications of this provision for the residual responsibility of the Host 
Member  State.  Through  this  Communication,  the  Commission  recalls  in  particular  the 
contents of the fields “governed” or reserved under the Directive to the responsibility of the 
Home  Member  State.  It  reaffirms  the  consequences  of  Article  44(1)  as  regards  the 
responsibility of the Host Member State.  

This  communication  does  not  create  any  right  or  obligation.  It  does  not  prejudge  the 
position that the Commission might decide to take on the same matters at a later stage in 
the light of further developments, including rulings from the European Court of Justice 
or the Court of First Instance.  

Executive summary 

•  The respective responsibilities of the Home Member State and the Host Member State in 
the context of the marketing of units of UCITS cross-border are laid down by Article 44(1) 
of the UCITS Directive: "A UCITS which markets its units in another Member State must 
comply  with  the  laws,  regulations  and  administrative  provisions  in  force  in  that  State 
which do not fall within the field governed by this Directive". 

•  The Home Member State field of responsibility under the UCITS Directive concerns: fund 
authorisation,  fund  structure,  management  and  investment  policies  and  compulsory 
information  to  be  supplied  to  the  unit  holders.  A  UCITS  complying  with  the  Home 
Member  State  rules  implementing  the  "basic  common  rules"  of  the  Directive  in  this 
reserved  field  shall  be  entitled  to  market  its  units  throughout  the  EU.  In  the  "reserved 
field", no additional rules, requirements or information requests originating from the Host 
Member State on the basis of its residual responsibility can be imposed. The Host Member 
State retains its responsibility outside this field. 

•  It is not possible to establish a definitive list of the areas which fall under the responsibility 
of the Host Member State. However, it is possible to identify distribution infrastructureand 
marketing techniques and channels as falling under the responsibility of the Host Member 
State. Facilities for making payments, repurchase / redemption of units of UCITS and for 
making  available  compulsory  investor  information  also  fall  under  the  review  of  the  Host 
authority (Article 45 of the UCITS Directive). 

•  To the extent that Host Member State requirements relate to functions or activities which 
are  not  undertaken  by  the  UCITS  management  company  itself,  but  which  instead  are 
carried out by third parties situated in the Host Member State and appointed by the UCITS, 
compliance  with  those  national  rules  is  to  be  required  in  a  first  instance  of  such  third 
parties.  

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1. 

RESPECTIVE  POWERS  OF  THE  HOME  MEMBER  STATE  AND  THE  HOST  MEMBER 
STATE PURSUANT TO ARTICLE 44 - GENERAL PRINCIPLES 

Pursuant  to  Article  44  (1)  of  the  Directive,  a  "UCITS  which  markets  its  units  in  another 
Member State must comply with the laws, regulations and administrative provisions in force 
in  that  State  which  do  not  fall  within  the  field  governed  by  [the  UCITS]  Directive".  In  the 
case of the notification procedure, the scope of the residual competence is reflected in Article 
46  of  the  Directive:  the  Host  Member  State  is  entitled  to  review  at  notification  stage  the 
compliance  of  a  UCITS  from  another  Member  State  with  the  laws,  regulations  and 
administrative  provisions  applicable  to  marketing  arrangements  falling  outside  the  field 
governed by the Directive.  

If Article 44(1) provides for the exclusive responsibility of the Host Member State outside the 
field governed by the Directive, it should also be interpreted to mean that the Host Member 
State should not use its residual powers to circumvent the rules and principles set out in the 
Directive, and notably those falling under the exclusive responsibility of the Home Member 
State. This is the case even though the provisions of the Directive are no more than common 
basic  rules.  This  principle  is  the  cornerstone  of  the  UCITS  notification  procedure  and  is 
widely recognized in EC internal market law7. A UCITS wishing to market its units in a Host 
Member State does not have to comply with Host Member States rules applicable in the field 
that the Directive reserves to the responsibility of the Home Member State. 

1.1. 

The field reserved to the responsibility of the Home Member State 

A  first  question  is:  what  does  the  "field  governed  by  the  Directive"  encompass?  More 
specifically, what is the field reserved to the responsibility of the Home Member State under 
the Directive? Recital 4 of the UCITS Directive mentions that one of its objectives is to set 
out  “common  basic  rules”  for  the  “authorisation,  supervision,  structure  and  activities  of 
collective  investment  undertakings  situated  in  the  Member  States  and  the  information  they 
must  publish”.  This  can  be  understood  as  the  "reserved  field".  In  a  more  detailed  way,  this 
field can also be summarized as follows: (i) fund authorisation (Section II of the Directive), 
(ii) fund structure (obligations regarding management companies and investment companies, 
obligations regarding the depositary) (Sections III, III(a), IV and IV(a) of the Directive), (iii) 
management  (operating  conditions,  obligations  concerning  investment  policies  and  eligible 
assets, general obligations such as prohibition of uncovered sales or limitations on borrowing) 
(same sections as for (ii), Section V and Section VII of the Directive), and (iv) compulsory 
information to be supplied to the unit-holders by the UCITS (Section VI)8.  

In  each  of  these  fields,  the  Host  Member  State  should  not  apply  to  a  UCITS  from  another 
Member  State  which  markets  its  units  in  its  territory,  the  rules  that  it  applies  to  a  UCITS 
registered  on  its  territory.  Recital  5  of  the  UCITS  Directive  makes  it  clear  that  "…The 
application  of  these  common  rules  is  a  sufficient  guarantee  to  permit  collective  investment 

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In  the  case  of  free  movement  of  television  programmes,  see  for  instance  ECJ  Joined  Cases  C  34/95, 
35/95 and 36/95, KO vs De Agostini and KO vs TV-Shop of 9 July 1997, notably paragraphs 55 to 62. 
In the case of Section VI, Article 33 and 35 of the Directive, which grant certain rights to investors as to 
access  to  compulsory  information,  are  outside  the  scope  of  this  communication,  as  they  apply  to  all 
investors, without distinguishing between those situated in the Home Member State and those situated 
in  the  Host  Member  State.  Accordingly  they  do  not  relate  to  the  respective  powers  retained  by  the 
Home Member State and the Host Member State. 

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undertakings situated in Member States…to market their units in other Member States without 
those  Member  States  being  able  to  subject  these  undertakings  to  any  provision  whatsoever 
other  than  provisions  which,  in  those  states,  do  not  fall  within  the  field  covered  by  this 
Directive  ".  As  a  consequence  of  the  above,  and  as  a  general  principle,  there  is  no  residual 
responsibility  of  the  Host  Member  State  in  the  field  that  the  Directive  reserves  to  the 
exclusive responsibility of the Home Member State9.  

1.2. 

The residual responsibility of the Host Member State 

A second question is: what are the Host Member State rules falling outside the reserved field 
which will be applicable to a foreign UCITS marketing its units in such Host Member State? 
On  the  basis  of  the  general  principles  set  out  in  Article  44(1),  it  is  not  possible  to  draw  a 
definitive list of such rules. However, it is possible to identify the following fields as falling 
under the responsibility of the Host Member State: 

•  Distribution infrastructure which should be in place before beginning to market the UCITS 
units.  In  certain  Member  States,  this  might  imply  the  use  of  a  duly  authorised  and/or 
supervised intermediary.  

•  Techniques and channels used to ensure that the UCITS units are ultimately subscribed to 
by  the  investor,  such  as  canvassing,  cold  calling,  direct  selling  via  the  internet  and  other 
forms of solicitation of the investor. For instance, if a Host Member State prohibits the use 
of  certain  techniques  for  UCITS  situated  on  its  territory,  this  can  also  be  imposed  on  a 
UCITS situated in another Member State. 

•  Advertising  (Article  44(2)10):  the  Host  Member  State  is  competent  to  determine  and 
enforce the rules applicable to the way a foreign UCITS is promoted to potential investors 
residing on its territory in view of subscription. 

•  Facilities for making payments to unit-holders, repurchase or redemption of units and for 
making available compulsory information on the UCITS to the unit-holders (Article 45). 

It  should  be  added  that  several  Host  Member  State  rules  falling  outside  the  field  reserved 
under  the  Directive  are  now  in  any  event  harmonised  at  EU  level.  This  includes  rules 
applicable  to  marketing  channels  and  techniques  (e-commerce  directive,  distance  marketing 
of  financial  products  directive),  consumer  protection  rules  (unfair  commercial  practices 
directive,  misleading  and  comparative  advertising)  and  MiFID11  provisions  on  marketing 
communications and other pre-contractual information. 

Once marketing has started in the Host Member State, UCITS will have to be compliant with 
all applicable Host Member State rules not falling within the reserved field. The consequences 

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The Directive expressly acknowledges potential exceptions to this principle in relation to certain items 
of information to be included in the full and the simplified prospectus, (cf paragraph 2.2. below). 
The fact that Article 44(2) is not expressly referred to under Article 46 does not mean that advertising 
does  not  fall within  the  scope of  the  review  to be undertaken  under  the  notification procedure by  the 
host Member State. Indeed, Article 44(2) is only an illustration of Article 44(1). 
Directive 2004/39/EC of 21 April 2004 on markets in financial instruments (the MiFID Directive) , OJ 
n° L145, 30.04.2004, p.1. 

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on UCITS management companies12 will vary, depending on the extent of their involvement 
in the marketing phase.  

Indeed,  to  the  extent  that  Host  Member  State  requirements  relate  to  functions  or  activities 
which are not undertaken by the UCITS management company, but which instead are carried 
out by third parties situated in that Member State, and appointed by the management company 
for the marketing of the units, compliance with those requirements is not to be required from 
the UCITS management company in the first instance. Using the examples of paragraph 1.1, 
Host  Member  State  compliance  requirements  over  marketing  techniques  or  payment  and 
repurchase of units are to be complied with by local entities undertaking such activities.  

Outside  the  field  reserved  to  the  responsibility  of  the  Home  Member  State,  the  UCITS 
management company may still be subject to certain compliance requirements even when it 
entrusts  a  third  party  with  the  marketing  of  its  units  in  a  Host  Member  State.  For  instance, 
using the examples of paragraph 1.1, a Host Member State authority can be entitled to require 
the management company to comply with certain standards for the choice of its local entity 
(such as a duly authorised and supervised intermediary). In the case of advertising campaigns 
organised  by  a  third  party  situated  in  the  Host  Member  State,  such  party  can  rely  on 
information  provided  by  the  management  company:  a  Host  Member  State  authority  may 
require  such  UCITS  management  company  to  provide,  say,  fair,  clear  and  not  misleading 
information on the UCITS to the local entity. 

Finally,  the  Directive  provides  expressly  in  Article  44(3)  that  the  Host  Member  State  rules 
governing  the  field  falling  outside  the  scope  of  the  Directive  should  be  applied  without 
discriminating between UCITS situated in the Home Member State and in the Host Member 
State.  In  addition,  it  is  settled  case  law  that  in  a  residual  field  of  responsibility  of  the  Host 
Member  State,  must  meet  certain  conditions  in  order  to  be  justified.  Specifically,  such 
restriction should not exceed what is “objectively necessary to this end”13 and should not go 
beyond what is necessary in order to attain it (“proportionality test”)14. In other words, when 
imposing restrictions on the freedom of establishment or on the freedom to provide services 
on the basis of investor protection, the relevant Host Member State has to demonstrate that the 
restriction is objectively necessary to attain investor protection and that the latter could not be 
achieved  by  less  stringent  rules15.  Hence  the  Host  Member  State  rules  falling  outside  the 
reserved field of the UCITS Directive are also subject to these general requirements16. 

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The  reference  in  Article  44(1)  to  "UCITS  which  markets  its  units…"  is  legally  correct  but  does  not 
correspond to economic reality. An UCITS does not constitute an autonomous decision-making centre, 
economically speaking the UCITS will not be performing marketing itself (one exception to this are self 
managed  UCITS).  Marketing  is  within  the  remit  of  the  UCITS  management  company,  and,  in  most 
cases, local intermediaries acting as third party distributors.  
Cf for instance ECJ C100/01, 26.11.2002, Oteiza Olazabal, ECJ C 192/01, 23.09.2003, Commission vs 
Denmark  and  ECJ  C  496/01,  11.03.2004,  Commission  vs  France,  and  ECJ  C  384/93,  10.05.1995, 
Alpine Investment BV. 
See equivalent interpretation in the case of freedom of movement of capital, ECJ C 174/04, 02.06.2005, 
Commission  vs  Italy,  para.  35.  See  also  Commission  communication  on  the  application  to  financial 
services of Article 3(4) to 3(6) of the electronic commerce directive, paragraph 2.2., COM(2003) 259, 
final, 14.5.2003. 
In the case of mortgage loans, see ECJ C 222/95, 09.07.1997, Parodi vs de Bary 
Cf in the case of cold calling in relation to financial services, see Alpine Investment BV, cited above. 

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2. 

CONSEQUENCES OF THESE PRINCIPLES – SOME EXAMPLES 

2.1. 

The full prospectus and the simplified prospectus 

In  the  case  of  compulsory  information  to  be  supplied  to  unit-holders,  (section  VI  of  the 
Directive),  the  information  provided  in  the  full  and  simplified  prospectus  falls  within  the 
reserved  field  covered  by  the  Directive.  Compliance  with  the  principles  set  out  in  the 
Directive shall be verified in the context of the Home Member State authorisation procedure. 
Such authorisation is sufficient to establish the conformity of these documents and the right to 
market the UCITS units in other Member States. The Host Member State should not request 
such information to be completed on the basis of its own rules. This general principle bears 
two  possible  exceptions  expressly  set  out  in  Article  45  and  48  of  the  UCITS  Directive  (cf 
paragraph 2.2 below). 

In  the  case  of  the  simplified  prospectus,  the  Directive  has  explicitly  provided  for  this 
principle.  The  simplified  prospectus  has  a  double  nature.  First,  compulsory  pre  contractual 
information  which  is  necessary  for  the  average  investor  to  be  able  to  make  an  informed 
judgement. Second, at the discretion of the management company, marketing tool, i.e. general 
information aimed at a potential customer. However, even if it is used as a marketing tool, this 
does not mean that the simplified prospectus falls under the residual responsibility of the Host 
Member  State.  Article  28(3)  is  explicit  in  this  respect,  restating  the  principle  set  out  in 
Paragraph 1. above: the simplified prospectus can be used as a marketing tool designed to be 
used  in  all  Member  States  "without  alteration  except  translation".  In  case  this  was  not 
sufficient,  Article  28(3)  adds:  "Member  States  may  therefore  not  require  any  further 
documents  or  additional  information  to  be  added".  Article  28(3)  does  not  exclude  the 
applicability of this principle to the full prospectus and the other information requirements set 
out in Section VI of the Directive.  

Some examples 

•  On  the  basis  of  local  advertising  rules,  a  Member  State  may  impose  additional  investor 
information  requirements  to  UCITS  situated  on  its  territory,  because  of  certain  of  their 
features.  This  can  be  the  case  when  a  UCITS  contains  a  guarantee  or  engages  in  certain 
types of investments which could be seen as entailing new or high level of investment risks 
by the Host Member State.  

In the case of UCITS situated in other Member States and marketing their units in such Host 
Member  State,  the  latter  should  refrain  from  imposing  any  amendment  or  additions  to  the 
contents  of  a  full  prospectus  or  a  simplified  prospectus  drafted  in  accordance  with  the 
common basic principles set out in the Directive17. These disclosure documents fall within the 
field reserved by the Directive, i.e. compulsory information to be supplied by the UCITS to 
the unit-holders. The reserved field covers in particular disclosure on UCITS risks, fees and 
costs18  (cf  Annex  I  of  the  Directive).  In  the  case  of  an  authorised  UCITS,  compliance  with 

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In  whatever  form,  for  instance  by  way  of  a  direct  amendment,  request  of  additional  information  or 
further documents. 
A distinction should be made between disclosures of cost and fees in relation to the UCITS itself, which 
fall  under  the  exclusive  competence  of  the  Home  Member  State  and  disclosure  of  cost  and  fees  in 
relation to the provision of services by third parties, such as distributors, which are not covered by the 
Directive. This is reflected in Article 34 of Directive 2006/73/EC of 10 August 2006 implementing the 
MiFID Directive (OJ n°L241, 2.9.2006, p.26). 

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such requirements has already been dealt with by the Home Member State and should not be 
subject to a second review at Host Member State level19.  

On the distinction between advertising and compulsory information, the information that the 
UCITS is required to provide to its unit-holders under the Directive should not be confused 
with  the  information  that  is  supplied  as  part  of  a  "marketing  campaign"  (e.g.  leaflets, 
brochures, advertising campaign) and which can be characterised as "advertising". In the first 
case,  the  field  of  compulsory  information  is  reserved  by  the  Directive  to  the  sole 
responsibility of the Home Member State (Article 44(1)). In the second case, the advertising 
field is not dealt with by the Directive and falls under the responsibility of the Host Member 
State.  If  an  advertisement  at  the  initiative  of  a  UCITS  management  company  from  another 
Member State can thus be modified at the request of the Host Member State, this possibility 
does not extend to the compulsory information, which is subject to the Home Member State 
responsibility. 

•  A  simplified  prospectus  drafted  in  accordance  with  the  common  basic  principles  of  the 
Directive  from  a  UCITS  authorised  by  its  Home  Member  State  authority  cannot  be 
reviewed, challenged or questioned by the Host Member State, even where it has not been 
subject  to  a  formal  approval  procedure  by  the  Home  Member  State  authority.  The 
attestation from the Home Member State that the UCITS fulfils the conditions imposed by 
the Directive, is sufficient in this respect. 

•  On the basis of Article 47 paragraph 2, a Host Member State may check the translation of 
the  full  and  simplified  prospectuses,  the  annual  and  half  yearly  reports  and  of  the  other 
information provided for in Article 29 and 30. 

2.2. 

Exceptions  to  the  principle  of  the  reserved  field  in  relation  to  the  full  and 
simplified prospectuses 

•  The Directive expressly states in its Article 45 that a UCITS wishing to market its units in 
another  Member  State  shall  take  in  accordance  with  the  laws,  regulations  and 
administrative  provisions  in  force  in  the  Host  Member  State  "the  measures  necessary  to 
ensure  that  facilities  are  available  in  that  State  for  making  payments  to  unit-holders, 
repurchasing or redeeming units and making available the information20 which UCITS are 
obliged to provide ". On the other hand, Schedule A, point 4 of the Directive states that the 
full  prospectus  should  contain  "information  concerning  the  arrangements  for  making 
payment  to  unit-holders,  repurchasing  or  redeeming  units  and  making  information 
available  concerning  the  UCITS".  Similarly,  Schedule  C  of  the  Directive  states  that  the 
simplified  prospectus  should  provide  information  on  "how  to  sell  the  units",  "when  and 
how dividends on units or shares of the UCITS are to be distributed". As acknowledged in 
Article 45 and 46 of the Directive, a Host Member State would be competent to review the 
compliance  of  such  information  with  its  local  rules  as  far  as  it  is  addressed  to  investors 
located on its territory. 

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Cf in a comparable situation ECJ Joined Cases C 34/95, 35/95 and 36/95, KO vs De Agostini and KO vs 
TV-Shop of 9 July 1997, cited above.  
On the respective competence of the Home and the Host Member State on the provision of compulsory 
information to investors, see paragraph 2.4 below. 

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•  Similarly,  article  48  of  the  Directive  entitles  the  UCITS  to  use  the  same  generic  name 
(such as "investment company" or "investment trust") in the Host Member State as in its 
Home Member State. Article 48 expressly entitles the Host Member State to impose on the 
UCITS  to  add  to  its  generic  name  certain  explanatory  particulars  for  the  purpose  of 
clarification. This is allowed only if there is a risk of confusion, but by no means does this 
imply a faculty to challenge its generic name. 

2.3. 

Possible restrictions on the marketing of certain products  

On the basis of the principle set out in paragraph 1 above, it would not be possible for a Host 
Member State to use its residual responsibility to prevent the marketing of units of an UCITS 
originating  from  other  Member  States  because  its  features  would  be  deemed  not  compliant 
with  the  requirements  of  the  Directive,  which  designs  an  investment  product  for  the  retail 
investor (for instance by deciding that such UCITS is not appropriate for retail investors). For 
the  Host  Member  State,  this  would  amount  to  challenge  the  authorisation  granted  by  the 
Home Member  State, which falls under the  reserved field.  The Home Member State is sole 
responsible  to  determine  whether  a  product  complies  or  not  with  the  requirements  of  the 
UCITS Directive. Once such compliance has been established, the Host Member State cannot 
review its merits on the basis of its residual responsibility. 

2.4. 

Notification procedure 

The notification procedure and in particular the information to be provided by the UCITS to 
the Host Member State authority pursuant to Article 46 is part of the "reserved field" of the 
Directive.  Accordingly,  a  UCITS  providing  the  information  requested  under  Article  46 
(attestation, fund rules or instruments of incorporation, full  and simplified prospectus,  latest 
annual  report  and  subsequent  half  yearly  report,  as  the  case  may  be  and  details  of  the 
marketing arrangements) should not be asked for additional documents or information by the 
Host  Member  State  authority  on  the  basis  of  rules  applicable  in  the  Host  Member  State. 
However,  there  is  an  exception  provided  for  in  Article  46,  as  the  Host  Member  State  is 
expressly  entitled  under  the  Directive  to  check  the  compliance  of  the  arrangements  for  the 
marketing of the units with applicable Host Member State rules pursuant to Articles 44(1) and 
45, within the limits set out in paragraph 1 above. 

Conclusion 

The  residual  responsibility  of  the  Host  Member  State  over  the  rules  applicable  to  the  fields 
falling outside the scope of the UCITS Directive does not mean that the Host Member State 
has  a  "licence"  to  impose  additional  rules  on  UCITS  from  other  Member  States  notified  to 
market its units on its territory. A key principle is that such rules should not encroach on the 
exclusive  responsibility  of  the  Home  Member  State  as  established  under  the  terms  of  the 
Directive.  

The  impact  of  any  residual  responsibility  of  the  Host  Member  State  relating  to  the  UCITS 
management  company  must  also  be  assessed  with  regard  to  the  way  the  UCITS  actually 
markets its units. Management companies often use third parties to carry out the distribution 
of  their  UCITS  in  Host  Member  States.  In  addition,  the  residual  responsibility  of  the  Host 
Member State is also circumscribed by the fact that rules falling outside the reserved field are 
more and more harmonised at EU level. 

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Notwithstanding that a Host State does not have the right to impose additional disclosures on 
the  risk  profile  of  an  UCITS  under  the  Directive,  a  possible  common  approach  on 
strengthened disclosures is currently under review following the issuance of the Commission 
White Paper on the enhancement of the EU framework for investment funds. In the meantime, 
the  Commission  recalls  the  need  to  comply  with  and  respect  the  principles  set  out  in  the 
UCITS Directive.  

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