Article 1 
1. This Directive applies to undertakings for collective investment in transferable securities (UCITS) established within the territories of the Member States. 2. For the purposes of this Directive, and subject to Article 3, UCITS means an undertaking: (a) with the sole object of collective investment in transferable securities or in other liquid financial assets referred to in Article 50(1) of capital raised from the public and which operate on the principle of risk-spreading; and (b) with units which are, at the request of holders, repurchased or redeemed, directly or indirectly, out of those undertakings’ assets. Action taken by a UCITS to ensure that the stock exchange value of its units does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption. Member States may allow UCITS to consist of several investment compartments. 3. The undertakings referred to in paragraph 2 may be constituted in accordance with contract law (as common funds managed by management companies), trust law (as unit trusts), or statute (as investment companies). For the purposes of this Directive: (a) ‘common funds’ shall also include unit trusts; (b) ‘units’ of UCITS shall also include shares of UCITS. 4. Investment companies, the assets of which are invested through the intermediary of subsidiary companies, mainly other than in transferable securities, shall not be subject to this Directive. 5. The Member States shall prohibit UCITS which are subject to this Directive from transforming themselves into collective investment undertakings which are not covered by this Directive. 6. Subject to the provisions in Community law governing capital movements and subject to Articles 91 and 92 and the second subparagraph of Article 108(1), no Member State shall apply any other provisions in the field covered by this Directive to UCITS established in another Member State or to the units issued by such UCITS, where those UCITS market their units within the territory of that Member State. 7. Without prejudice to this Chapter, a Member State may apply to UCITS established within its territory requirements which are stricter than or additional to those laid down in this Directive, provided that they are of general application and do not conflict with the provisions of this Directive.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 1 ):
1. This Directive applies to undertakings for collective investment in transferable securities (UCITS) established within the territories of the Member States. For the purposes of this Directive, and subject to Article 3, UCITS means an undertaking: (a) with the sole object of collective investment in transferable securities or in other liquid financial assets referred to in Article 50(1) of capital raised from the public and which operate on the principle of risk-spreading; and (b) with units which are, at the request of holders, repurchased or redeemed, directly or indirectly, out of those undertakings’ assets. Action taken by a UCITS to ensure that the stock exchange value of its units does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption. Member States may allow UCITS to consist of several investment compartments. 3. The undertakings referred to in paragraph 2 may be constituted in accordance with contract law (as common funds managed by management companies), trust law (as unit trusts), or statute (as investment companies). For the purposes of this Directive: (a) ‘common funds’ shall also include unit trusts; (b) ‘units’ of UCITS shall also include shares of UCITS. The undertakings referred to in paragraph 2 may be constituted in accordance with contract law (as common funds managed by management companies), trust law (as unit trusts), or statute (as investment companies). For the purposes of this Directive: (a) ‘common funds’ shall also include unit trusts; (b) ‘units’ of UCITS shall also include shares of UCITS. 4. Investment companies, the assets of which are invested through the intermediary of subsidiary companies, mainly other than in transferable securities, shall not be subject to this Directive. 5. The Member States shall prohibit UCITS which are subject to this Directive from transforming themselves into collective investment undertakings which are not covered by this Directive. 6. Subject to the provisions in Community law governing capital movements and subject to Articles 91 and 92 and the second subparagraph of Article 108(1), no Member State shall apply any other provisions in the field covered by this Directive to UCITS established in another Member State or to the units issued by such UCITS, where those UCITS market their units within the territory of that Member State. 7. Without prejudice to this Chapter, a Member State may apply to UCITS established within its territory requirements which are stricter than or additional to those laid down in this Directive, provided that they are of general application and do not conflict with the provisions of this Directive.
Article 2 
1. For the purposes of this Directive the following definitions apply: (a) ‘depositary’ means an institution entrusted with the duties set out in Articles 22 and 32 and subject to the other provisions laid down in Chapter IV and Section 3 of Chapter V; (b) ‘management company’ means a company, the regular business of which is the management of UCITS in the form of common funds or of investment companies (collective portfolio management of UCITS); (c) ‘management company’s home Member State’ means the Member State in which the management company has its registered office; (d) ‘management company’s host Member State’ means a Member State, other than the home Member State, within the territory of which a management company has a branch or provides services; (e) ‘UCITS home Member State’ means the Member State in which the UCITS is authorised pursuant to Article 5; (f) ‘UCITS host Member State’ means a Member State, other than the UCITS home Member State, in which the units of the UCITS are marketed; (g) ‘branch’ means a place of business which is a part of the management company, which has no legal personality and which provides the services for which the management company has been authorised; (h) ‘competent authorities’ means the authorities which each Member State designates under Article 97; (i) ‘close links’ means a situation in which two or more natural or legal persons are linked by either: (i) ‘participation’, which means the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; or (ii) ‘control’, which means the relationship between a ‘parent undertaking’ and a ‘subsidiary’, as defined in Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts ( 10 ) and in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; (i) ‘close links’ means a situation in which two or more natural or legal persons are linked by either: (i) ‘participation’, which means the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; or (ii) ‘control’, which means the relationship between a ‘parent undertaking’ and a ‘subsidiary’, as defined in Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts ( 10 ) and in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; (j) ‘qualifying holding’ means a direct or indirect holding in a management company which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists; (k) ‘initial capital’ means the funds as referred to in Article 57(a) and (b) of Directive 2006/48/EC; (l) ‘own funds’ means own funds as referred to in Title V, Chapter 2, Section 1 of Directive 2006/48/EC; (m) ‘durable medium’ means an instrument which enables an investor to store information addressed personally to that investor in a way that is accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored; (n) ‘transferable securities’ means: (i) shares in companies and other securities equivalent to shares in companies (shares); (ii) bonds and other forms of securitised debt (debt securities); (iii) any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange; (n) ‘transferable securities’ means: (i) shares in companies and other securities equivalent to shares in companies (shares); (ii) bonds and other forms of securitised debt (debt securities); (iii) any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange; (o) ‘money market instruments’ means instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time; (p) ‘mergers’ means an operation whereby: (i) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (ii) two or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to a UCITS which they form or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (iii) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, which continue to exist until the liabilities have been discharged, transfer their net assets to another investment compartment of the same UCITS, to a UCITS which they form or to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’; (p) ‘mergers’ means an operation whereby: (i) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (ii) two or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to a UCITS which they form or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (iii) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, which continue to exist until the liabilities have been discharged, transfer their net assets to another investment compartment of the same UCITS, to a UCITS which they form or to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’; (q) ‘cross-border merger’ means a merger of UCITS: (i) at least two of which are established in different Member States; or (ii) established in the same Member State into a newly constituted UCITS established in another Member State; (q) ‘cross-border merger’ means a merger of UCITS: (i) at least two of which are established in different Member States; or (ii) established in the same Member State into a newly constituted UCITS established in another Member State; (r) ‘domestic merger’ means a merger between UCITS established in the same Member State where at least one of the involved UCITS has been notified pursuant to Article 93. 2. For the purposes of paragraph 1(b), the regular business of a management company shall include the functions referred to in Annex II. 3. For the purposes of paragraph 1(g), all the places of business established in the same Member State by a management company with its head office in another Member State shall be regarded as a single branch. 4. For the purposes of point (i)(ii) of paragraph 1, the following shall apply: (a) a subsidiary undertaking of a subsidiary undertaking shall also be considered to be a subsidiary of the parent undertaking which is at the head of those undertakings; (b) situations in which two or more natural or legal persons are permanently linked to the same person by a control relationship shall also be regarded as constituting a close links between such persons. 5. For the purposes of paragraph 1(j), the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market ( 11 ) shall be taken into account. 6. For the purposes of paragraph 1(l), Articles 13 to 16 of Directive 2006/49/EC shall apply mutatis mutandis . 7. For the purposes of paragraph 1(n), transferable securities shall exclude the techniques and instruments referred to in Article 51.
Amendment rationale: Context of the proposal 1.1. General Since the UCITS Directive was adopted in 1985, the rules relating to depositaries in the Directive have remained unchanged: they consist of a number of generic principles setting out the duties of depositaries. The principal UCITS rule is that all assets of a UCITS fund must be entrusted to a depositary. This depositary shall, in accordance with national law, be liable for losses suffered as a result of a failure to perform its duties. The UCITS Directive, apart from employing a negligence-based standard, makes reference to national laws in respect of the precise contours of these duties. This reference leaves considerable scope for diverging interpretations regarding the scope of a depositary's duties and the liability for the negligent performance thereof. As a result, different approaches have developed across the European Union, leading to UCITS investors facing uneven levels of protection in different jurisdictions. The potential consequences of national divergences in the liability standard came to the fore following the Lehman bankruptcy[1] and the Madoff fraud. In particular, the consequences of the Madoff fraud have been particularly acute in some EU Member States. In one instance, a particular fund that acted as a feeder fund for Madoff lost around € 1.4 billion. The large scale of the Madoff fraud essentially went undetected for a long period because the depositary had delegated custody of the assets to an entity run by Bernard Madoff, the US broker "Bernard Madoff Investment Securities". At the same time, Bernard Madoff was also the manager and broker responsible for purchasing financial instruments on behalf of the fund. The Madoff case raised several important issues in relation to UCITS funds. First, it raises the question of the precise conditions under which a depositary acting on behalf of a UCITS fund can delegate safekeeping of assets to a sub-custodian? The current UCITS Directive is silent on the precise conditions under which custody may be delegated. The Madoff case also raises the issue of conflicts of interest. More particularly, to what extent should the manager of an investment fund be allowed to belong to the same corporate group as the sub-custodian to whom custody has been delegated? Can it really be expected that a fund manager will always behave in a manner conducive to protecting the interests of a fund's investors where the manager is also the sub-custodian of the assets they invest in? In respect of conflicts of interests that may arise in relation to the independence of the depositary, the UCITS Directive is limited to stipulating the general principle that a company cannot manage a UCITS fund and also act as its depositary. The UCITS Directive contains no rule to cover the conflicts of interest that may arise in case the management function and the depositary functions are delegated to one and the same third party. Finally, the Madoff case has also revealed general uncertainties within the UCITS framework, especially in relation to the principal custodian's liability in case of delegation of custody to a sub-custodian. The issue of liability in case of delegation, in the absence of hard and fast rules in the relevant UCITS Directive, is dealt with differently in individual Member States. The Madoff case brought to the fore an essential development in the UCITS sphere: while the UCITS provisions on depositaries have remained unchanged, the investment environment for UCITS has evolved. UCITS are now able to invest in a wider range of financial assets, which may be more complex and also may be issued and held in custody outside the EU (for instance, in emerging markets); fund portfolios are increasingly diverse and international. As a consequence, holding assets through sub-custody arrangements, so as to match the fund's investment strategies, have become increasingly common. The Madoff fraud has shown that the risks associated with the use of delegated sub-custody networks are not always negligible. Assets can be lost at the level of the sub-custodian, which might include loss through fraud committed by the sub-custodian, negligence of the sub-custodian or the bankruptcy of the sub-custodian. Under the current UCITS framework, it is unclear what duties a depositary has in the selection and the oversight of the sub-custodian. As a result, there is a legal uncertainty to what extent a depositary is liable for losses at sub-custodian level. It must be noted that on 12 July 2010 the Commission proposed the extension of investor compensation schemes to cover investors in UCITS. The amendments to Directive 97/9/EC aimed to cover situations where a depositary is liable for the loss of assets of UCITS but is not able to cover its liabilities. This should serve as an additional means to increase the protection for investors in UCITS. However, at this stage this proposal has not been accepted by the Council and is subject to further negotiations. In addition, the financial crisis also revealed that the remuneration and incentive schemes commonly applied within financial institutions were themselves exacerbating the impact and scale of the crisis. Remuneration policies contributed to short-term decision making and created incentives for taking excessive risk. Finally, the analysis of national sanctioning regimes carried out by the Commission, along with the Committees of Supervisors (now transformed into European Supervisory Authorities) has shown a number of divergences and weaknesses which may have a negative impact on the proper application of EU legislation, the effectiveness of financial supervision, and ultimately on competition, stability and integrity of financial markets and consumer protection. Therefore, in its Communication of 9 December 2010 "Reinforcing sanctioning regimes in the financial sector"[2] the Commission suggested setting EU minimum common standards on certain key issues, in order to promote convergence and reinforcement of national sanctioning regimes. The Commission has included such common rules, adapted to the specifics of the sectors concerned, in all its recent proposals for the review of the sectoral EU legislation concerned (CRD IV, MiFID, Market Abuse Directive, Transparency Directive). Extending this work to the UCITS framework is a natural additional step in this process. This proposal forms part of a wider legislative package dedicated to rebuilding consumer trust in financial markets. The package has two other parts. The first is an extensive overhaul of the Insurance Mediation Directive 2002/92/EC to ensure that customers benefit from a high level of protection when buying insurance products. The final part of the package aims at improving transparency in the investment market for retail investors (a proposal for a Regulation on key information documents for investment products).
Revised version (Article 2 ):
1. For the purposes of this Directive the following definitions apply: (a) ‘depositary’ means an institution entrusted with the duties set out in Articles 22 and 32 and subject to the other provisions laid down in Chapter IV and Section 3 of Chapter V; (b) ‘management company’ means a company, the regular business of which is the management of UCITS in the form of common funds or of investment companies (collective portfolio management of UCITS); (c) ‘management company’s home Member State’ means the Member State in which the management company has its registered office; (d) ‘management company’s host Member State’ means a Member State, other than the home Member State, within the territory of which a management company has a branch or provides services; (e) ‘UCITS home Member State’ means the Member State in which the UCITS is authorised pursuant to Article 5; (f) ‘UCITS host Member State’ means a Member State, other than the UCITS home Member State, in which the units of the UCITS are marketed; (g) ‘branch’ means a place of business which is a part of the management company, which has no legal personality and which provides the services for which the management company has been authorised; (h) ‘competent authorities’ means the authorities which each Member State designates under Article 97; (i) ‘close links’ means a situation in which two or more natural or legal persons are linked by either: (i) ‘participation’, which means the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; or (ii) ‘control’, which means the relationship between a ‘parent undertaking’ and a ‘subsidiary’, as defined in Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts ( 10 ) and in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; (i) ‘close links’ means a situation in which two or more natural or legal persons are linked by either: (i) ‘participation’, which means the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; or (ii) ‘control’, which means the relationship between a ‘parent undertaking’ and a ‘subsidiary’, as defined in Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts ( 10 ) and in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; (j) ‘qualifying holding’ means a direct or indirect holding in a management company which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists; (k) ‘initial capital’ means the funds as referred to in Article 57(a) and (b) of Directive 2006/48/EC; (l) ‘own funds’ means own funds as referred to in Title V, Chapter 2, Section 1 of Directive 2006/48/EC; (m) ‘durable medium’ means an instrument which enables an investor to store information addressed personally to that investor in a way that is accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored; (n) ‘transferable securities’ means: (i) shares in companies and other securities equivalent to shares in companies (shares); (ii) bonds and other forms of securitised debt (debt securities); (iii) any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange; (n) ‘transferable securities’ means: (i) shares in companies and other securities equivalent to shares in companies (shares); (ii) bonds and other forms of securitised debt (debt securities); (iii) any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange; (o) ‘money market instruments’ means instruments normally dealt in on the money market which are liquid and have a value which can be accurately determined at any time; (p) ‘mergers’ means an operation whereby: (i) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (ii) two or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to a UCITS which they form or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (iii) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, which continue to exist until the liabilities have been discharged, transfer their net assets to another investment compartment of the same UCITS, to a UCITS which they form or to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’; (p) ‘mergers’ means an operation whereby: (i) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (ii) two or more UCITS or investment compartments thereof, the ‘merging UCITS’, on being dissolved without going into liquidation, transfer all of their assets and liabilities to a UCITS which they form or an investment compartment thereof, the ‘receiving UCITS’, in exchange for the issue to their unit-holders of units of the receiving UCITS and, if applicable, a cash payment not exceeding 10 % of the net asset value of those units; (iii) one or more UCITS or investment compartments thereof, the ‘merging UCITS’, which continue to exist until the liabilities have been discharged, transfer their net assets to another investment compartment of the same UCITS, to a UCITS which they form or to another existing UCITS or an investment compartment thereof, the ‘receiving UCITS’; (q) ‘cross-border merger’ means a merger of UCITS: (i) at least two of which are established in different Member States; or (ii) established in the same Member State into a newly constituted UCITS established in another Member State; (q) ‘cross-border merger’ means a merger of UCITS: (i) at least two of which are established in different Member States; or (ii) established in the same Member State into a newly constituted UCITS established in another Member State; (r) ‘domestic merger’ means a merger between UCITS established in the same Member State where at least one of the involved UCITS has been notified pursuant to Article 93; (s) ‘management body’ means the body with ultimate decision-making authority in a management company, investment company or depositary, comprising the supervisory and the managerial functions, or only the managerial function if the two functions are separated. Where, according to national law, the management company, investment company or depositary has in place different bodies with specific functions, the requirements laid down in this Directive directed at the management body or at the management body in its supervisory function shall also, or shall instead, apply to those members of other bodies of the management company, investment company or depositary to whom the applicable national law assigns the respective responsibility; (t) ‘financial instrument’ means a financial instrument specified in Section C of Annex I to Directive 2014/65/EU of the European Parliament and of the Council ( 11 ). 2. For the purposes of paragraph 1(b), the regular business of a management company shall include the functions referred to in Annex II. 3. For the purposes of paragraph 1(g), all the places of business established in the same Member State by a management company with its head office in another Member State shall be regarded as a single branch. 4. For the purposes of point (i)(ii) of paragraph 1, the following shall apply: (a) a subsidiary undertaking of a subsidiary undertaking shall also be considered to be a subsidiary of the parent undertaking which is at the head of those undertakings; (b) situations in which two or more natural or legal persons are permanently linked to the same person by a control relationship shall also be regarded as constituting a close links between such persons. 5. For the purposes of paragraph 1(j), the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market ( 12 ) shall be taken into account. 6. For the purposes of paragraph 1(l), Articles 13 to 16 of Directive 2006/49/EC shall apply mutatis mutandis . 7. For the purposes of paragraph 1(n), transferable securities shall exclude the techniques and instruments referred to in Article 51.
Article 3 
The following undertakings are not subject to this Directive: (a) collective investment undertakings of the closed-ended type; (b) collective investment undertakings which raise capital without promoting the sale of their units to the public within the Community or any part of it; (c) collective investment undertakings the units of which, under the fund rules or the instruments of incorporation of the investment company, may be sold only to the public in third countries; (d) categories of collective investment undertakings prescribed by the regulations of the Member States in which such collective investment undertakings are established, for which the rules laid down in Chapter VII and Article 83 are inappropriate in view of their investment and borrowing policies.
Article 4 
For the purposes of this Directive, a UCITS shall be deemed to be established in its home Member State.
Article 5 
1. No UCITS shall pursue activities as such unless it has been authorised in accordance with this Directive. Such authorisation shall be valid for all Member States. 2. A common fund shall be authorised only if the competent authorities of its home Member State have approved the application of the management company to manage that common fund, the fund rules and the choice of depositary. An investment company shall be authorised only if the competent authorities of its home Member State have approved both its instruments of incorporation and the choice of depositary, and, where relevant, the application of the designated management company to manage that investment company. 3. Without prejudice to paragraph 2, if the UCITS is not established in the management company’s home Member State, the competent authorities of the UCITS home Member State shall decide, on the application of the management company, to manage the UCITS pursuant to Article 20. Authorisation shall not be subject either to a requirement that the UCITS be managed by a management company having its registered office in the UCITS home Member State or that the management company pursue or delegate any activities in the UCITS home Member State. 4. The competent authorities of the UCITS home Member State shall not authorise a UCITS if: (a) they establish that the investment company does not comply with the preconditions laid down in Chapter V; or (b) the management company is not authorised for the management of UCITS in its home Member State. Without prejudice to Article 29(2), the management company or, where applicable, the investment company, shall be informed, within two months of the submission of a complete application, whether or not authorisation of the UCITS has been granted. The competent authorities of the UCITS home Member State shall not authorise a UCITS if the directors of the depositary are not of sufficiently good repute or are not sufficiently experienced also in relation to the type of UCITS to be managed. To that end, the names of the directors of the depositary and of every person succeeding them in office shall be communicated forthwith to the competent authorities. Directors shall mean those persons who, under the law or the instruments of incorporation, represent the depositary, or who effectively determine the policy of the depositary. 5. The competent authorities of the UCITS home Member State shall not grant authorisation if the UCITS is legally prevented (for example, through a provision in the fund rules or instruments of incorporation) from marketing its units in its home Member State. 6. Neither the management company nor the depositary shall be replaced, nor shall the fund rules or the instruments of incorporation of the investment company be amended, without the approval of the competent authorities of the UCITS home Member State. 7. The Member States shall ensure that complete information on the laws, regulations and administrative provisions implementing this Directive which relate to the constitution and functioning of the UCITS are easily accessible at a distance or by electronic means. Member States shall ensure that such information is available at least in a language customary in the sphere of international finance, provided in a clear and unambiguous manner, and kept up to date. 8. In order to ensure consistent harmonisation of this Article the European Supervisory Authority (European Securities and Markets Authority) (hereinafter ‘ESMA’), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council ( 12 ) may develop draft regulatory technical standards to specify the information to be provided to the competent authorities in the application for authorisation of a UCITS. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 5 ):
1. No UCITS shall pursue activities as such unless it has been authorised in accordance with this Directive. Such authorisation shall be valid for all Member States. No UCITS shall pursue activities as such unless it has been authorised in accordance with this Directive. Such authorisation shall be valid for all Member States. 2. A common fund shall be authorised only if the competent authorities of its home Member State have approved the application of the management company to manage that common fund, the fund rules and the choice of depositary. An investment company shall be authorised only if the competent authorities of its home Member State have approved both its instruments of incorporation and the choice of depositary, and, where relevant, the application of the designated management company to manage that investment company. 3. Without prejudice to paragraph 2, if the UCITS is not established in the management company’s home Member State, the competent authorities of the UCITS home Member State shall decide, on the application of the management company, to manage the UCITS pursuant to Article 20. Authorisation shall not be subject either to a requirement that the UCITS be managed by a management company having its registered office in the UCITS home Member State or that the management company pursue or delegate any activities in the UCITS home Member State. The competent authorities of the UCITS home Member State shall not authorise a UCITS if: (a) they establish that the investment company does not comply with the preconditions laid down in Chapter V; or (b) the management company is not authorised for the management of UCITS in its home Member State. Without prejudice to Article 29(2), the management company or, where applicable, the investment company, shall be informed, within two months of the submission of a complete application, whether or not authorisation of the UCITS has been granted. The competent authorities of the UCITS home Member State shall not authorise a UCITS if the directors of the depositary are not of sufficiently good repute or are not sufficiently experienced also in relation to the type of UCITS to be managed. To that end, the names of the directors of the depositary and of every person succeeding them in office shall be communicated forthwith to the competent authorities. Directors shall mean those persons who, under the law or the instruments of incorporation, represent the depositary, or who effectively determine the policy of the depositary. 5. The competent authorities of the UCITS home Member State shall not grant authorisation if the UCITS is legally prevented (for example, through a provision in the fund rules or instruments of incorporation) from marketing its units in its home Member State. 6. Neither the management company nor the depositary shall be replaced, nor shall the fund rules or the instruments of incorporation of the investment company be amended, without the approval of the competent authorities of the UCITS home Member State. 7. The Member States shall ensure that complete information on the laws, regulations and administrative provisions implementing this Directive which relate to the constitution and functioning of the UCITS are easily accessible at a distance or by electronic means. Member States shall ensure that such information is available at least in a language customary in the sphere of international finance, provided in a clear and unambiguous manner, and kept up to date. 8. In order to ensure consistent harmonisation of this Article the European Supervisory Authority (European Securities and Markets Authority) (hereinafter ‘ESMA’), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council ( 4 ) may develop draft regulatory technical standards to specify the information to be provided to the competent authorities in the application for authorisation of a UCITS. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure consistent harmonisation of this Article the European Supervisory Authority (European Securities and Markets Authority) (hereinafter ‘ESMA’), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council ( 4 ) may develop draft regulatory technical standards to specify the information to be provided to the competent authorities in the application for authorisation of a UCITS. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 6 
1. Access to the business of management companies shall be subject to prior authorisation to be granted by the competent authorities of the management company’s home Member State. Authorisation granted under this Directive to a management company shall be valid for all Member States. ESMA shall be notified of every authorisation granted and shall publish and keep up-to-date a list of authorised management companies on its website. 2. No management company shall engage in activities other than the management of UCITS authorised under this Directive, with the exception of the additional management of other collective investment undertakings which are not covered by this Directive and for which the management company is subject to prudential supervision but the units of which cannot be marketed in other Member States under this Directive. The activity of management of UCITS shall include, for the purpose of this Directive, the functions referred to in Annex II. 3. By way of derogation from paragraph 2, Member States may authorise management companies to provide, in addition to the management of UCITS, the following services: (a) management of portfolios of investments, including those owned by pension funds, in accordance with mandates given by investors on a discretionary, client-by-client basis, where such portfolios include one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; and (b) as non-core services: (i) investment advice concerning one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; (ii) safekeeping and administration in relation to units of collective investment undertakings. (b) as non-core services: (i) investment advice concerning one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; (ii) safekeeping and administration in relation to units of collective investment undertakings. Management companies shall not be authorised under this Directive to provide only the services referred to in this paragraph, or to provide non-core services without being authorised for the services referred to in point (a) of the first subparagraph. 4. Article 2(2) and Articles 12, 13 and 19 of Directive 2004/39/EC shall apply to the provision of the services referred to in paragraph 3 of this Article by management companies.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Commission has today adopted a package of measures to deepen the Capital Markets Union (‘CMU’) together with the Communication "Completing Capital Markets Union by 2019 – time to accelerate delivery". The package includes this proposal and a proposal f or a regulation on facilitating the cross-border distribution of collective investment funds, which also amends Regulations (No) 345/2013 1 and 346/2013 2 , as well as a proposal for an enabling EU framework on covered bonds, a proposal for an enabling frame work on European crowdfunding service providers (ECSP)for businesses , a proposal on the law applicable to the third-party effects of assignments of claims, and a Communication on the applicable law to the proprietary effects of transactions in securities. This proposal amends certain provisions in Directive 2009/65/EC 3 and Directive 2011/61/EU 4 with the purpose of reducing regulatory barriers to the cross-border distribution of investment funds in the EU. These new measures are expected to reduce the cost for fund managers of going cross-border and should support more cross-border marketing of investment funds. Increased competition in the EU will help to give investors more choice and better value. This proposal was scheduled in the Commission Work Program me 2018 5 and should be seen in the broader context of the CMU action plan 6 and the CMU Mid-Term Review 7 , to establish a genuine internal capital market by addressing fragmentation in the capital markets, removing regulatory barriers to the financing of the economy and increasing the supply of capital to businesses. Regulatory barriers, namely Member States’ marketing requirements, regulatory fees and administrative and notification requirements represent a significant disincentive to the cross-border distri bution of funds. These barriers were identified in response to the Green Paper on Capital Markets Union 8 , the Call for Evidence on the EU regulatory framework for financial services 9 and the public consultation on barriers to the cross-border distribution of investment funds 10 . Investment funds are investment products created with the sole purpose of pooling investors’ capital and investing that capital collectively through a portfolio of financial instruments such as stocks, bonds and other securities. In the EU, investment funds can be categorised as undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIFs) managed by alternative investment fund managers. UCITS are covered by Directive 2009/65/EC and AIFs are covered by Directive 2011/61/EU. Directive 2011/61/EU is complemented by four fund frameworks: · Regulation (No) 345/2013 on European venture capital funds, · Regulation (No) 346/2013 on European social entrepreneurship funds, · Regulation 2015/460 11 on European long-term investment funds and · Regulation 2017/1131 12 on money market funds. The shared purpose of these rules is notably to make cross-border distribution easier while ensuring a high level of investor protection. Rules for EU investment fun ds allow fund managers to distribute and, with some exceptions, also to manage their funds across the EU . While EU investment funds have seen rapid growth, with a total of EUR 14 310 billion in assets under management in June 2017 13 , the EU investment fund market is still predominantly organised as a national market : 70 % of all assets under management are held by investment funds registered for sale only in their domestic market 14 . Only 37 % of UCITS and about 3 % of AIFs are registered for sale in more than three Member States. Compared to the United States, the EU market is smaller in terms of assets under management. However, there are considerably more funds in the EU (58 125 in the EU compared to 15 415 in the US) 15 . This means EU funds are on average sig nificantly smaller . This has a negative impact on economies of scale, the fees paid by investors and the way in which the internal market operates for investment funds. This proposal also recognizes that there are other factors outside the scope of this proposal which hold back the cross-border distribution of investment funds in the EU. These factors include national tax regimes applicable to investment funds and investors, vertical distribution channels and cultural preferences for domestic investment products. 
Revised version (Article 6 ):
1. Access to the business of management companies shall be subject to prior authorisation to be granted by the competent authorities of the management company’s home Member State. Authorisation granted under this Directive to a management company shall be valid for all Member States. ESMA shall be notified of every authorisation granted and shall publish and keep up-to-date a list of authorised management companies on its website. 2. No management company shall engage in activities other than the management of UCITS authorised under this Directive, with the exception of the additional management of other collective investment undertakings which are not covered by this Directive and for which the management company is subject to prudential supervision but the units of which cannot be marketed in other Member States under this Directive. The activity of management of UCITS shall include, for the purpose of this Directive, the functions referred to in Annex II. 3. By way of derogation from paragraph 2, Member States may authorise management companies to provide, in addition to the management of UCITS, the following services: (a) management of portfolios of investments, including those owned by pension funds, in accordance with mandates given by investors on a discretionary, client-by-client basis, where such portfolios include one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; and as non-core services: (i) investment advice concerning one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; (ii) safekeeping and administration in relation to units of collective investment undertakings. as non-core services: (i) investment advice concerning one or more of the instruments listed in Annex I, Section C to Directive 2004/39/EC; (ii) safekeeping and administration in relation to units of collective investment undertakings. Management companies shall not be authorised under this Directive to provide only the services referred to in this paragraph, or to provide non-core services without being authorised for the services referred to in point (a) of the first subparagraph. 4. Article 2(2) and Articles 12, 13 and 19 of Directive 2004/39/EC shall apply to the provision of the services referred to in paragraph 3 of this Article by management companies.
Article 7 
1. Without prejudice to other conditions of general application laid down by national law, the competent authorities shall not grant authorisation to a management company unless the following conditions are met: (a) the management company has an initial capital of at least EUR 125 000, taking into account the following: (i) when the value of the portfolios of the management company exceeds EUR 250 000 000, the management company must be required to provide an additional amount of own funds which is equal to 0,02 % of the amount by which the value of the portfolios of the management company exceeds EUR 250 000 000 but the required total of the initial capital and the additional amount must not, however, exceed EUR 10 000 000; (ii) for the purposes of this paragraph, the following portfolios must be deemed to be the portfolios of the management company: — common funds managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation, — investment companies for which the management company is the designated management company, — other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; (iii) irrespective of the amount of those requirements, the own funds of the management company must at no time be less than the amount prescribed in Article 21 of Directive 2006/49/EC; (a) the management company has an initial capital of at least EUR 125 000, taking into account the following: (i) when the value of the portfolios of the management company exceeds EUR 250 000 000, the management company must be required to provide an additional amount of own funds which is equal to 0,02 % of the amount by which the value of the portfolios of the management company exceeds EUR 250 000 000 but the required total of the initial capital and the additional amount must not, however, exceed EUR 10 000 000; (ii) for the purposes of this paragraph, the following portfolios must be deemed to be the portfolios of the management company: — common funds managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation, — investment companies for which the management company is the designated management company, — other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; (ii) for the purposes of this paragraph, the following portfolios must be deemed to be the portfolios of the management company: — common funds managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation, — investment companies for which the management company is the designated management company, — other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; (iii) irrespective of the amount of those requirements, the own funds of the management company must at no time be less than the amount prescribed in Article 21 of Directive 2006/49/EC; (b) the persons who effectively conduct 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 names of those persons and of every person succeeding them in office being communicated forthwith to the competent authorities and the conduct of the business of a management company being decided by at least two persons meeting such conditions; (c) the application for authorisation is accompanied by a programme of activity setting out, at least, the organisational structure of the management company; and (d) the head office and the registered office of the management company are located in the same Member State. For the purposes of point (a) of the first subparagraph, Member States may authorise management companies not to provide up to 50 % of the additional amount of own funds referred to in point (i) of point (a) if they benefit from a guarantee of the same amount given by a credit institution or an insurance undertaking which has its registered office in a Member State, or in a third country where it is subject to prudential rules considered by the competent authorities as equivalent to those laid down in Community law. 2. Where close links exist between the management company and other natural or legal persons, the competent authorities shall grant authorisation only if those close links do not prevent the effective exercise of their supervisory functions. The competent authorities shall also refuse authorisation if the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the management company has close links, or difficulties involved in their enforcement, prevent the effective exercise of their supervisory functions. The competent authorities shall require management companies to provide them with the information they require to monitor compliance with the conditions referred to in this paragraph on a continuous basis. 3. The competent authorities shall inform the applicant within six months of the submission of a complete application whether or not authorisation has been granted. Reasons shall be given where an authorisation is refused. 4. A management company may start business as soon as authorisation has been granted. 5. The competent authorities may withdraw the authorisation issued to a management company subject to this Directive only where that company: (a) does not make use of the authorisation within 12 months, expressly renounces the authorisation or has ceased the activity covered by this Directive more than six months previously, unless the Member State concerned has provided for authorisation to lapse in such cases; (b) has obtained the authorisation by making false statements or by any other irregular means; (c) no longer fulfils the conditions under which authorisation was granted; (d) no longer complies with Directive 2006/49/EC if its authorisation also covers the discretionary portfolio management service referred to in Article 6(3)(a) of this Directive; (e) has seriously or systematically infringed the provisions adopted pursuant to this Directive; or (f) falls within any of the cases where national law provides for withdrawal. 6. In order to ensure consistent harmonisation of this Article, ESMA may develop draft regulatory technical standards to specify: (a) the information to be provided to the competent authorities in the application for the authorisation of the management company, including the programme of activity; (b) the requirements applicable to the management company under paragraph 2 and the information for the notification provided for in paragraph 3; (c) the requirements applicable to shareholders and members with qualifying holdings, as well as obstacles which may prevent effective exercise of the supervisory functions of the competent authority, as provided for in Article 8(1) of this Directive and in Article 10(1) and (2) of Directive 2004/39/EC, in accordance with Article 11 of this Directive. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine standard forms, templates and procedures for the notification or provision of information provided for in points (a) and (b) of the first subparagraph. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Commission has today adopted a package of measures to deepen the Capital Markets Union (‘CMU’) together with the Communication "Completing Capital Markets Union by 2019 – time to accelerate delivery". The package includes this proposal and a proposal f or a regulation on facilitating the cross-border distribution of collective investment funds, which also amends Regulations (No) 345/2013 1 and 346/2013 2 , as well as a proposal for an enabling EU framework on covered bonds, a proposal for an enabling frame work on European crowdfunding service providers (ECSP)for businesses , a proposal on the law applicable to the third-party effects of assignments of claims, and a Communication on the applicable law to the proprietary effects of transactions in securities. This proposal amends certain provisions in Directive 2009/65/EC 3 and Directive 2011/61/EU 4 with the purpose of reducing regulatory barriers to the cross-border distribution of investment funds in the EU. These new measures are expected to reduce the cost for fund managers of going cross-border and should support more cross-border marketing of investment funds. Increased competition in the EU will help to give investors more choice and better value. This proposal was scheduled in the Commission Work Program me 2018 5 and should be seen in the broader context of the CMU action plan 6 and the CMU Mid-Term Review 7 , to establish a genuine internal capital market by addressing fragmentation in the capital markets, removing regulatory barriers to the financing of the economy and increasing the supply of capital to businesses. Regulatory barriers, namely Member States’ marketing requirements, regulatory fees and administrative and notification requirements represent a significant disincentive to the cross-border distri bution of funds. These barriers were identified in response to the Green Paper on Capital Markets Union 8 , the Call for Evidence on the EU regulatory framework for financial services 9 and the public consultation on barriers to the cross-border distribution of investment funds 10 . Investment funds are investment products created with the sole purpose of pooling investors’ capital and investing that capital collectively through a portfolio of financial instruments such as stocks, bonds and other securities. In the EU, investment funds can be categorised as undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIFs) managed by alternative investment fund managers. UCITS are covered by Directive 2009/65/EC and AIFs are covered by Directive 2011/61/EU. Directive 2011/61/EU is complemented by four fund frameworks: · Regulation (No) 345/2013 on European venture capital funds, · Regulation (No) 346/2013 on European social entrepreneurship funds, · Regulation 2015/460 11 on European long-term investment funds and · Regulation 2017/1131 12 on money market funds. The shared purpose of these rules is notably to make cross-border distribution easier while ensuring a high level of investor protection. Rules for EU investment fun ds allow fund managers to distribute and, with some exceptions, also to manage their funds across the EU . While EU investment funds have seen rapid growth, with a total of EUR 14 310 billion in assets under management in June 2017 13 , the EU investment fund market is still predominantly organised as a national market : 70 % of all assets under management are held by investment funds registered for sale only in their domestic market 14 . Only 37 % of UCITS and about 3 % of AIFs are registered for sale in more than three Member States. Compared to the United States, the EU market is smaller in terms of assets under management. However, there are considerably more funds in the EU (58 125 in the EU compared to 15 415 in the US) 15 . This means EU funds are on average sig nificantly smaller . This has a negative impact on economies of scale, the fees paid by investors and the way in which the internal market operates for investment funds. This proposal also recognizes that there are other factors outside the scope of this proposal which hold back the cross-border distribution of investment funds in the EU. These factors include national tax regimes applicable to investment funds and investors, vertical distribution channels and cultural preferences for domestic investment products. 
Revised version (Article 7 ):
1. Without prejudice to other conditions of general application laid down by national law, the competent authorities shall not grant authorisation to a management company unless the following conditions are met: the management company has an initial capital of at least EUR 125 000 , taking into account the following: (i) when the value of the portfolios of the management company exceeds EUR 250 000 000 , the management company must be required to provide an additional amount of own funds which is equal to 0,02 % of the amount by which the value of the portfolios of the management company exceeds EUR 250 000 000 but the required total of the initial capital and the additional amount must not, however, exceed EUR 10 000 000 ; (ii) for the purposes of this paragraph, the following portfolios must be deemed to be the portfolios of the management company: — common funds managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation, — investment companies for which the management company is the designated management company, — other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; for the purposes of this paragraph, the following portfolios must be deemed to be the portfolios of the management company: — common funds managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation, — investment companies for which the management company is the designated management company, — other collective investment undertakings managed by the management company including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; (iii) irrespective of the amount of those requirements, the own funds of the management company must at no time be less than the amount prescribed in Article 21 of Directive 2006/49/EC; (b) the persons who effectively conduct 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 names of those persons and of every person succeeding them in office being communicated forthwith to the competent authorities and the conduct of the business of a management company being decided by at least two persons meeting such conditions; (c) the application for authorisation is accompanied by a programme of activity setting out, at least, the organisational structure of the management company; and (d) the head office and the registered office of the management company are located in the same Member State. 2. Where close links exist between the management company and other natural or legal persons, the competent authorities shall grant authorisation only if those close links do not prevent the effective exercise of their supervisory functions. The competent authorities shall also refuse authorisation if the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the management company has close links, or difficulties involved in their enforcement, prevent the effective exercise of their supervisory functions. The competent authorities shall require management companies to provide them with the information they require to monitor compliance with the conditions referred to in this paragraph on a continuous basis. 3. The competent authorities shall inform the applicant within six months of the submission of a complete application whether or not authorisation has been granted. Reasons shall be given where an authorisation is refused. 4. A management company may start business as soon as authorisation has been granted. 5. The competent authorities may withdraw the authorisation issued to a management company subject to this Directive only where that company: (a) does not make use of the authorisation within 12 months, expressly renounces the authorisation or has ceased the activity covered by this Directive more than six months previously, unless the Member State concerned has provided for authorisation to lapse in such cases; (b) has obtained the authorisation by making false statements or by any other irregular means; (c) no longer fulfils the conditions under which authorisation was granted; no longer complies with Directive 2006/49/EC if its authorisation also covers the discretionary portfolio management service referred to in Article 6(3)(a) of this Directive; (e) has seriously or systematically infringed the provisions adopted pursuant to this Directive; or (f) falls within any of the cases where national law provides for withdrawal. 6. In order to ensure consistent harmonisation of this Article, ESMA may develop draft regulatory technical standards to specify: (a) the information to be provided to the competent authorities in the application for the authorisation of the management company, including the programme of activity; (b) the requirements applicable to the management company under paragraph 2 and the information for the notification provided for in paragraph 3; (c) the requirements applicable to shareholders and members with qualifying holdings, as well as obstacles which may prevent effective exercise of the supervisory functions of the competent authority, as provided for in Article 8(1) of this Directive and in Article 10(1) and (2) of Directive 2004/39/EC, in accordance with Article 11 of this Directive. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine standard forms, templates and procedures for the notification or provision of information provided for in points (a) and (b) of the first subparagraph. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 8 
1. The competent authorities shall not grant authorisation to take up the business of management companies until they have been informed of the identities of the shareholders or members, whether direct or indirect, natural or legal persons, that have qualifying holdings and of the amounts of those holdings. The competent authorities shall refuse authorisation if, taking into account the need to ensure the sound and prudent management of a management company, they are not satisfied as to the suitability of the shareholders or members referred to in the first subparagraph. 2. In the case of branches of management companies that have registered offices outside the Community and are taking up or pursuing business, the Member States shall not apply provisions that result in treatment more favourable than that accorded to branches of management companies that have registered offices in Member States. 3. The competent authorities of the other Member State involved shall be consulted beforehand in relation to the authorisation of any management company which is one of the following: (a) a subsidiary of another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State; (b) a subsidiary of the parent undertaking of another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State; or (c) a company controlled by the same natural or legal persons as control another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 8 ):
1. The competent authorities shall not grant authorisation to take up the business of management companies until they have been informed of the identities of the shareholders or members, whether direct or indirect, natural or legal persons, that have qualifying holdings and of the amounts of those holdings. The competent authorities shall refuse authorisation if, taking into account the need to ensure the sound and prudent management of a management company, they are not satisfied as to the suitability of the shareholders or members referred to in the first subparagraph. The competent authorities shall not grant authorisation to take up the business of management companies until they have been informed of the identities of the shareholders or members, whether direct or indirect, natural or legal persons, that have qualifying holdings and of the amounts of those holdings. The competent authorities shall refuse authorisation if, taking into account the need to ensure the sound and prudent management of a management company, they are not satisfied as to the suitability of the shareholders or members referred to in the first subparagraph. 2. In the case of branches of management companies that have registered offices outside the Community and are taking up or pursuing business, the Member States shall not apply provisions that result in treatment more favourable than that accorded to branches of management companies that have registered offices in Member States. The competent authorities of the other Member State involved shall be consulted beforehand in relation to the authorisation of any management company which is one of the following: (a) a subsidiary of another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State; (b) a subsidiary of the parent undertaking of another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State; or (c) a company controlled by the same natural or legal persons as control another management company, an investment firm, a credit institution or an insurance undertaking authorised in another Member State.
Article 9 
1. Relations with third countries shall be regulated in accordance with the relevant rules laid down in Article 15 of Directive 2004/39/EC. For the purposes of this Directive, the terms ‘investment firm’ and ‘investment firms’ referred to in Article 15 of Directive 2004/39/EC shall mean, respectively, ‘management company’ and ‘management companies’; the term ‘providing investment services’ referred to in Article 15(1) of Directive 2004/39/EC shall mean ‘providing services’. 2. Member States shall inform ESMA and the Commission of any general difficulties which UCITS encounter in marketing their units in any third country. The Commission shall examine such difficulties as quickly as possible in order to find an appropriate solution. ESMA shall assist it in discharging that task.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 9 ):
1. Relations with third countries shall be regulated in accordance with the relevant rules laid down in Article 15 of Directive 2004/39/EC. For the purposes of this Directive, the terms ‘investment firm’ and ‘investment firms’ referred to in Article 15 of Directive 2004/39/EC shall mean, respectively, ‘management company’ and ‘management companies’; the term ‘providing investment services’ referred to in Article 15(1) of Directive 2004/39/EC shall mean ‘providing services’. Relations with third countries shall be regulated in accordance with the relevant rules laid down in Article 15 of Directive 2004/39/EC. For the purposes of this Directive, the terms ‘investment firm’ and ‘investment firms’ referred to in Article 15 of Directive 2004/39/EC shall mean, respectively, ‘management company’ and ‘management companies’; the term ‘providing investment services’ referred to in Article 15(1) of Directive 2004/39/EC shall mean ‘providing services’. 2. Member States shall inform ESMA and the Commission of any general difficulties which UCITS encounter in marketing their units in any third country. The Commission shall examine such difficulties as quickly as possible in order to find an appropriate solution. ESMA shall assist it in discharging that task. Member States shall inform ESMA and the Commission of any general difficulties which UCITS encounter in marketing their units in any third country. The Commission shall examine such difficulties as quickly as possible in order to find an appropriate solution. ESMA shall assist it in discharging that task.
Article 10 
1. The competent authorities of the management company’s home Member State shall require that the management company which they have authorised complies at all times with the conditions laid down in Article 6 and Article 7(1) and (2). The own funds of a management company shall not fall below the level specified in Article 7(1)(a). If they do, however, the competent authorities may, where the circumstances so justify, allow such firms a limited period in which to rectify their situations or cease their activities. 2. The prudential supervision of a management company shall be the responsibility of the competent authorities of the management company’s home Member State, whether the management company establishes a branch or provides services in another Member State or not, without prejudice to those provisions of this Directive which confer responsibility to the competent authorities of a management company’s host Member State.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 10 ):
1. The competent authorities of the management company’s home Member State shall require that the management company which they have authorised complies at all times with the conditions laid down in Article 6 and Article 7(1) and (2). The own funds of a management company shall not fall below the level specified in Article 7(1)(a). If they do, however, the competent authorities may, where the circumstances so justify, allow such firms a limited period in which to rectify their situations or cease their activities. The competent authorities of the management company’s home Member State shall require that the management company which they have authorised complies at all times with the conditions laid down in Article 6 and Article 7(1) and (2). The own funds of a management company shall not fall below the level specified in Article 7(1)(a). If they do, however, the competent authorities may, where the circumstances so justify, allow such firms a limited period in which to rectify their situations or cease their activities. 2. The prudential supervision of a management company shall be the responsibility of the competent authorities of the management company’s home Member State, whether the management company establishes a branch or provides services in another Member State or not, without prejudice to those provisions of this Directive which confer responsibility to the competent authorities of a management company’s host Member State.
Article 11 
1. Qualifying holdings in management companies shall be subject to the same rules as those laid down in Articles 10, 10a and 10b of Directive 2004/39/EC. 2. For the purposes of this Directive, the terms ‘investment firm’ and ‘investment firms’ referred to in Article 10 of Directive 2004/39/EC, mean, respectively, ‘management company’ and ‘management companies’. 3. In order to ensure consistent harmonisation of this Directive, ESMA may develop draft regulatory technical standards to establish an exhaustive list of information, as provided for in this Article, with reference to Article 10b(4) of Directive 2004/39/EC, to be included by proposed acquirers in their notification, without prejudice to Article 10a(2) of that Directive. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the modalities of the consultation process between the relevant competent authorities, as provided for in this Article, with reference to Article 10(4) of Directive 2004/39/EC. Power is conferred to the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 11 ):
1. Qualifying holdings in management companies shall be subject to the same rules as those laid down in Articles 10, 10a and 10b of Directive 2004/39/EC. 2. For the purposes of this Directive, the terms ‘investment firm’ and ‘investment firms’ referred to in Article 10 of Directive 2004/39/EC, mean, respectively, ‘management company’ and ‘management companies’. 3. In order to ensure consistent harmonisation of this Directive, ESMA may develop draft regulatory technical standards to establish an exhaustive list of information, as provided for in this Article, with reference to Article 10b(4) of Directive 2004/39/EC, to be included by proposed acquirers in their notification, without prejudice to Article 10a(2) of that Directive. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the modalities of the consultation process between the relevant competent authorities, as provided for in this Article, with reference to Article 10(4) of Directive 2004/39/EC. Power is conferred to the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010. In order to ensure consistent harmonisation of this Directive, ESMA may develop draft regulatory technical standards to establish an exhaustive list of information, as provided for in this Article, with reference to Article 10b(4) of Directive 2004/39/EC, to be included by proposed acquirers in their notification, without prejudice to Article 10a(2) of that Directive. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the modalities of the consultation process between the relevant competent authorities, as provided for in this Article, with reference to Article 10(4) of Directive 2004/39/EC. Power is conferred to the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 12 
1. Each Member State shall draw up prudential rules which management companies authorised in that Member State, with regard to the activity of management of UCITS authorised according to this Directive, shall observe at all times. In particular, the competent authorities of the management company’s home Member State, having regard also to the nature of the UCITS managed by a management company, shall require that each such company: (a) has sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing and adequate internal control mechanisms including, in particular, rules for personal transactions by its employees or for the holding or management of investments in financial instruments in order to invest on its own account and ensuring, at least, that each transaction involving the UCITS 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 UCITS managed by the management company are invested according to the fund rules or the instruments of incorporation and the legal provisions in force; (b) is structured and organised in such a way as to minimise the risk of UCITS’ or clients’ interests being prejudiced by conflicts of interest between the company and its clients, between two of its clients, between one of its clients and a UCITS, or between two UCITS. 2. Each management company the authorisation of which also covers the discretionary portfolio management service referred to in Article 6(3)(a) shall: (a) not be permitted to invest all or a part of the investor’s portfolio in units of collective investment undertakings it manages, unless it receives prior general approval from the client; (b) be subject with regard to the services referred to in Article 6(3) to the provisions laid down in Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes ( 13 ). 3. Without prejudice to Article 116, the Commission shall adopt, by means of delegated acts in accordance with Article 112(2), (3) and (4), and subject to the conditions of Articles 112a and 112b, measures specifying the procedures and arrangements as referred to under point (a) of the second subparagraph of paragraph 1 and the structures and organisational requirements to minimise conflicts of interests as referred to under point (b) of the second subparagraph of paragraph 1. 4. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine the conditions of applications of the delegated acts adopted by the Commission regarding the procedures, arrangements, structures and organisational requirements referred to in paragraph 3. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: Context of the proposal 1.1. General Since the UCITS Directive was adopted in 1985, the rules relating to depositaries in the Directive have remained unchanged: they consist of a number of generic principles setting out the duties of depositaries. The principal UCITS rule is that all assets of a UCITS fund must be entrusted to a depositary. This depositary shall, in accordance with national law, be liable for losses suffered as a result of a failure to perform its duties. The UCITS Directive, apart from employing a negligence-based standard, makes reference to national laws in respect of the precise contours of these duties. This reference leaves considerable scope for diverging interpretations regarding the scope of a depositary's duties and the liability for the negligent performance thereof. As a result, different approaches have developed across the European Union, leading to UCITS investors facing uneven levels of protection in different jurisdictions. The potential consequences of national divergences in the liability standard came to the fore following the Lehman bankruptcy[1] and the Madoff fraud. In particular, the consequences of the Madoff fraud have been particularly acute in some EU Member States. In one instance, a particular fund that acted as a feeder fund for Madoff lost around € 1.4 billion. The large scale of the Madoff fraud essentially went undetected for a long period because the depositary had delegated custody of the assets to an entity run by Bernard Madoff, the US broker "Bernard Madoff Investment Securities". At the same time, Bernard Madoff was also the manager and broker responsible for purchasing financial instruments on behalf of the fund. The Madoff case raised several important issues in relation to UCITS funds. First, it raises the question of the precise conditions under which a depositary acting on behalf of a UCITS fund can delegate safekeeping of assets to a sub-custodian? The current UCITS Directive is silent on the precise conditions under which custody may be delegated. The Madoff case also raises the issue of conflicts of interest. More particularly, to what extent should the manager of an investment fund be allowed to belong to the same corporate group as the sub-custodian to whom custody has been delegated? Can it really be expected that a fund manager will always behave in a manner conducive to protecting the interests of a fund's investors where the manager is also the sub-custodian of the assets they invest in? In respect of conflicts of interests that may arise in relation to the independence of the depositary, the UCITS Directive is limited to stipulating the general principle that a company cannot manage a UCITS fund and also act as its depositary. The UCITS Directive contains no rule to cover the conflicts of interest that may arise in case the management function and the depositary functions are delegated to one and the same third party. Finally, the Madoff case has also revealed general uncertainties within the UCITS framework, especially in relation to the principal custodian's liability in case of delegation of custody to a sub-custodian. The issue of liability in case of delegation, in the absence of hard and fast rules in the relevant UCITS Directive, is dealt with differently in individual Member States. The Madoff case brought to the fore an essential development in the UCITS sphere: while the UCITS provisions on depositaries have remained unchanged, the investment environment for UCITS has evolved. UCITS are now able to invest in a wider range of financial assets, which may be more complex and also may be issued and held in custody outside the EU (for instance, in emerging markets); fund portfolios are increasingly diverse and international. As a consequence, holding assets through sub-custody arrangements, so as to match the fund's investment strategies, have become increasingly common. The Madoff fraud has shown that the risks associated with the use of delegated sub-custody networks are not always negligible. Assets can be lost at the level of the sub-custodian, which might include loss through fraud committed by the sub-custodian, negligence of the sub-custodian or the bankruptcy of the sub-custodian. Under the current UCITS framework, it is unclear what duties a depositary has in the selection and the oversight of the sub-custodian. As a result, there is a legal uncertainty to what extent a depositary is liable for losses at sub-custodian level. It must be noted that on 12 July 2010 the Commission proposed the extension of investor compensation schemes to cover investors in UCITS. The amendments to Directive 97/9/EC aimed to cover situations where a depositary is liable for the loss of assets of UCITS but is not able to cover its liabilities. This should serve as an additional means to increase the protection for investors in UCITS. However, at this stage this proposal has not been accepted by the Council and is subject to further negotiations. In addition, the financial crisis also revealed that the remuneration and incentive schemes commonly applied within financial institutions were themselves exacerbating the impact and scale of the crisis. Remuneration policies contributed to short-term decision making and created incentives for taking excessive risk. Finally, the analysis of national sanctioning regimes carried out by the Commission, along with the Committees of Supervisors (now transformed into European Supervisory Authorities) has shown a number of divergences and weaknesses which may have a negative impact on the proper application of EU legislation, the effectiveness of financial supervision, and ultimately on competition, stability and integrity of financial markets and consumer protection. Therefore, in its Communication of 9 December 2010 "Reinforcing sanctioning regimes in the financial sector"[2] the Commission suggested setting EU minimum common standards on certain key issues, in order to promote convergence and reinforcement of national sanctioning regimes. The Commission has included such common rules, adapted to the specifics of the sectors concerned, in all its recent proposals for the review of the sectoral EU legislation concerned (CRD IV, MiFID, Market Abuse Directive, Transparency Directive). Extending this work to the UCITS framework is a natural additional step in this process. This proposal forms part of a wider legislative package dedicated to rebuilding consumer trust in financial markets. The package has two other parts. The first is an extensive overhaul of the Insurance Mediation Directive 2002/92/EC to ensure that customers benefit from a high level of protection when buying insurance products. The final part of the package aims at improving transparency in the investment market for retail investors (a proposal for a Regulation on key information documents for investment products).
Revised version (Article 12 ):
1. Each Member State shall draw up prudential rules which management companies authorised in that Member State, with regard to the activity of management of UCITS authorised according to this Directive, shall observe at all times. In particular, the competent authorities of the management company’s home Member State, having regard also to the nature of the UCITS managed by a management company, shall require that each such company: (a) has sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing and adequate internal control mechanisms including, in particular, rules for personal transactions by its employees or for the holding or management of investments in financial instruments in order to invest on its own account and ensuring, at least, that each transaction involving the UCITS 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 UCITS managed by the management company are invested according to the fund rules or the instruments of incorporation and the legal provisions in force; (b) is structured and organised in such a way as to minimise the risk of UCITS’ or clients’ interests being prejudiced by conflicts of interest between the company and its clients, between two of its clients, between one of its clients and a UCITS, or between two UCITS. 2. Each management company the authorisation of which also covers the discretionary portfolio management service referred to in Article 6(3)(a) shall: (a) not be permitted to invest all or a part of the investor’s portfolio in units of collective investment undertakings it manages, unless it receives prior general approval from the client; (b) be subject with regard to the services referred to in Article 6(3) to the provisions laid down in Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes ( 14 ). 3. Without prejudice to Article 116, the Commission shall adopt, by means of delegated acts in accordance with Article 112a , measures specifying the procedures and arrangements as referred to under point (a) of the second subparagraph of paragraph 1 and the structures and organisational requirements to minimise conflicts of interests as referred to under point (b) of the second subparagraph of paragraph 1. 4. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine the conditions of applications of the delegated acts adopted by the Commission regarding the procedures, arrangements, structures and organisational requirements referred to in paragraph 3. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 13 
1. If the law of the management company’s home Member State allows management companies to delegate to third parties for the purpose of a more efficient conduct of the companies’ business, to carry out on their behalf one or more of their own functions, all of the following preconditions shall be complied with: (a) the management company must inform the competent authorities of its home Member State in an appropriate manner; the competent authorities of the management company’s home Member State must, without delay, transmit the information to the competent authorities of the UCITS home Member State; (b) the mandate must not prevent the effectiveness of supervision over the management company, and, in particular, must not prevent the management company from acting, or the UCITS from being managed, in the best interests of its investors; (c) when the delegation concerns the investment management, the mandate must be given only to undertakings which are authorised or registered for the purpose of asset management and subject to prudential supervision; the delegation must be in accordance with investment-allocation criteria periodically laid down by the management companies; (d) where the mandate concerns the investment management and is given to a third-country undertaking, cooperation between the supervisory authorities concerned must be ensured; (e) a mandate with regard to the core function of investment management must not be given to the depositary or to any other undertaking whose interests may conflict with those of the management company or the unit-holders; (f) measures must exist which enable the persons who conduct the business of the management company to monitor effectively at any time the activity of the undertaking to which the mandate is given; (g) the mandate must not prevent the persons who conduct the business of the management company from giving further instructions to the undertaking to which functions are delegated at any time or from withdrawing the mandate with immediate effect when this is in the interest of investors; (h) having regard to the nature of the functions to be delegated, the undertaking to which functions will be delegated must be qualified and capable of undertaking the functions in question; and (i) the UCITS’ prospectuses must list the functions which the management company has been allowed to delegate in accordance with this Article. 2. The liability of the management company or the depositary shall not be affected by delegation by the management company of any functions to third parties. The management company shall not delegate its functions to the extent that it becomes a letter-box entity.
Amendment rationale: CONTEXT OF THE PROPOSAL · Reasons for and objectives of the proposal This proposal is part of a package of measures to further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks. It is in line with the Commission priorities to make Europe fit for the digital age and to build a future-ready economy that works for the people. The digital finance package includes a new Strategy on digital finance for the EU financial sector 1 with the aim to ensure that the EU embraces the digital revolution and drives it with innovative European firms in the lead, making the benefits of digital finance available to European consumers and businesses. In addition to this proposal, the package also includes a proposal for a regulation on markets in crypto assets 2 , a proposal for a regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) 3 and a proposal for a regulation on digital operational resilience for the financial sector 4 . The reasons for, and objectives of, the two sets of legislative measures have been set out in the explanatory memoranda of the proposal for a regulation on a pilot regime for distributed ledger technology market infrastructures, proposal for a regulation on markets in crypto assets and proposal for a regulation on digital operational resilience, respectively, and apply here as well. The particular reasons for this proposal for a directive is that, in order to provide legal certainty as regards crypto assets and achieve the objectives of strengthening digital operational resilience, it is necessary to establish a temporary exemption for multilateral trading facilities and amend or clarify certain provisions in existing EU financial services directives. · Consistency with existing provisions in the policy area This proposal, similar to the proposals for regulation it accompanies, is part of a broader ongoing work at European and international level aimed at (i) strengthening the cybersecurity in financial services and address broader operational risks, and (ii) providing a clear, proportionate and enabling EU legal framework for crypto-asset service providers. · Consistency with other Union policies As stated by President von der Leyen in her Political Guidelines, 5 and set-out in the Communication ‘Shaping Europe’s digital future’, 6 it is crucial for Europe to reap all the benefits of the digital age and to strengthen its industry and innovation capacity, within safe and ethical boundaries. As regards crypto assets, this proposal is closely linked with wider Commission policies on blockchain technology, as crypto-assets, as the main application of blockchain technologies, are inextricably linked to the promotion of blockchain technology throughout Europe. As regards operational resilience, the European strategy for data 7 sets out four pillars - data protection, fundamental rights, safety and cyber-security - as essential pre-requisites for a society empowered by the use of data. A legislative framework strengthening the digital operational resilience of the Union’s financial entities is consistent with these policy objectives. The proposal would also support policies aimed at recovering from the coronavirus, as it would ensure that increased reliance on digital finance goes hand in hand with operational resilience. Both proposals also respond to calls from the CMU High-Level Forum to establish clear rules for the use of crypto asset (recommendation 7) and to put in place new rules on cyber resilience.
Article 14 
1. Each Member State shall draw up rules of conduct which management companies authorised in that Member State shall observe at all times. Such rules shall implement at least the principles set out in this paragraph. Those principles shall ensure that a management company: (a) acts honestly and fairly in conducting its business activities in the best interests of the UCITS it manages and the integrity of the market; (b) acts with due skill, care and diligence, in the best interests of the UCITS it manages and the integrity of the market; (c) has and employs effectively the resources and procedures that are necessary for the proper performance of its business activities; (d) tries to avoid conflicts of interests and, when they cannot be avoided, ensures that the UCITS it manages are fairly treated; and (e) complies with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of its investors and the integrity of the market. 2. Without prejudice to Article 116, the Commission shall adopt, by means of delegated acts in accordance with Article 112(2), (3) and (4), and subject to the conditions of Articles 112a and 112b, measures with a view to ensuring that the management company complies with the duties set out in paragraph 1, in particular to: (a) establish appropriate criteria for acting honestly and fairly and with due skill, care and diligence in the best interests of the UCITS; (b) specify the principles required to ensure that management companies employ effectively the resources and procedures that are necessary for the proper performance of their business activities; and (c) define the steps that management companies might reasonably be expected to take to identify, prevent, manage or disclose conflicts of interest as well as to establish appropriate criteria for determining the types of conflicts of interest whose existence may damage the interests of the UCITS. 3. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine the delegated acts adopted by the Commission regarding the criteria, principles and steps referred to in paragraph 2. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: Context of the proposal 1.1. General Since the UCITS Directive was adopted in 1985, the rules relating to depositaries in the Directive have remained unchanged: they consist of a number of generic principles setting out the duties of depositaries. The principal UCITS rule is that all assets of a UCITS fund must be entrusted to a depositary. This depositary shall, in accordance with national law, be liable for losses suffered as a result of a failure to perform its duties. The UCITS Directive, apart from employing a negligence-based standard, makes reference to national laws in respect of the precise contours of these duties. This reference leaves considerable scope for diverging interpretations regarding the scope of a depositary's duties and the liability for the negligent performance thereof. As a result, different approaches have developed across the European Union, leading to UCITS investors facing uneven levels of protection in different jurisdictions. The potential consequences of national divergences in the liability standard came to the fore following the Lehman bankruptcy[1] and the Madoff fraud. In particular, the consequences of the Madoff fraud have been particularly acute in some EU Member States. In one instance, a particular fund that acted as a feeder fund for Madoff lost around € 1.4 billion. The large scale of the Madoff fraud essentially went undetected for a long period because the depositary had delegated custody of the assets to an entity run by Bernard Madoff, the US broker "Bernard Madoff Investment Securities". At the same time, Bernard Madoff was also the manager and broker responsible for purchasing financial instruments on behalf of the fund. The Madoff case raised several important issues in relation to UCITS funds. First, it raises the question of the precise conditions under which a depositary acting on behalf of a UCITS fund can delegate safekeeping of assets to a sub-custodian? The current UCITS Directive is silent on the precise conditions under which custody may be delegated. The Madoff case also raises the issue of conflicts of interest. More particularly, to what extent should the manager of an investment fund be allowed to belong to the same corporate group as the sub-custodian to whom custody has been delegated? Can it really be expected that a fund manager will always behave in a manner conducive to protecting the interests of a fund's investors where the manager is also the sub-custodian of the assets they invest in? In respect of conflicts of interests that may arise in relation to the independence of the depositary, the UCITS Directive is limited to stipulating the general principle that a company cannot manage a UCITS fund and also act as its depositary. The UCITS Directive contains no rule to cover the conflicts of interest that may arise in case the management function and the depositary functions are delegated to one and the same third party. Finally, the Madoff case has also revealed general uncertainties within the UCITS framework, especially in relation to the principal custodian's liability in case of delegation of custody to a sub-custodian. The issue of liability in case of delegation, in the absence of hard and fast rules in the relevant UCITS Directive, is dealt with differently in individual Member States. The Madoff case brought to the fore an essential development in the UCITS sphere: while the UCITS provisions on depositaries have remained unchanged, the investment environment for UCITS has evolved. UCITS are now able to invest in a wider range of financial assets, which may be more complex and also may be issued and held in custody outside the EU (for instance, in emerging markets); fund portfolios are increasingly diverse and international. As a consequence, holding assets through sub-custody arrangements, so as to match the fund's investment strategies, have become increasingly common. The Madoff fraud has shown that the risks associated with the use of delegated sub-custody networks are not always negligible. Assets can be lost at the level of the sub-custodian, which might include loss through fraud committed by the sub-custodian, negligence of the sub-custodian or the bankruptcy of the sub-custodian. Under the current UCITS framework, it is unclear what duties a depositary has in the selection and the oversight of the sub-custodian. As a result, there is a legal uncertainty to what extent a depositary is liable for losses at sub-custodian level. It must be noted that on 12 July 2010 the Commission proposed the extension of investor compensation schemes to cover investors in UCITS. The amendments to Directive 97/9/EC aimed to cover situations where a depositary is liable for the loss of assets of UCITS but is not able to cover its liabilities. This should serve as an additional means to increase the protection for investors in UCITS. However, at this stage this proposal has not been accepted by the Council and is subject to further negotiations. In addition, the financial crisis also revealed that the remuneration and incentive schemes commonly applied within financial institutions were themselves exacerbating the impact and scale of the crisis. Remuneration policies contributed to short-term decision making and created incentives for taking excessive risk. Finally, the analysis of national sanctioning regimes carried out by the Commission, along with the Committees of Supervisors (now transformed into European Supervisory Authorities) has shown a number of divergences and weaknesses which may have a negative impact on the proper application of EU legislation, the effectiveness of financial supervision, and ultimately on competition, stability and integrity of financial markets and consumer protection. Therefore, in its Communication of 9 December 2010 "Reinforcing sanctioning regimes in the financial sector"[2] the Commission suggested setting EU minimum common standards on certain key issues, in order to promote convergence and reinforcement of national sanctioning regimes. The Commission has included such common rules, adapted to the specifics of the sectors concerned, in all its recent proposals for the review of the sectoral EU legislation concerned (CRD IV, MiFID, Market Abuse Directive, Transparency Directive). Extending this work to the UCITS framework is a natural additional step in this process. This proposal forms part of a wider legislative package dedicated to rebuilding consumer trust in financial markets. The package has two other parts. The first is an extensive overhaul of the Insurance Mediation Directive 2002/92/EC to ensure that customers benefit from a high level of protection when buying insurance products. The final part of the package aims at improving transparency in the investment market for retail investors (a proposal for a Regulation on key information documents for investment products).
Revised version (Article 14 ):
1. Each Member State shall draw up rules of conduct which management companies authorised in that Member State shall observe at all times. Such rules shall implement at least the principles set out in this paragraph. Those principles shall ensure that a management company: (a) acts honestly and fairly in conducting its business activities in the best interests of the UCITS it manages and the integrity of the market; (b) acts with due skill, care and diligence, in the best interests of the UCITS it manages and the integrity of the market; (c) has and employs effectively the resources and procedures that are necessary for the proper performance of its business activities; (d) tries to avoid conflicts of interests and, when they cannot be avoided, ensures that the UCITS it manages are fairly treated; and (e) complies with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of its investors and the integrity of the market. 2. Without prejudice to Article 116, the Commission shall adopt, by means of delegated acts in accordance with Article 112a , measures with a view to ensuring that the management company complies with the duties set out in paragraph 1, in particular to: (a) establish appropriate criteria for acting honestly and fairly and with due skill, care and diligence in the best interests of the UCITS; (b) specify the principles required to ensure that management companies employ effectively the resources and procedures that are necessary for the proper performance of their business activities; and (c) define the steps that management companies might reasonably be expected to take to identify, prevent, manage or disclose conflicts of interest as well as to establish appropriate criteria for determining the types of conflicts of interest whose existence may damage the interests of the UCITS. 3. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to determine the delegated acts adopted by the Commission regarding the criteria, principles and steps referred to in paragraph 2. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 15 
Management companies or, where relevant, investment companies shall take measures in accordance with Article 92 and establish appropriate procedures and arrangements to ensure that they deal properly with investor complaints and that there are no restrictions on investors exercising their rights in the event that the management company is authorised in a Member State other than the UCITS home Member State. Those measures shall allow investors to file complaints in the official language or one of the official languages of their Member State. Management companies shall also establish appropriate procedures and arrangements to make information available at the request of the public or the competent authorities of the UCITS home Member State.
Article 16 
1. Member States shall ensure that a management company, authorised by its home Member State, may pursue within their territories the activity for which it has been authorised, either by the establishment of a branch or under the freedom to provide services. Where a management company so authorised proposes, without establishing a branch, only to market the units of the UCITS it manages as provided for in Annex II in a Member State other than the UCITS home Member State, without proposing to pursue any other activities or services, such marketing shall be subject only to the requirements of Chapter XI. 2. Member States shall not make the establishment of a branch or the provision of the services subject to any authorisation requirement, to any requirement to provide endowment capital or to any other measure having equivalent effect. 3. Subject to the conditions set out in this Article, a UCITS shall be free to designate, or to be managed by a management company authorised in a Member State other than the UCITS home Member State in accordance with the relevant provisions of this Directive, provided that such a management company complies with the provisions of: (a) Article 17 or Article 18; and (b) Articles 19 and 20.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 16 ):
1. Member States shall ensure that a management company, authorised by its home Member State, may pursue within their territories the activity for which it has been authorised, either by the establishment of a branch or under the freedom to provide services. Where a management company so authorised proposes, without establishing a branch, only to market the units of the UCITS it manages as provided for in Annex II in a Member State other than the UCITS home Member State, without proposing to pursue any other activities or services, such marketing shall be subject only to the requirements of Chapter XI. Member States shall ensure that a management company, authorised by its home Member State, may pursue within their territories the activity for which it has been authorised, either by the establishment of a branch or under the freedom to provide services. Where a management company so authorised proposes, without establishing a branch, only to market the units of the UCITS it manages as provided for in Annex II in a Member State other than the UCITS home Member State, without proposing to pursue any other activities or services, such marketing shall be subject only to the requirements of Chapter XI. 2. Member States shall not make the establishment of a branch or the provision of the services subject to any authorisation requirement, to any requirement to provide endowment capital or to any other measure having equivalent effect. 3. Subject to the conditions set out in this Article, a UCITS shall be free to designate, or to be managed by a management company authorised in a Member State other than the UCITS home Member State in accordance with the relevant provisions of this Directive, provided that such a management company complies with the provisions of: (a) Article 17 or Article 18; and (b) Articles 19 and 20. Subject to the conditions set out in this Article, a UCITS shall be free to designate, or to be managed by a management company authorised in a Member State other than the UCITS home Member State in accordance with the relevant provisions of this Directive, provided that such a management company complies with the provisions of: (a) Article 17 or Article 18; and (b) Articles 19 and 20.
Article 17 
1. In addition to meeting the conditions imposed in Articles 6 and 7, a management company wishing to establish a branch within the territory of another Member State to pursue the activities for which it has been authorised shall notify the competent authorities of its home Member State accordingly. 2. Member States shall require every management company wishing to establish a branch within the territory of another Member State to provide the following information and documents, when effecting the notification provided for in paragraph 1: (a) the Member State within the territory of which the management company plans to establish a branch; (b) a programme of operations setting out the activities and services according to Article 6(2) and (3) envisaged and the organisational structure of the branch, which shall include a description of the risk management process put in place by the management company. It shall also include a description of the procedures and arrangements taken in accordance with Article 15; (c) the address in the management company’s host Member State from which documents may be obtained; and (d) the names of those responsible for the management of the branch. 3. Unless the competent authorities of the management company’s home Member State have reason to doubt the adequacy of the administrative structure or the financial situation of a management company, taking into account the activities envisaged, they shall, within two months of receiving all the information referred to in paragraph 2, communicate that information to the competent authorities of the management company’s host Member State and shall inform the management company accordingly. They shall also communicate details of any compensation scheme intended to protect investors. Where the competent authorities of the management company’s home Member State refuse to communicate the information referred to in paragraph 2 to the competent authorities of the management company’s host Member State, they shall give reasons for such refusal to the management company concerned within two months of receiving all the information. The refusal or any failure to reply shall be subject to the right to apply to the courts in the management company’s home Member State. Where a management company wishes to pursue the activity of collective portfolio management referred to in Annex II, the competent authorities of the management company’s home Member State shall enclose with the documentation sent to the competent authorities of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of this Directive, a description of the scope of the management company’s authorisation and details of any restriction on the types of UCITS that the management company is authorised to manage. 4. A management company which pursues activities by a branch within the territory of the host Member State shall comply with the rules drawn up by the management company’s host Member State pursuant to Article 14. 5. The competent authorities of the management company’s host Member State shall be responsible for supervising compliance with paragraph 4. 6. Before the branch of a management company starts business, the competent authorities of the management company’s host Member State shall, within two months of receiving the information referred to in paragraph 2, prepare for supervising the compliance of the management company with the rules under their responsibility. 7. On receipt of a communication from the competent authorities of the management company’s host Member State or on the expiry of the period provided for in paragraph 6 without receipt of any communication from those authorities, the branch may be established and start business. 8. In the event of change of any particulars communicated in accordance with paragraph 2(b), (c) or (d), a management company shall give written notice of that change to the competent authorities of the management company’s home Member State and of the management company’s host Member State at least one month before implementing the change so that the competent authorities of the management company’s home Member State may take a decision on the change under paragraph 3 and the competent authorities of the management company’s host Member State may do so under paragraph 6. 9. In the event of a change in the particulars communicated in accordance with the first subparagraph of paragraph 3, the competent authorities of the management company’s home Member State shall inform the competent authorities of the management company’s host Member State accordingly. The competent authorities of the management company’s home Member State shall update the information contained in the attestation referred to in the third subparagraph of paragraph 3 and inform the competent authorities of the management company’s host Member State whenever there is a change in the scope of the management company’s authorisation or in the details of any restriction on the types of UCITS that the management company is authorised to manage. 10. In order to ensure consistent harmonisation of this Article ESMA may develop draft regulatory technical standards to specify the information to be notified in accordance with paragraphs 1, 2, 3, 8 and 9. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the transmission of information in accordance with paragraphs 3 and 9. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The Commission has today adopted a package of measures to deepen the Capital Markets Union (‘CMU’) together with the Communication "Completing Capital Markets Union by 2019 – time to accelerate delivery". The package includes this proposal and a proposal f or a regulation on facilitating the cross-border distribution of collective investment funds, which also amends Regulations (No) 345/2013 1 and 346/2013 2 , as well as a proposal for an enabling EU framework on covered bonds, a proposal for an enabling frame work on European crowdfunding service providers (ECSP)for businesses , a proposal on the law applicable to the third-party effects of assignments of claims, and a Communication on the applicable law to the proprietary effects of transactions in securities. This proposal amends certain provisions in Directive 2009/65/EC 3 and Directive 2011/61/EU 4 with the purpose of reducing regulatory barriers to the cross-border distribution of investment funds in the EU. These new measures are expected to reduce the cost for fund managers of going cross-border and should support more cross-border marketing of investment funds. Increased competition in the EU will help to give investors more choice and better value. This proposal was scheduled in the Commission Work Program me 2018 5 and should be seen in the broader context of the CMU action plan 6 and the CMU Mid-Term Review 7 , to establish a genuine internal capital market by addressing fragmentation in the capital markets, removing regulatory barriers to the financing of the economy and increasing the supply of capital to businesses. Regulatory barriers, namely Member States’ marketing requirements, regulatory fees and administrative and notification requirements represent a significant disincentive to the cross-border distri bution of funds. These barriers were identified in response to the Green Paper on Capital Markets Union 8 , the Call for Evidence on the EU regulatory framework for financial services 9 and the public consultation on barriers to the cross-border distribution of investment funds 10 . Investment funds are investment products created with the sole purpose of pooling investors’ capital and investing that capital collectively through a portfolio of financial instruments such as stocks, bonds and other securities. In the EU, investment funds can be categorised as undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIFs) managed by alternative investment fund managers. UCITS are covered by Directive 2009/65/EC and AIFs are covered by Directive 2011/61/EU. Directive 2011/61/EU is complemented by four fund frameworks: · Regulation (No) 345/2013 on European venture capital funds, · Regulation (No) 346/2013 on European social entrepreneurship funds, · Regulation 2015/460 11 on European long-term investment funds and · Regulation 2017/1131 12 on money market funds. The shared purpose of these rules is notably to make cross-border distribution easier while ensuring a high level of investor protection. Rules for EU investment fun ds allow fund managers to distribute and, with some exceptions, also to manage their funds across the EU . While EU investment funds have seen rapid growth, with a total of EUR 14 310 billion in assets under management in June 2017 13 , the EU investment fund market is still predominantly organised as a national market : 70 % of all assets under management are held by investment funds registered for sale only in their domestic market 14 . Only 37 % of UCITS and about 3 % of AIFs are registered for sale in more than three Member States. Compared to the United States, the EU market is smaller in terms of assets under management. However, there are considerably more funds in the EU (58 125 in the EU compared to 15 415 in the US) 15 . This means EU funds are on average sig nificantly smaller . This has a negative impact on economies of scale, the fees paid by investors and the way in which the internal market operates for investment funds. This proposal also recognizes that there are other factors outside the scope of this proposal which hold back the cross-border distribution of investment funds in the EU. These factors include national tax regimes applicable to investment funds and investors, vertical distribution channels and cultural preferences for domestic investment products. 
Revised version (Article 17 ):
1. In addition to meeting the conditions imposed in Articles 6 and 7, a management company wishing to establish a branch within the territory of another Member State to pursue the activities for which it has been authorised shall notify the competent authorities of its home Member State accordingly. 2. Member States shall require every management company wishing to establish a branch within the territory of another Member State to provide the following information and documents, when effecting the notification provided for in paragraph 1: (a) the Member State within the territory of which the management company plans to establish a branch; a programme of operations setting out the activities and services according to Article 6(2) and (3) envisaged and the organisational structure of the branch, which shall include a description of the risk management process put in place by the management company. It shall also include a description of the procedures and arrangements taken in accordance with Article 15; (c) the address in the management company’s host Member State from which documents may be obtained; and (d) the names of those responsible for the management of the branch. 3. Unless the competent authorities of the management company’s home Member State have reason to doubt the adequacy of the administrative structure or the financial situation of a management company, taking into account the activities envisaged, they shall, within two months of receiving all the information referred to in paragraph 2, communicate that information to the competent authorities of the management company’s host Member State and shall inform the management company accordingly. They shall also communicate details of any compensation scheme intended to protect investors. Where the competent authorities of the management company’s home Member State refuse to communicate the information referred to in paragraph 2 to the competent authorities of the management company’s host Member State, they shall give reasons for such refusal to the management company concerned within two months of receiving all the information. The refusal or any failure to reply shall be subject to the right to apply to the courts in the management company’s home Member State. Where a management company wishes to pursue the activity of collective portfolio management referred to in Annex II, the competent authorities of the management company’s home Member State shall enclose with the documentation sent to the competent authorities of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of this Directive, a description of the scope of the management company’s authorisation and details of any restriction on the types of UCITS that the management company is authorised to manage. 4. A management company which pursues activities by a branch within the territory of the host Member State shall comply with the rules drawn up by the management company’s host Member State pursuant to Article 14. 5. The competent authorities of the management company’s host Member State shall be responsible for supervising compliance with paragraph 4. 6. Before the branch of a management company starts business, the competent authorities of the management company’s host Member State shall, within two months of receiving the information referred to in paragraph 2, prepare for supervising the compliance of the management company with the rules under their responsibility. 7. On receipt of a communication from the competent authorities of the management company’s host Member State or on the expiry of the period provided for in paragraph 6 without receipt of any communication from those authorities, the branch may be established and start business. 8. In the event of change of any particulars communicated in accordance with paragraph 2(b), (c) or (d), a management company shall give written notice of that change to the competent authorities of the management company’s home Member State and of the management company’s host Member State at least one month before implementing the change so that the competent authorities of the management company’s home Member State may take a decision on the change under paragraph 3 and the competent authorities of the management company’s host Member State may do so under paragraph 6. 9. In the event of a change in the particulars communicated in accordance with the first subparagraph of paragraph 3, the competent authorities of the management company’s home Member State shall inform the competent authorities of the management company’s host Member State accordingly. The competent authorities of the management company’s home Member State shall update the information contained in the attestation referred to in the third subparagraph of paragraph 3 and inform the competent authorities of the management company’s host Member State whenever there is a change in the scope of the management company’s authorisation or in the details of any restriction on the types of UCITS that the management company is authorised to manage. 10. In order to ensure consistent harmonisation of this Article ESMA may develop draft regulatory technical standards to specify the information to be notified in accordance with paragraphs 1, 2, 3, 8 and 9. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the transmission of information in accordance with paragraphs 3 and 9. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 18 
1. Any management company wishing to pursue the activities for which it has been authorised within the territory of another Member State for the first time under the freedom to provide services shall communicate the following information to the competent authorities of the management company’s home Member State: (a) the Member State within the territory of which the management company intends to operate; and (b) a programme of operations stating the activities and services referred to in Article 6(2) and (3) envisaged which shall include a description of the risk management process put in place by the management company. It shall also include a description of the procedures and arrangements taken in accordance with Article 15. 2. The competent authorities of the management company’s home Member State shall, within one month of receiving the information referred to in paragraph 1, forward it to the competent authorities of the management company’s host Member State. The competent authorities of the management company’s home Member State shall also communicate details of any applicable compensation scheme intended to protect investors. Where a management company wishes to pursue the activity of collective portfolio management as referred to in Annex II, the competent authorities of the management company’s home Member State shall enclose with the documentation sent to the competent authorities of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of this Directive, a description of the scope of the management company’s authorisation and details of any restriction on the types of UCITS that the management company is authorised to manage. Notwithstanding Articles 20 and 93, the management company may then start business in the management company’s host Member State. 3. A management company which pursues activities under the freedom to provide services shall comply with the rules drawn up by the management company’s home Member State pursuant to Article 14. 4. Where the content of the information communicated in accordance with paragraph 1(b) is amended, the management company shall give notice of the amendment in writing to the competent authorities of the management company’s home Member State and of the management company’s host Member State before implementing the change. The competent authorities of the management company’s home Member State shall update the information contained in the attestation referred to in paragraph 2 and inform the competent authorities of the management company’s host Member State whenever there is a change in the scope of the management company’s authorisation or in the details of any restriction on the types of UCITS that the management company is authorised to manage. 5. In order to ensure consistent harmonisation of this Article ESMA may develop draft regulatory technical standards to specify the information to be notified in accordance with paragraphs 1, 2 and 4. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the transmission of information in accordance with paragraphs 2 and 4. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Each undertaking for collective investment in transferable securities (UCITS) must provide ‘k ey investor information’ in accordance with Directive 2009/65/EC 1 . The information on objectives and investment policy, risk and reward profile, charges, past performance and other practical details helps investors to understand the essential characteristics of the UCITS and to make informed investment decisions. Articles 78 to 82, and 94 of the Directive specify the main principles of the k ey investor information . Commission Regulation (EU) No 583/2010 2 lays down further rules on its content and format . UCITS qualify as packaged retail and insurance-based investment products (PRIIPs) within the meaning of Regulation (EU) No 1286/2014 3 , which requires that all PRIIPs be accompanied by a ‘key information document’. The document contains i nformation on the PRIIP’s risk and reward profile, including the possible maximum loss of invested capital and appropriate performance scenarios, the costs retail investors have to bear when investing in it, and other details. Again, this information helps retail investors to understand the essential characteristics of the product and to make informed investment decisions. Commission Delegated Regulation (EU) 2017/653 4 lays down detailed rules on the presentation, content, review, revision and provision of the document. Delegated Regulation (EU) 2016/1904 5 lays down rules on product intervention. Article 32 of Regulation (EU) No 1286/2014 provides for a transitional arrangement whereby management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS are temporarily exempted from the requirement to provide retail investors with a key information document. The arrangement currently applies until 31 December 2021. This Directive is accompanied by two further measures. First, the Commission is proposing that the transitional arrangement in Regulation (EU) No 1286/2014 be extended to 30 June 2022. This will allow the time necessary to prepare for the end of the transitional arrangement and to implement the other measure (which involves amendments to Delegated Regulation (EU) 2017/653) from 1 July 2022. The three measures are therefore synchronised in terms of application dates. As things stand, as of 1 July 2022 retail investors in UCITS would receive both a key information document in accordance with Regulation (EU) No 1286/2014 and key investor information in accordance with Directive 2009/65/EC. It is desirable to avoid a situation where retail investors receive two different pre-contractual disclosure documents in respect of the same UCITS. This Directive ensures that a key information document drawn up, provided, revised and translated for a given UCITS in accordance with the Regulation is considered as satisfying the key investor information requirements of Directive 2009/65/EC. This initiative is not part of the regulatory fitness programme (REFIT). 
Revised version (Article 18 ):
Any management company wishing to pursue the activities for which it has been authorised within the territory of another Member State for the first time under the freedom to provide services shall communicate the following information to the competent authorities of the management company’s home Member State: (a) the Member State within the territory of which the management company intends to operate; and (b) a programme of operations stating the activities and services referred to in Article 6(2) and (3) envisaged which shall include a description of the risk management process put in place by the management company. It shall also include a description of the procedures and arrangements taken in accordance with Article 15. 2. The competent authorities of the management company’s home Member State shall, within one month of receiving the information referred to in paragraph 1, forward it to the competent authorities of the management company’s host Member State. The competent authorities of the management company’s home Member State shall also communicate details of any applicable compensation scheme intended to protect investors. Where a management company wishes to pursue the activity of collective portfolio management as referred to in Annex II, the competent authorities of the management company’s home Member State shall enclose with the documentation sent to the competent authorities of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of this Directive, a description of the scope of the management company’s authorisation and details of any restriction on the types of UCITS that the management company is authorised to manage. Notwithstanding Articles 20 and 93, the management company may then start business in the management company’s host Member State. The competent authorities of the management company’s home Member State shall, within one month of receiving the information referred to in paragraph 1, forward it to the competent authorities of the management company’s host Member State. The competent authorities of the management company’s home Member State shall also communicate details of any applicable compensation scheme intended to protect investors. Where a management company wishes to pursue the activity of collective portfolio management as referred to in Annex II, the competent authorities of the management company’s home Member State shall enclose with the documentation sent to the competent authorities of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of this Directive, a description of the scope of the management company’s authorisation and details of any restriction on the types of UCITS that the management company is authorised to manage. Notwithstanding Articles 20 and 93, the management company may then start business in the management company’s host Member State. 3. A management company which pursues activities under the freedom to provide services shall comply with the rules drawn up by the management company’s home Member State pursuant to Article 14. 4. Where the content of the information communicated in accordance with paragraph 1(b) is amended, the management company shall give notice of the amendment in writing to the competent authorities of the management company’s home Member State and of the management company’s host Member State before implementing the change. The competent authorities of the management company’s home Member State shall update the information contained in the attestation referred to in paragraph 2 and inform the competent authorities of the management company’s host Member State whenever there is a change in the scope of the management company’s authorisation or in the details of any restriction on the types of UCITS that the management company is authorised to manage. 5. In order to ensure consistent harmonisation of this Article ESMA may develop draft regulatory technical standards to specify the information to be notified in accordance with paragraphs 1, 2 and 4. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the transmission of information in accordance with paragraphs 2 and 4. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010. In order to ensure consistent harmonisation of this Article ESMA may develop draft regulatory technical standards to specify the information to be notified in accordance with paragraphs 1, 2 and 4. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for the transmission of information in accordance with paragraphs 2 and 4. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 19 
1. A management company which pursues the activity of collective portfolio management on a cross-border basis by establishing a branch or under the freedom to provide services shall comply with the rules of the management company’s home Member State which relate to the organisation of the management company, including delegation arrangements, risk-management procedures, prudential rules and supervision, procedures referred to in Article 12 and the management company’s reporting requirements. Those rules shall be no stricter than those applicable to management companies conducting their activities only in their home Member State. 2. The competent authorities of the management company’s home Member State shall be responsible for supervising compliance with paragraph 1. 3. A management company which pursues the activity of collective portfolio management on a cross-border basis by establishing a branch or in accordance with the freedom to provide services shall comply with the rules of the UCITS home Member State which relate to the constitution and functioning of the UCITS, namely the rules applicable to: (a) the setting up and authorisation of the UCITS; (b) the issuance and redemption of units and shares; (c) investment policies and limits, including the calculation of total exposure and leverage; (d) restrictions on borrowing, lending and uncovered sales; (e) the valuation of assets and the accounting of the UCITS; (f) the calculation of the issue or redemption price, and errors in the calculation of the net asset value and related investor compensation; (g) the distribution or reinvestment of the income; (h) the disclosure and reporting requirements of the UCITS, including the prospectus, key investor information and periodic reports; (i) the arrangements made for marketing; (j) the relationship with unit-holders; (k) the merging and restructuring of the UCITS; (l) the winding-up and liquidation of the UCITS; (m) where applicable, the content of the unit-holder register; (n) the licensing and supervision fees regarding the UCITS; and (o) the exercise of unit-holders’ voting rights and other unit-holders’ rights in relation to points (a) to (m). 4. The management company shall comply with the obligations set out in the fund rules or in the instruments of incorporation, and the obligations set out in the prospectus, which shall be consistent with the applicable law as referred to in paragraphs 1 and 3. 5. The competent authorities of the UCITS home Member State shall be responsible for supervising compliance with paragraphs 3 and 4. 6. The management company shall decide and be responsible for adopting and implementing all the arrangements and organisational decisions which are necessary to ensure compliance with the rules which relate to the constitution and functioning of the UCITS and with the obligations set out in the fund rules or in the instruments of incorporation, and with the obligations set out in the prospectus. 7. The competent authorities of the management company’s home Member State shall be responsible for supervising the adequacy of the arrangements and organisation of the management company so that the management company is in a position to comply with the obligations and rules which relate to the constitution and functioning of all the UCITS it manages. 8. Member States shall ensure that any management company authorised in a Member State is not subject to any additional requirement established in the UCITS home Member State in respect of the subject matter of this Directive, except in the cases expressly referred to in this Directive.
Amendment rationale: CONTEXT OF THE PROPOSAL · Reasons for and objectives of the proposal This proposal is part of a package of measures to further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks. It is in line with the Commission priorities to make Europe fit for the digital age and to build a future-ready economy that works for the people. The digital finance package includes a new Strategy on digital finance for the EU financial sector 1 with the aim to ensure that the EU embraces the digital revolution and drives it with innovative European firms in the lead, making the benefits of digital finance available to European consumers and businesses. In addition to this proposal, the package also includes a proposal for a regulation on markets in crypto assets 2 , a proposal for a regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) 3 and a proposal for a regulation on digital operational resilience for the financial sector 4 . The reasons for, and objectives of, the two sets of legislative measures have been set out in the explanatory memoranda of the proposal for a regulation on a pilot regime for distributed ledger technology market infrastructures, proposal for a regulation on markets in crypto assets and proposal for a regulation on digital operational resilience, respectively, and apply here as well. The particular reasons for this proposal for a directive is that, in order to provide legal certainty as regards crypto assets and achieve the objectives of strengthening digital operational resilience, it is necessary to establish a temporary exemption for multilateral trading facilities and amend or clarify certain provisions in existing EU financial services directives. · Consistency with existing provisions in the policy area This proposal, similar to the proposals for regulation it accompanies, is part of a broader ongoing work at European and international level aimed at (i) strengthening the cybersecurity in financial services and address broader operational risks, and (ii) providing a clear, proportionate and enabling EU legal framework for crypto-asset service providers. · Consistency with other Union policies As stated by President von der Leyen in her Political Guidelines, 5 and set-out in the Communication ‘Shaping Europe’s digital future’, 6 it is crucial for Europe to reap all the benefits of the digital age and to strengthen its industry and innovation capacity, within safe and ethical boundaries. As regards crypto assets, this proposal is closely linked with wider Commission policies on blockchain technology, as crypto-assets, as the main application of blockchain technologies, are inextricably linked to the promotion of blockchain technology throughout Europe. As regards operational resilience, the European strategy for data 7 sets out four pillars - data protection, fundamental rights, safety and cyber-security - as essential pre-requisites for a society empowered by the use of data. A legislative framework strengthening the digital operational resilience of the Union’s financial entities is consistent with these policy objectives. The proposal would also support policies aimed at recovering from the coronavirus, as it would ensure that increased reliance on digital finance goes hand in hand with operational resilience. Both proposals also respond to calls from the CMU High-Level Forum to establish clear rules for the use of crypto asset (recommendation 7) and to put in place new rules on cyber resilience.
Revised version (Article 19 ):
1. A management company which pursues the activity of collective portfolio management on a cross-border basis by establishing a branch or under the freedom to provide services shall comply with the rules of the management company’s home Member State which relate to the organisation of the management company, including delegation arrangements, risk-management procedures, prudential rules and supervision, procedures referred to in Article 12 and the management company’s reporting requirements. Those rules shall be no stricter than those applicable to management companies conducting their activities only in their home Member State. 2. The competent authorities of the management company’s home Member State shall be responsible for supervising compliance with paragraph 1. 4. The management company shall comply with the obligations set out in the fund rules or in the instruments of incorporation, and the obligations set out in the prospectus, which shall be consistent with the applicable law as referred to in paragraphs 1 and 3. 5. The competent authorities of the UCITS home Member State shall be responsible for supervising compliance with paragraphs 3 and 4. 6. The management company shall decide and be responsible for adopting and implementing all the arrangements and organisational decisions which are necessary to ensure compliance with the rules which relate to the constitution and functioning of the UCITS and with the obligations set out in the fund rules or in the instruments of incorporation, and with the obligations set out in the prospectus. 7. The competent authorities of the management company’s home Member State shall be responsible for supervising the adequacy of the arrangements and organisation of the management company so that the management company is in a position to comply with the obligations and rules which relate to the constitution and functioning of all the UCITS it manages. 8. Member States shall ensure that any management company authorised in a Member State is not subject to any additional requirement established in the UCITS home Member State in respect of the subject matter of this Directive, except in the cases expressly referred to in this Directive.
Article 20 
1. Without prejudice to Article 5, a management company which applies to manage a UCITS established in another Member State shall provide the competent authorities of the UCITS home Member State with the following documentation: (a) the written agreement with the depositary referred to in Articles 23 and 33; and (b) information on delegation arrangements regarding functions of investment management and administration referred to in Annex II. If a management company already manages other UCITS of the same type in the UCITS home Member State, reference to the documentation already provided shall be sufficient. 2. In so far as it is necessary to ensure compliance with the rules for which they are responsible, the competent authorities of the UCITS home Member State may ask the competent authorities of the management company’s home Member State for clarification and information regarding the documentation referred to in paragraph 1 and, based on the attestation referred to in Articles 17 and 18, as to whether the type of UCITS for which authorisation is requested falls within the scope of the management company’s authorisation. Where applicable, the competent authorities of the management company’s home Member State shall provide their opinion within 10 working days of the initial request. 3. The competent authorities of the UCITS home Member State may refuse the application of the management company only if: (a) the management company does not comply with the rules falling under their responsibility pursuant to Article 19; (b) the management company is not authorised by the competent authorities of its home Member State to manage the type of UCITS for which authorisation is requested; or (c) the management company has not provided the documentation referred to in paragraph 1. Before refusing an application, the competent authorities of the UCITS home Member State shall consult the competent authorities of the management company’s home Member State. 4. Any subsequent material modifications of the documentation referred to in paragraph 1 shall be notified by the management company to the competent authorities of the UCITS home Member State. 5. In order to ensure consistent harmonisation of this Article, ESMA may develop draft regulatory technical standards to determine the information to be provided to the competent authorities in the application for managing a UCITS established in another Member State. The Commission may adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for such provision of information. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment rationale: Context of the proposal 1.1. General Since the UCITS Directive was adopted in 1985, the rules relating to depositaries in the Directive have remained unchanged: they consist of a number of generic principles setting out the duties of depositaries. The principal UCITS rule is that all assets of a UCITS fund must be entrusted to a depositary. This depositary shall, in accordance with national law, be liable for losses suffered as a result of a failure to perform its duties. The UCITS Directive, apart from employing a negligence-based standard, makes reference to national laws in respect of the precise contours of these duties. This reference leaves considerable scope for diverging interpretations regarding the scope of a depositary's duties and the liability for the negligent performance thereof. As a result, different approaches have developed across the European Union, leading to UCITS investors facing uneven levels of protection in different jurisdictions. The potential consequences of national divergences in the liability standard came to the fore following the Lehman bankruptcy[1] and the Madoff fraud. In particular, the consequences of the Madoff fraud have been particularly acute in some EU Member States. In one instance, a particular fund that acted as a feeder fund for Madoff lost around € 1.4 billion. The large scale of the Madoff fraud essentially went undetected for a long period because the depositary had delegated custody of the assets to an entity run by Bernard Madoff, the US broker "Bernard Madoff Investment Securities". At the same time, Bernard Madoff was also the manager and broker responsible for purchasing financial instruments on behalf of the fund. The Madoff case raised several important issues in relation to UCITS funds. First, it raises the question of the precise conditions under which a depositary acting on behalf of a UCITS fund can delegate safekeeping of assets to a sub-custodian? The current UCITS Directive is silent on the precise conditions under which custody may be delegated. The Madoff case also raises the issue of conflicts of interest. More particularly, to what extent should the manager of an investment fund be allowed to belong to the same corporate group as the sub-custodian to whom custody has been delegated? Can it really be expected that a fund manager will always behave in a manner conducive to protecting the interests of a fund's investors where the manager is also the sub-custodian of the assets they invest in? In respect of conflicts of interests that may arise in relation to the independence of the depositary, the UCITS Directive is limited to stipulating the general principle that a company cannot manage a UCITS fund and also act as its depositary. The UCITS Directive contains no rule to cover the conflicts of interest that may arise in case the management function and the depositary functions are delegated to one and the same third party. Finally, the Madoff case has also revealed general uncertainties within the UCITS framework, especially in relation to the principal custodian's liability in case of delegation of custody to a sub-custodian. The issue of liability in case of delegation, in the absence of hard and fast rules in the relevant UCITS Directive, is dealt with differently in individual Member States. The Madoff case brought to the fore an essential development in the UCITS sphere: while the UCITS provisions on depositaries have remained unchanged, the investment environment for UCITS has evolved. UCITS are now able to invest in a wider range of financial assets, which may be more complex and also may be issued and held in custody outside the EU (for instance, in emerging markets); fund portfolios are increasingly diverse and international. As a consequence, holding assets through sub-custody arrangements, so as to match the fund's investment strategies, have become increasingly common. The Madoff fraud has shown that the risks associated with the use of delegated sub-custody networks are not always negligible. Assets can be lost at the level of the sub-custodian, which might include loss through fraud committed by the sub-custodian, negligence of the sub-custodian or the bankruptcy of the sub-custodian. Under the current UCITS framework, it is unclear what duties a depositary has in the selection and the oversight of the sub-custodian. As a result, there is a legal uncertainty to what extent a depositary is liable for losses at sub-custodian level. It must be noted that on 12 July 2010 the Commission proposed the extension of investor compensation schemes to cover investors in UCITS. The amendments to Directive 97/9/EC aimed to cover situations where a depositary is liable for the loss of assets of UCITS but is not able to cover its liabilities. This should serve as an additional means to increase the protection for investors in UCITS. However, at this stage this proposal has not been accepted by the Council and is subject to further negotiations. In addition, the financial crisis also revealed that the remuneration and incentive schemes commonly applied within financial institutions were themselves exacerbating the impact and scale of the crisis. Remuneration policies contributed to short-term decision making and created incentives for taking excessive risk. Finally, the analysis of national sanctioning regimes carried out by the Commission, along with the Committees of Supervisors (now transformed into European Supervisory Authorities) has shown a number of divergences and weaknesses which may have a negative impact on the proper application of EU legislation, the effectiveness of financial supervision, and ultimately on competition, stability and integrity of financial markets and consumer protection. Therefore, in its Communication of 9 December 2010 "Reinforcing sanctioning regimes in the financial sector"[2] the Commission suggested setting EU minimum common standards on certain key issues, in order to promote convergence and reinforcement of national sanctioning regimes. The Commission has included such common rules, adapted to the specifics of the sectors concerned, in all its recent proposals for the review of the sectoral EU legislation concerned (CRD IV, MiFID, Market Abuse Directive, Transparency Directive). Extending this work to the UCITS framework is a natural additional step in this process. This proposal forms part of a wider legislative package dedicated to rebuilding consumer trust in financial markets. The package has two other parts. The first is an extensive overhaul of the Insurance Mediation Directive 2002/92/EC to ensure that customers benefit from a high level of protection when buying insurance products. The final part of the package aims at improving transparency in the investment market for retail investors (a proposal for a Regulation on key information documents for investment products).
Revised version (Article 20 ):
1. Without prejudice to Article 5, a management company which applies to manage a UCITS established in another Member State shall provide the competent authorities of the UCITS home Member State with the following documentation: (a) the written contract with the depositary referred to in Article 22(2); (b) information on delegation arrangements regarding functions of investment management and administration referred to in Annex II. If a management company already manages other UCITS of the same type in the UCITS home Member State, reference to the documentation already provided shall be sufficient. 2. In so far as it is necessary to ensure compliance with the rules for which they are responsible, the competent authorities of the UCITS home Member State may ask the competent authorities of the management company’s home Member State for clarification and information regarding the documentation referred to in paragraph 1 and, based on the attestation referred to in Articles 17 and 18, as to whether the type of UCITS for which authorisation is requested falls within the scope of the management company’s authorisation. Where applicable, the competent authorities of the management company’s home Member State shall provide their opinion within 10 working days of the initial request. 3. The competent authorities of the UCITS home Member State may refuse the application of the management company only if: (a) the management company does not comply with the rules falling under their responsibility pursuant to Article 19; (b) the management company is not authorised by the competent authorities of its home Member State to manage the type of UCITS for which authorisation is requested; or (c) the management company has not provided the documentation referred to in paragraph 1. Before refusing an application, the competent authorities of the UCITS home Member State shall consult the competent authorities of the management company’s home Member State. 4. Any subsequent material modifications of the documentation referred to in paragraph 1 shall be notified by the management company to the competent authorities of the UCITS home Member State. 5. In order to ensure consistent harmonisation of this Article, ESMA may develop draft regulatory technical standards to determine the information to be provided to the competent authorities in the application for managing a UCITS established in another Member State. The Commission may adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010. In order to ensure uniform conditions of application of this Article, ESMA may develop draft implementing technical standards to establish standard forms, templates and procedures for such provision of information. Power is conferred on the Commission to adopt the implementing technical standards referred to in the third subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.