A key characteristic of Undertakings for the Collective Funding in Transferable Securities (“UCITS” fund) is the Key Investor Data Doc (“KIID”), which gives the retail investor with simplified info from the prospectus.
UCITS additionally qualify as Packaged Retail Funding and Insurance coverage Merchandise (“PRIIPS”). Since PRIIPs are required to do a Key Data Doc (“KID”), promoters of a UCITS fund had been technically to offer each the KIID in addition to the KID. Thus, these conflicting necessities would have created uncertainty for the retail investor.
Initially, an exemption was offered for funding firms and administration firms who’re selling a UCITS to proceed utilizing a KIID beneath the UCITS framework with out the necessity for doing a KID as required by the PRIIPS laws. The exemption was initially given till the thirty first of December 2021, however it was prolonged till the thirty first of December 2022.
In a round dated the twenty third of Might 2022, the MFSA gives ‘Amendments to the Funding Providers Rulebooks to Transpose and Implement EU Directives, Laws and EBA Pointers’. The fourth level of this round pertains to the transposition of ‘Directive (EU) 2021/2261 of the European Parliament and of the Council of 15 December 2021 amending Directive 2009/65/EC as regards the usage of key info paperwork by administration firms of UCITS’.
The seventh Recital of EU Directive 2021/2261 states that: “It ought to subsequently be laid down that the KID is to be thought of to fulfill the necessities relevant to the important thing investor info.” Moreover, this recital provides that the funding firms and administration firms that are selling a UCITS fund “shouldn’t be required by competent authorities to offer the important thing investor info, and solely the KID ought to be offered to these traders.” In response to Article 2 of the Directive, this can grow to be efficient from the first of January 2023.
Moreover, the MFSA’s round gives Annex D, a doc containing the updates for Half BII of the Funding Providers Guidelines for Retail Collective Funding Schemes. This annex introduces three new Normal License Circumstances (“SLCs”). While SLC 6.2.25 gives that these amendments will begin making use of from the start of 2023, SLCs 6.2.23 and 6.2.24 present that retail traders of UCITS may be supplied with a KID beneath PRIIPS laws to suffice the KIID requirement beneath UCITS laws. Nonetheless, non-retail traders of UCITS should nonetheless be given a KIID in accordance with the UCITS framework.
Thus, the MFSA’s round on this EU directive removes the necessity to proceed suspending the exemption which is scheduled to run out on the finish of 2022 and can present additional readability to retail traders prior to creating their respective funding selections. From a juridical perspective, these amendments consolidate the EU’s effort to guard retail traders by means of the PRIIPS framework by permitting PRIIPS laws to successfully supersede sure parts of UCITS laws referring to retail traders.
