Updated Q&A on the application of the UCITS Directive

On 21st November 2016, the European Securities and Markets Authorities updated its Questions & Answers on the application of the UCITS Directive (the “Updated Q&A”). 

Article 56(2)(c) and Article 55(1) of the UCITS Directive set out two limits whereby (i) a UCITS may not acquire more than 25% of the units issued by a target fund (control limit) and (ii) a UCITS may not invest that more than 10% of its assets in a target fund (concentration limit), knowing that (nearly) all of the EU member states opted for the flexibility provided for in the UCITS Directive to increase this limit to 20%.

The Updated Q&A specifies that where investments are made in sub-funds of an umbrella-structure, each sub-fund is to be considered separately as a target fund when applying these limits.

In Luxembourg, this had already been clarified by section 2.1 of the CSSF FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment (the “2010 Law”) respectively article 46 (1) of the 2010 Law.

Luxembourg based UCITS and management companies already following these rules should hence not be concerned by the Updated Q&A.