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New circular in relation with the autonomy of the management of collective investment undertakingsKPMG Legal Advisers, Brussels

According to Article 108, paragraph 2, of the Law of December 4 1990 on financial transactions and financial markets, a Belgian investment undertaking has to be managed in the sole interest of the participants.

This provision has been executed by the Royal Decree of March 4 1991 concerning certain collective investment undertakings, which provides that, in order to obtain registration by the Banking and Finance Commission, a management/investment company has to demonstrate that it has an adequate organization - for administrative, accounting, financial and technical purposes - guaranteeing an autonomous management of the investment undertaking concerned (Article 3, §1, 2° and §2, 2°).

A collective investment undertaking which is governed by foreign law and which does not meet the conditions of Directive 85/611/EEC on the co-ordination of laws, regulations, and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) has to make the same demonstration.

Given that the fast-growing investment industry is gradually gaining a more international and competitive dimension, and in order to maintain public confidence in the industry, the Banking and Finance Commission published, on May 18 2000, a circular in order to further explain the obligation to have an organization guaranteeing an autonomous management.

Circular UCI 1/2000 deals especially with the issue of the composition, the tasks and the working of the board of directors of a management/investment company, and provides specific rules on the outsourcing of portfolio or administrative/accounting management.

The circular entered into force on the June 1 2000.

Yvan Stempnierwsky

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