Decree Law 252/2003 of October 17, implementing EC Directives 2001/107/EC and 108/2001/EC, sets out new provisions regarding undertakings for collective investment in transferable securities (Ucits) in three main areas. They are: Ucits management companies; the activity of Ucits; and the information to be provided to investors in Ucits.
The law enters into force on January 1 2004, but it establishes a transitory period of two years for Ucits incorporated under the previous law. Such Ucits will only be subject to the new rules on January 1 2006.
In the case of collective investment institutions outside Portugal, one of the most important changes relates to information provided to investors and the entity responsible for that information. According to the previous decree law, one of the main information documents submitted before subscription was the complementary informative note (CIN), which was the responsibility of, and prepared by, each Portuguese distributor of the units of the fund, which meant that each fund had as many CINs as distributors.
According to the new decree law, the management entity is now responsible for issuing a simplified prospectus for each Ucit, and for each group of Ucits. The simplified prospectus may also be used as a marketing document in any EU member state, notwithstanding the need for translation and description of the local tax regime. So the marketing of units of a Ucits of another EU member state will be less confusing and bureaucratic (basically, the same document can be used regardless of the number of distributors).
It is the understanding of the securities regulator, the Comissão de Mercado de Valores Mobiliários (CMVM), that in the case of collective investment institutions in EU member states that have not yet adopted the simplified prospectus, the CIN should be filed in Portugal.
Other important provisions established by the new decree law are the express recognition of the European passport regime for Ucits management companies, and the enlargement of the scope of activity of these types of entities. They are now authorized to carry on discretionary individual portfolio management activities for a third party, management of real estate funds and investment advice activities.
Lastly, the decree law has also updated the types of investments admissible to Ucits. In general terms, it increases the types of investment in which Ucits may invest.
The decree law has been complemented by a regulation (CMVM Regulation 15/2003), which clarifies and details the regulatory competences conferred by the decree law to the CMVM. This regulation, although dealing only with contractual Ucits (constituted as common funds managed by management companies), will also be applicable to Ucits under statute (constituted as investment companies), once they have been regulated.
The preamble to the CMVM regulation also states that the regulation is intended to generally revise the regulations that apply to investment
funds in transferable securities, adapting them to international standards, simplifying and harmonizing them with a sole piece of regulation.
The CMVM regulation also covers the definition of collective undertakings according to the underlying assets, requirements for investor information, performance fees, and soft and hard commissions, among other issues.
Sofia Gouveia Pereira and Margarida Lino Santos