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Denmark adopted a new Act on Investment Associations, Special-Purpose Associations and other collective investment schemes (CIS) on December 4 2003. The Act implements part of the UCITS Directive (Council Directive 85/611/EEC as amended) and introduces a couple of new features. The Act will in all material respects come into force on January 1 2004.

The Act intends to regulate all forms of CIS, including future schemes, and it differentiates between (i) investment associations, such as Ucits (Undertakings for Collective Investment in Transferable Securities), (ii) special-purpose associations, (iii) non-Danish Ucits, (iv) non-Danish non-ucits and (v) other CIS. It introduces a new form of CIS (few-member schemes), which are schemes with only a few members consisting of institutional investors and high net worth individuals. These will be subject to less strict regulation.

The Act also covers activities carried out in Denmark by non-Danish Ucits and non-Ucits and expands the area of regulated activities to include indirect marketing. This means shares or interests of non-Danish Ucits and non-Ucits that form part of a financial product marketed in Denmark, will be subject to Danish regulation. This implies that non-Danish entities carrying out indirect marketing in Denmark must submit a number of documents translated into Danish to the Danish Financial Supervisory Authority prior to carrying out such marketing.

However, non-Danish Ucits and Non-Ucits carrying out direct or indirect marketing in Denmark without a marketing permit in accordance with previous legislation may continue to do so if they register with the Danish FSA no later than June 1 2004. The Act does not say how registration should be made. The Danish FSA will most likely issue an executive order on the matter.

Regina M Andersen

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