The Council of the European Union has approved legislation that would allow fund companies to sell in any European Union country, as long as the fund is registered in one of them.
The Council of the Ministers of the Economy and Finances of the European Union voted to amend the 1985 UCITS (Undertakings For Collective Investment In Transferable Securities) Directive, which has jurisdiction over most European funds. The amendment also institutes a simplified prospectus, creating uniformity in prospectuses within the EU.
With the passage of this amendment, another amendment to the UCITS Directive, which was passed by the Council in October, will also take effect. The previous amendment adds funds of funds and money-market funds to those already regulated by the UCITS Directive, and relaxes limits on index funds, raising the maximum percentage of assets they can invest in a single issuer.
'The new legislative framework will ensure a high level of protection for individual investors by setting standards for both the investment products and the managers undertaking the investment,' according to a statement from the EU Council. 'As regards the products [the first proposal], the proposed rules aim to ensure that funds raised from the public are invested in suitably qualified assets and that basic risk-spreading requirements are fully respected. As for the portfolio managers [the proposal approved this week], the rules are set to impose harmonised [sic] market access and operating conditions and controls. This dual approach is expected to encourage a climate of investor confidence in which the markets can develop on an EU-wide basis.'
In February 1993, European authorities began to discuss widening the scope of the 1985 directive. The European Parliament proposed the amendments in 1998, and last June, they were approved by the European Commission.
