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Article (19/400)
European regulation update: investor protection
European regulation update: investor protection

European regulation update: investor protection


Focus on the latest European regulatory developments

  • Alternative Investment Fund Managers Directive (AIFMD) 
  • Institutions for Occupational Retirement Provision Directive (IORP II)
  • Shareholders Rights Directive (SRD)
  • Undertakings for Collective Investments in Transferable Securities Directive (UCITS V)


Investor protection


AIFM Directive


On 16 December 2016, the European Securities and Markets Authority (ESMA) published an update of its Q&A on the application of the AIFMD. The document was updated to include a new Q&A on reporting obligations by non-EU alternative investment fund managers (AIFMs), clarifying the circumstances under which information on EU master alternative investment funds (AIFs) should be reported to competent authorities.

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IORP II Directive


On 23 December 2016, a recast directive on the IORP provision was published in the Official Journal of the European Union (OJEU). The directive aims at facilitating the development and better protection of pension scheme members and beneficiaries. It will also improve the governance and transparency of IORPs and facilitate their cross-border activities. Member States have two years to transpose the directive into their national laws since its entry into force on 12 January 2017.

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Shareholders Rights Directive

On 13 December 2016, the Council formally endorsed the final agreement with the European Parliament (EP) and the EC on the Shareholder Rights Directive. The SRD addresses, among others, shareholder engagement through clarifying rules on an asset manager's engagement policy, the remuneration policy of directors, as well as lays out provisions for related party transactions. Following the final adoption by the Council and the EP next year, the revised directive will be published in the OJEU.

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UCITS V Directive


On 30 January 2017, after two consultations, ESMA published its final opinion concerning share classes of UCITS. Under the directive, UCITS can offer different share classes to investors, but the directive does not prescribe whether and to what extent share classes of a given UCITS can differ from one another.

ESMA identified four high-level principles that should be followed when setting up different share classes:

  • Firstly, common investment objective – share classes of the same fund should have a common investment objective reflected by a common pool of assets
  • Secondly, non-contagion – UCITS management companies should implement appropriate procedures to minimize the risk that features specific to one share class could have a potentially adverse impact on other share classes of the same fund
  • Thirdly, pre-determination – all features of the share class should be pre-determined before the fund is set up
  • Finally, transparency – differences between share classes of the same fund should be disclosed to investors when they have a choice between two or more classes.

ESMA recommends that share classes established prior to the opinion, which do not comply with these principles should be allowed to continue in order to mitigate the impact on investors. Such share classes should be closed to new investors within six months of the publication of the opinion, and for additional investment by existing investors within 18 months of publication.

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