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UCITS

UCITS, or “Undertakings for Collective Investment in Transferable Securities”, may be established in Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations (S.I. 352/2011), (the “UCITS Regulations”). This legislation implemented “UCITS IV” in Ireland.

Ireland is one of the leading jurisdictions for the domiciliation of cross-border UCITS and these may be established in Ireland in any of the following legal forms:

- an open-ended investment company with variable capital;

- an open-ended unit trust; or

- an open-ended common contractual fund (“CCF”).

The principal advantage of having a fund authorised as a UCITS is that, once authorised in one EU Member State, it can, through a “passport” regime, be sold in all other EU Member States (subject to a registration process in the other relevant Member States) without requiring further authorisation in each target Member State. UCITS are also having an impact outside Europe. The UCITS brand is now globally recognised and, due to its reputation as a regulated product with a strong emphasis on investor protection, regulators in the Far East, the Middle East and in Latin America, for example, are comfortable to allow UCITS to be sold in their jurisdictions following local registration. This is critical for managers seeking global distribution opportunities.

UCITS are regarded as the most highly-regulated funds because of the necessity to comply with a common European standard. UCITS operate on the basis of their potential for availability to the retail investor (although most are, in fact, targeted at institutional investors) and their investment and borrowing restrictions are generally not negotiable. These restrictions are aimed at ensuring an acceptable level of liquidity and risk diversification while limiting leverage.

UCITS Publications