Good News for UCITS V Documentation Updates

With the UCITS V transposition date weeks away, the European Securities and Markets Authority (“ESMA”) has published a new UCITS Q&A which sheds welcome light on a number of UCITS V issues regarding documentation updates. Specifically, it sets out ESMA’s position regarding the timing, and in some cases the content, of updates to documentation arising from the UCITS V amendments regarding remuneration and depositary contracts. The UCITS Q&A also consolidates into a single document all ESMA’s previously issued Q&As on the UCITS Directive.

Remuneration Updates

UCITS V requires each UCITS management company or self managed UCITS (“UCITS Manager”) to put in place a remuneration policy and to apply specific rules to any staff member whose professional activity has a material impact on the UCITS it manages. In addition, each UCITS Manager must publish remunerationrelated information in the Key Investor Information Document (“KIID”), the prospectus and the annual report.

The KIID and the Prospectus

The KIID is the main UCITS pre-contractual disclosure document and its essential elements must be kept up-to-date. In addition, UCITS are required to make an updated KIID available to investors within 35 business days of 31 December each year (eg by 19 February 2016 in respect of the period ending 2015). UCITS must also publish a prospectus and, like the KIID, the essential elements of the prospectus must be kept up-to-date.

According to the UCITS Q&A, subject to national law requirements, UCITS will not be required to issue an updated KIID or prospectus on 18 March 2016 to take into account the UCITS V amendments, but can wait until the next occasion the relevant document is revised for another purpose. The latest date for updating the KIID is therefore the earlier of (i) February 2017, on the occasion of the next annual update and (ii) the next time any element of the KIID is updated. The latest date for updating the prospectus is the earlier of (i) 18 March 2017 and (ii) the next time the prospectus is amended for any other updates.

Prior to the next update of the KIID or the prospectus a UCITS Manager should make available information about its remuneration policies on a relevant website.

The Annual Report

Under the UCITS V amendments, each UCITS Manager must include specified information about its remuneration practice in its annual report, including:

  • the total amount of remuneration for the financial year, split into fixed and variable remuneration paid to its staff and the number of beneficiaries; and
  • the aggregate amount of remuneration broken down by categories of staff.

A UCITS Manager must publish its annual report within four months of the end of its financial year.

It is not necessary to include remuneration related information in any annual report relating to a period that will end before 18 March 2016. For periods that end on or after 18 March 2016, but before the first annual performance period in which the UCITS remuneration requirements must be complied with, the remuneration related information should be included in the annual report “on a best efforts basis and to the extent possible, explaining the basis for any omission.”

Depositaries Updates

UCITS V amends the UCITS Directive to include new rules for depositaries. Among other things, it requires the appointment of the depositary to be evidenced in writing. In addition, the written contract must include certain particulars set out in delegated acts, once these have been adopted. UCITS V also amends the UCITS requirements relating to depositary liability, providing a new strict liability regime in the context of a loss of financial instruments held in custody.

UCITS depositary contracts must be revised promptly in accordance with any transitional arrangements outlined in the delegated acts. On 17 December 2015, the European Commission published a draft Commission Delegated Regulation (“Delegated Regulation”) dealing with the obligations of depositaries, which among other things provides the minimum particulars that need to be included in the written contract. The Delegated Regulation is currently being considered by the European Parliament and the Council of Ministers. If neither of these objects, it will enter into force on the twentieth day after its publication in the European Union’s Official Journal and apply six months after that date: this effectively means that it will not be necessary to revise the depositary agreement until several months after 18 March 2016.

As outlined in the UCITS Q&A, there is no need to revise the depositary contract in order for the UCITS V requirements regarding depositary liability to come into effect: any contractual provisions which conflict with those requirements will be void from 18 March 2016. However, liability provisions in existing depositary liability contracts should be amended to reflect the UCITS V requirements when those depositary contracts are revised to comply with the Delegated Regulation.


The UCITS Q&A also consolidates into a single document, repeals and replaces the following Q&As:

  • the Key Investor Information Document (KIID) for UCITS;
  • ESMA’s guidelines on ETFs and other UCITS issues;
  • Notification of UCITS and exchange of information between competent authorities; and
  • Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS.


The UCITS Q&A provides some welcome clarity regarding the documentation updates required by UCITS V. It is clear from the Q&A that there is no immediate requirement to update either the KIID or the prospectus, unless such a requirement is imposed under national law. Nor is there any immediate requirement to update depositary contracts. Specifically, the earliest such contracts will need to be updated is likely to be Q4 of this year. However, at that point, the required update will need to reflect both UCITS V and the Delegated Regulation.

The requirements regarding the inclusion of remuneration-related information in the annual report are, unfortunately, somewhat less clear. Hopefully, ESMA will provide additional guidance on this issue once it publishes its final Guidelines on sound remuneration polices under the UCITS Directive and AIFMD.

While ESMA’s approach to UCITS V documentation updates as outlined in the UCITS Q&A is undoubtedly good news, we await confirmation from the Central Bank of Ireland regarding its approach to these updates. The UCITS Q&A may be accessed here.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.