The European Securities and Markets Authority (ESMA) has today published a discussion paper on UCITS share classes (the DP).
The Undertakings for Collective Investment in Transferable Securities (UCITS) Directive recognises the possibility for UCITS to offer different share classes to investors but it does not prescribe whether, and to what extent, share classes of a given UCITS can differ from one another. ESMA has identified diverging national practices in Europe regarding the types of share class that are permitted and therefore proposes establishing a common regulatory framework for share classes in the EU.
The DP describes the nature of share classes, the reasons for their existence and the key elements of share classes. It builds on the feedback received from ESMA’s first discussion paper on this topic, published in December 2014, which proposed providing actual examples of share classes deemed compatible and non-compatible with the UCITS framework. In this DP, ESMA puts forward a revised, principles-based approach.
The consultation closes on 6 June 2016. ESMA expects to take further steps on UCITS share classes by the end of 2016. The ESMA statement and the DP can be found here.