Circular CSSF 20/764 is a CSSF circular, published 18 December 2020. Subject: Guidelines on performance fees in UCITS and certain types of AIFs.
\nRelevant for: AIFMs, Investment fund managers, Investment funds and vehicles, Management companies - Chapter 15, Management companies - Chapter 16, Other specific authorisations, registrations and information, Part II UCIs, Pension funds, Securitisation undertakings, SICARs, SIFs, UCITS.
\nKeywords: AIF (alternative investment fund).
\nCircular CSSF 20/764 Re: Guidelines on performance fees in UCITS and certain types of AIFs
\nLuxembourg, 18 December 2020 To all investment fund managers of UCITS and to all AIFMs of AIFs marketed to retail investors in Luxembourg
\nLadies and Gentlemen,
\nSubject: Application of the Guidelines of the European Securities and Market Authority on performance fees in UCITS and certain types of AIFs (ESMA34-39992).
\nPurpose of the Circular The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the Guidelines of ESMA on performance fees in UCITS and certain types of AIFs (Ref. ESMA34-39-992) (the “Guidelines”), published on 5 November 2020. Consequently, the CSSF will integrate the Guidelines into its administrative practices and regulatory approach with a view to promoting supervisory convergence in this field at European level as of the date of application of the Guidelines.
\nThe Guidelines The Guidelines are issued by ESMA in accordance with Article 16(1) of the ESMA Regulation. The Guidelines apply primarily in relation to Article 14 of the UCITS Directive 2009/65/EC 1 as further specified by Article 22 of the UCITS Level 2 Commission Directive 2010/43/EU 2, as well Article 78 of the UCITS Directive 2009/65/EC as further specified by Articles 10, 12 and 14 of the UCITS Level 2 Commission Delegated Regulation (EU) 2016/438 3 and in relation to Article 69 of the UCITS Directive 2009/65/EC. In respect of AIFs, the Guidelines apply in relation to Article 43 of the AIFM Directive 2011/61/EU 4.
\n1 Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) 2
\nCommission Directive 2010/43/EU implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organizational requirements, conflicts of interest, conduct of business, risk management and the content of the agreement between a depositary and a management company 3
\nCommission Delegated Regulation (EU) 2016/438 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regards to obligations of depositaries
\n4 Directive 2011/61/EU on Alternative Investment Fund managers and amending Directives 2003/43/EC and 2009/65/EC and Regulations (EC) N° 1060/2009 and (EU) N° 1095/2010
\nThe Guidelines apply as from 6 January 2021. Managers of any new funds created after the date of application of the Guidelines with a performance fee, or any funds existing before the date of application that introduce a performance fee for the first time after that date, should comply with these Guidelines immediately in respect of those funds. Managers of funds with a performance fee existing before 6 January 2021 should apply these Guidelines in respect of those funds by the beginning of the financial year following 6 months from 6 January 2021. The Guidelines will also be applicable as of 6 January 2021 for any newly created compartments of an existing umbrella, i.e. in relation to any new compartment setting up a performance fee at compartment or classes of units/shares level. The Guidelines aim to promote greater convergence and standardisation in the field of performance fees. In particular, they aim to ensure that performance fee models used by IFMs and AIFMs comply with the principles of acting honestly and fairly in conducting their business activities and acting with due skill, care and diligence, in the best interest of the fund that they manage, in such way as to prevent undue costs being charged to the fund and its investors. They also aim at establishing a common standard in relation to the disclosure of performance fees to investors.
\nThe text above is the opening of the document; the PDF carries the whole.
\nDocument page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.
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