These Regulations implement in part Directive 2009/65/EC of the European Parliament and of the Council on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (“UCITS”) (“the UCITS directive”), and certain of the obligations in Commission Directives 2010/43/EU (and 2010/44/EU ). A transposition note setting out how the main elements of these Directives will be transposed into UK law will be available on HM Treasury's website (www.hm-treasury.gov.uk).

Regulation 2 of these Regulations amends the Financial Services and Markets Act 2000 as it applies to collective investment schemes which are UCITS.

Paragraph (3) inserts a new section limiting the liability which may arise in relation to key investor information (section 90ZA).

Paragraph (8) revises the conditions which must be satisfied before the Financial Services Authority (“FSA”) is able to exercise its powers of intervention in relation to a EEA management company or UCITS, by substituting section 195A.

Paragraph (10) inserts section 199A, imposing an obligation on the FSA to take action to safeguard investors in the United Kingdom where the authorisation of an EEA management company is withdrawn.

Paragraph (13) clarifies the definition of “relevant person” for the purposes of section 213 of the Financial Services and Markets Act 2000.

Paragraph (14) inserts new definitions into section 237.

Paragraphs (15) and (16) amend sections 243 and 244 respectively, to revise the conditions which must be satisfied before a UCITS may be authorised and require the FSA to determine applications for authorisation of unit trust schemes which are UCITS within two months.

Paragraphs (19), (21), (23) and (26) make provision for master and feeder UCITS. Paragraph (19) sets out the procedure which will apply to any proposal by a UCITS to cease being a feeder UCITS (new section 252A). Paragraph (21) provides for the consequences where a master UCITS which has one or more feeder UCITS is wound up (new section 258A). Paragraph (23) inserts new sections 261A and 261B, which set out the circumstances in which the FSA is required to provide information to home state regulators of EEA UCITS, or the operators of authorised unit trust schemes which are feeder UCITS. Paragraph (26) inserts new section 283A, requiring approval of significant investments by a UCITS in another UCITS (the master UCITS), and new section 283B, requiring management companies to provide periodic reports to the FSA about any investment in derivative instruments made by UCITS under their management.

Paragraph (28) inserts new section 351A, which enables depositaries and auditors of master and feeder UCITS to enter into information sharing agreements as required by the UCITS directive, and ensures that they are exempt from liability in relation to disclosures made under those agreements.

Paragraph (30) repeals section 409(1)(e) of the Act, removing the Treasury's power to provide for the Authority to give notice under section 264(2) on grounds relating to the law of Gibraltar.

Paragraph (33) amends Schedule 3 to set out the circumstances in which the FSA may reject an application by an EEA management company to manage a UK UCITS, the procedure applying to such applications, and what information must be given to the home state regulator of the management company (paragraphs 15A, 15B and 15C). Paragraphs 19 and 20 are amended (and paragraph 20ZA inserted) to set out the conditions which must be satisfied by a UK management company wishing to provide services in another Member State, and the obligations the FSA must meet in such a case. New paragraphs 26 to 28 impose obligations on the FSA to provide information to the home state regulator of the EEA UCITS managed by a UK management company in certain circumstances, and to consult with that regulator before withdrawing authorisation from the management company. New paragraph 20B sets out the conditions to be satisfied before a UK UCITS is able to market its units in another Member State.

Regulation 3 amends the Open-ended Investment Companies Regulations 2001 to ensure that the amendments made to the Financial Services and Markets Act 2000 in relation to authorised unit trusts also apply in relation to open-ended investment companies.

Regulation 4 amends the Financial Services and Markets Act 2000 (Compensation Scheme: Electing Participants) Regulations 2001 to ensure that the definitions in those Regulations reflect the provisions of the UCITS directive, and to clarify the authorised activities in relation to which an EEA management company exercising rights in this country is subject to the compensation scheme.

Regulation 5 amends the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 to ensure that those Regulations apply to information received by the Authority in the course of the exercise of its functions as competent authority under the UCITS directive.

Regulation 6 amends the Financial Services and Markets Act 2000 (Collective Investment Schemes Constituted in Other EEA States) Regulations 2001 to make transitional provision for the use of simplified prospectuses until 30th June 2012.

Regulations 7 to 14 implement the UCITS directive provisions in relation to mergers of UCITS. Regulation 15 makes provision in relation to divisions. Regulation 16 and the Schedule make consequential amendments to other secondary legislation.

Regulation 17 requires the Treasury to review the operation and effect of these Regulations within five years after they come into force and within every five years after that. Following a review it will fall to the Treasury to consider whether the Regulations should remain as they are, or be revoked or be amended. A further instrument would be needed to revoke the Regulations or to amend them.

An Impact Assessment of the effect that these Regulations will have on the costs of business and the voluntary sector is available on HM Treasury's website (hm-treasury.gov.uk) and is published with the Explanatory Memorandum alongside these Regulations on the legislation.gov.uk website.