The European Commission has warned of the impact of Brexit on EU-UK cross-border funds as well as Ucits funds domiciled in the UK, which will lose their Ucits status once the UK leaves the EU next year and becomes a “third country”.
In an official notice published on Thursday, the Commission said that, in the absence of any agreement on a possible transitional arrangement with the UK, all UK-domiciled Ucits funds will stop being Ucits funds from March 30, 2019.
The warning is likely to come as little surprise to the industry given the UK government’s stated aim for a so-called hard Brexit, under which the UK would not only stop being a member of the EU but would also leave the European single market and customs union.
The notice also confirms that UK fund managers will have to register under the Alternative Investment Fund Managers’ Directive (AIFMD) if they want to keep selling funds which were previously Ucits funds in the EU.
Likewise, EU fund managers who operate UK funds will have to register under the AIFMD.
“Investors are reminded of the legal repercussions which need to be considered when the UK becomes a third country,” the notice warns.
“UK Ucits management firms and UK AIF managers will no longer benefit from authorisation (losing the so-called “EU passport”) and will be treated as third-country AIF managers.”
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