Sumi Trust Global Asset Services, which includes SMT Trustees (Ireland) Ltd, has issued a bulletin warning clients and potential clients about the looming deadline for putting in place suitable fund administration to handle the requirements of Ucits V regulations.
EU member states have until 16 March to transpose the relevant Directive into national law. In particular, the changes affect the depositary function, manager remuneration and administrative sanctions.
Under Ucits V, the depositary is responsible for cashflow monitoring, for example, to identify “inconsistent cashflows, which will be intestigated with relevant parties and escalated as required,” Sumi Trust notes in its bulletin.
The depositary is also responsible for safekeeping of assets, including holding assets in segregated accounts according to Directive requirements.
And then there are oversight requirements, which reflect those already in place under the existing Ucits directive.
A major change is the implementation of liabilities on the depositary, in case of a loss.
“In the event of such loss by a depositary (or its delegate) an obligation is imposed on the depositary to replace the financial instrument or pay the value to the Ucits without undue delay. A depositary can only avoid this strict liability standard where it can prove that the loss was as a result of an external event, beyond its reasonable control, the consequences of which would have been unavoidable despite all reasonable efforts to the contrary.”
“In contrast to AIFMD, it is not possible under the Ucits V Directive for a depositary to contractually discharge or limit their liability in case of the loss of assets by its delegate, meaning that the loss must be borne by the depositary rather than by the delegate. The depositary will also be liable to the Ucits, and the investors of a Ucits, if a loss is suffered as a result of the depositary’s negligence or intentional failure to properly fulfill its obligations under the Ucits V Directive.”
Given the new demands, Sumi Trust said that its own asset servicing business will be targeting mid-February for collection of all relevant legal documentation