Last week, the European Commission published seven Notices to stakeholders concerning the Withdrawal of the United Kingdom and EU rules in the field of banking and finance, to prepare for, and soften, the upcoming shock on March 30th, 2019. Among them, professionals in the asset management sector have been warned that after the Article 50 deadline expires, the United Kingdom will become a third-party to the E.U., and UCITS authorisations granted by the FCA will no longer be available for UK-domiciled investment companies.
The legal consequence is that units from current UK-registered UCITS funds will be prohibited from being marketed and sold under this legal form in the EU Single Market. In order to sell such financial products in the single market, asset managers will have to register as AIFMs with each individual FSA of the EU27. In other words, UK fund managers will lose the EU ‘mutual funds passport’.
The same applies to E.U.-27-registered UCITS, which will no longer be allowed to be sold in the UK as UCITS, but rather as alternative investments financial products, in accordance with the AIFM Directive.