What may a UCITS borrow, how are its assets valued, and when can redemptions be suspended?

The starting point is a ban: a VCIC, and a management company or depositary acting for a UCITS, may not borrow. There are three exceptions. Foreign currency may be obtained through a back-to-back loan. Temporary borrowing of up to 10% of NAV is allowed. And any VCIC may borrow up to 10% of NAV to buy immovable property essential to its business, with temporary and property borrowing together capped at 15% of NAV.

The exam material adds a limit of 15% of own funds on a management company borrowing to buy property it needs. That rule came from Law 200(I)/2004. Law 78(I)/2012, which replaced it on 15 June 2012, contains no such rule; its limits concern borrowing for the fund and are measured against the fund's NAV.

The same parties may not grant loans or stand as guarantor for third parties, although buying instruments that are not fully paid is allowed. Uncovered sales of securities, money market instruments or other eligible instruments are prohibited.

Listed securities and money market instruments take that day's closing exchange price. For markets outside the EU, where time differences make that impossible, the previous working day's close is used. Listed derivatives take the closing price or, failing that, the last trade price published for the day, with the same non-EU fallback. If nothing traded on the valuation day, the previous session's price applies; only if nothing traded then either is the last bid or ask price used. Where a market publishes a single price, that price is used. The exam material merges the last two steps into one rule: the previous trading day's price, at the bid or ask price that suits the position. Since 2012, Article 51 of the Law has applied them one after the other.

Interest, dividends and gains from bond drawings may be distributed each year, net of the year's expenses. The exam material says they have to be; the Law has said 'may' since 2012. Capital gains, after capital losses, are paid out or reinvested as the management company or VCIC decides, and the rules may require reinvestment. Interim distributions are allowed where the rules provide for them.

A unit is issued only once the net issue price has been paid to the fund, although units may also be distributed free. Units are issued and redeemed only on a valuation date, at a price for that date that must not have been calculated before the request (forward pricing), and redemption money is paid in cash within 4 working days of that valuation date. An index-tracking exchange-traded UCITS may pay in securities if its rules allow.

In exceptional cases, where unitholders' interests justify it, the management company or a self-managed UCITS may suspend redemptions with CySEC's prior permission, for up to 1 month, extendable by another month with fresh permission. CySEC may extend further, but never beyond 3 months in total. The decision goes to CySEC immediately, host authorities are told, and unitholders are informed without delay. No redemption requests are accepted during the suspension, but those lodged before the suspension decision are honoured. CySEC may also suspend on its own initiative, as it did for daily-valued funds holding listed securities on 3 and 6 April 2026, when markets and the TARGET2 payment system closed for Easter. For the equivalent rules for AIFs, see How must an AIFM manage risk, leverage and liquidity?