How does a UCITS market its units in other EU countries?

Before marketing its units in another Member State, the UCITS sends CySEC a notification letter. It describes the marketing arrangements, any unit classes and whether the management company markets under its own passport, and since 18 October 2021 it also gives invoicing details for host fees and information on facilities. Attached are the fund rules or instruments of incorporation, together with the prospectus, the KIID and the most recent annual and half-yearly reports. CySEC checks that the file is complete and, within 10 working days, sends it to the host authority with an attestation that the fund meets the Directive. It then informs the UCITS, which may start marketing from that date. The host authority has no approval to give.

The UCITS keeps its documents current and available to the host authority. The exam material requires written notice of changes before they are made. Since 18 October 2021 the notice must reach CySEC and the host authority at least 1 month in advance, and if a change would breach the Law, CySEC tells the UCITS within 15 working days not to go ahead. The KIID must be translated into the host state's official language or another language its authority accepts; other documents may be translated, at the fund's choice, into a host language or a language customary in international finance, and the fund answers for the translations. How often prices are published follows Cyprus law.

Since 18 October 2021 the UCITS has had to make facilities available in each host state. They process subscription and redemption orders and payments, tell investors how to deal and how to exercise their rights, handle complaints, supply documents and act as a contact point with the authorities. They work in the host state's language, may be run by the fund or by a third party, and may be electronic, so no office is needed.

To withdraw from a market, the UCITS makes a blanket offer, publicly available for at least 30 working days, to repurchase free of charge all units held by investors in that state, announces publicly that it will stop marketing there, and ends its contracts with intermediaries. CySEC forwards the notification to the host authority and to ESMA within 15 working days.

A UCITS authorised elsewhere in the EU may market its units in Cyprus once its home authority has sent the notification to CySEC and told the fund so; CySEC may not ask for further documents. Since 18 October 2021, changes to the marketing arrangements or share classes have had to be notified to CySEC in writing at least 1 month ahead. The exam material requires the fund to name a Cyprus bank that pays unitholders and receives their money. Since 18 October 2021, Law 134(I)/2021 has instead required facilities in Cyprus, without any physical presence or local appointment.

The KIID must be in Greek or English, and other documents may be in either at the fund's choice. How often issue and redemption prices are published is decided by the fund's home state. Marketing material must say where the prospectus and KIID can be obtained, and the fund may describe itself in Cyprus with the same legal-form label it uses at home, for example 'investment company' or 'common fund'. Alternative investment funds follow a different route, set out in Who may invest in an AIF, and how can AIFs be marketed to retail investors in Cyprus?