The United Kingdom left the European Union on 31 January 2020 with a transitional period that ends on 31 December 2020 at midnight.
Except in the event of a negotiated/soft Brexit, the end of the transition period on 31 December means the end of European regimes and the end of inbound and outbound passports, for UK firms/funds in the EU/EEA, and for EU/EEA firms/funds in the UK. EU authorities are working hard to issue regulations as UK firm may become third countries entities in a hard Brexit perpective.
The French AMF will publish an ordinance in December in regard to the eligibility of PEA funds to tax incentive of French investors investing into PEA funds (hereafter the “AMF Ordinance”). In agreement with the French authorities, the French AFG already disclosed the content of the new measures, giving therefore the asset managers the opportunity to win time in decision making and be prepared.
The ordinance should provide the following, inter alia (not exhaustive):
- A single 9-month compliance deadline is granted
- In respect to mandates:
A 9-month delay should be granted for UK securities bought before 31 December 2020; no UK securities should be eligible from 1 January 2021
- In respect to UCIs:
A 9-month delay should be granted for UK securities invested in a EU/EEA UCI at the latest at the date of publication of the AMF Ordinance, provided that the EU/EEA UCI is eligible to the PEA the date of publication of the AMF Ordinance;
A 9-month delay should be granted for UK securities invested in a UK UCI at the latest at the date of publication of the AMF ordinance, provided that the UK UCI is eligible to the PEA the date of publication of the AMF Ordinance
- Disclosure requirements applicable to the management companies of PEA UCIs:
The management companies of a PEA UCI should provide a prior communication to account keepers before 1 March 2021, indicating if PEA eligibility will be maintained or not after the 30 September 2021; the information must also be made easily accessible/visible on the management company’s website.
It is also reminded that, management companies are required to inform unitholders/shareholders of UCIs loosing PEA eligibility and/or not maintaining PEA eligibility
- Disclosure requirements applicable to the account keepers of PEA UCIs:
Each account keeper should inform each PEA investors before 1 May 2021 if the PEA eligibility will not be maintained only; the information provided should include (i) the date of termination of the PEA eligibility, (ii) the consequence of loosing PEA eligibility, and (iii) the terms and conditions under which PA conditions may be maintained (tax regulation BOI-RPPM-RCM-40-50-50-20170925, § 20…)
Please also note that, the investor has 2-month to sell its units/shares of a UCI when the PEA eligibility is lost.
We will update this post on the official publication of the AMF ordinance and keep you posted on any change.
FundGlobam will be happy to assist you should you require any further information.