Regulations, 2011

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 18,769, 28 ta’ Ġunju, 2011 B 3149

Taqsima B

L.N. 242 of 2011

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (UCITS Mergers)

Regulations, 2011

IN exercise of the powers conferred by article 12 of the

Investment Services Act, the Minister of Finance, the Economy and

Investment, acting on the advice of the Malta Financial Services

Authority, has made the following regulations:-

PRELIMINARY

(1)

The title of these regulations is the Investment Citation,

commencement

Services Act (UCITS Merger) Regulations, 2011.

and scope.

(2) These regulations shall come into force on 1st July, 2011.

(3) The objective of these regulations is to transpose Articles

2(1)(q), 2(1)(r), 37 to 48 and 60 (5) of the UCITS Directive as herein

defined, and Articles 4, 5, 6, 22, and 23 of the Implementing

Directive as herein defined, and they shall be interpreted and applied

accordingly.

(Regulation 11)

Information to be provided by Maltese UCITS

which are in the process of merging.

1. General

The information to be provided to unit-holders by

the Maltese UCITS regarding the proposed merger

shall be written in a concise manner and in non-

technical language that enables unit-holders to make

an informed judgment of the impact of the proposed

merger on their investment.

In case of a proposed cross-border merger, the

Maltese UCITS shall explain in plain language any

terms or procedures relating to the other UCITS

which differ from those commonly used in the other

Member State.

The information to be provided to unit-holders of a

Maltese UCITS shall also include

(i)

details of how any accrued income in

the Maltese UCITS is to be treated; and

(ii) an indication of how the report of the

independent auditor or the custodian as referred to in

regulation 10(3) may be obtained.

2. Additional Information to be provided by the Maltese

UCITS when it is the merging UCITS

Where the Maltese UCITS is the merging UCITS,

the information to be provided to its unit-holders

shall meet the needs of investors who have no prior

knowledge of the features of the receiving UCITS or

of the manner of its operation. The attention of such

investors shall be drawn to the key investor

information of the receiving UCITS and shall

emphasise the desirability of reading such

document.

Where the Maltese UCITS is the merging UCITS,

the information to be provided to the unit-holders

shall also include

(i)

details of any differences in the rights

of unit-holders of such Maltese UCITS as the

merging UCITS before and after the proposed

merger takes effect;

(ii) if the key investor information of the

merging UCITS and that of the receiving UCITS

show synthetic risk and reward indicators in

different categories, or identify different material

risks in the accompanying narrative, a comparison of

those differences;

(iii) a comparison of all charges, fees and

expenses for both UCITS, based on the amounts

disclosed in their respective key investor

information;

(iv) if the merging UCITS applies a

performance-related fee, an explanation of how it

will be applied up to the point at which the merger

becomes effective;

(v) if the receiving UCITS applies a

performance-related fee, how it will subsequently be

applied to ensure fair treatment of those unit-holders

who previously held units in the merging UCITS;

(vi) in the case of self-managed UCITS,

details of costs associated with the preparation and

completion of the merger to be charged to either the

merging UCITS or the receiving UCITS or any of

their unit-holders, including details of how those

costs are to be allocated;

(vii) an explanation of whether the

management company, or where this is not

appointed, the investment company of the merging

UCITS intends to undertake any rebalancing of the

portfolio before the merger takes effect;

(viii) the period during which unit-holders

shall be able to continue making subscriptions and

requesting redemptions of units in the merging

UCITS;

(ix) the time when those unit-holders not

making use of their rights granted pursuant to

regulation 12(1), within the relevant time limit, shall

be able to exercise their rights as unit-holders of the

receiving UCITS; and

(x) an explanation that in cases where the

merger proposal must be approved by the unit-

holders in accordance with the applicable laws,

those unit-holders who vote against the proposal or

who do not vote at all, and who do not make use of

their rights granted pursuant to regulation 12(1)

within the relevant time limit, shall become unit-

holders of the receiving UCITS.

Where the Maltese UCITS is the merging UCITS

and the proposed terms of merger include provisions

for a cash payment in accordance with the

requirements of the UCITS Directive, the

information which it provides to unit-holders shall

contain details of that proposed payment, including

when and how unit-holders of the merging UCITS

will receive such cash payment.

3. Additional Information to be provided by the Maltese

UCITS when it is the receiving UCITS

The information to be provided to unit-holders by

the Maltese UCITS, when it is the receiving UCITS

shall also include an explanation of whether the

management company or the investment company of

such receiving UCITS expects the merger to have

any material impact on the portfolio of the receiving

UCITS, and whether it intends to undertake any

rebalancing of the portfolio either before or after the

merger takes effect.

Where the Maltese UCITS is the receiving UCITS,

the information which it must provide to its unit-

holders shall focus on the operation of the merger

and its potential impact on the receiving UCITS.

4. Method of providing the Information to Unit-Holders

The information which a Maltese UCITS is required

to provide to its unit-holders so as to enable them to

make an informed judgement of the impact of the

proposed merger on their investment shall be

provided on paper or in another durable medium.

Where the information is to be provided to all or

certain unit-holders using a durable medium other

than paper, the following conditions shall be

fulfilled

(i)

the provision of the information is

appropriate to the context in which the business

between the unit-holder and the Maltese UCITS or,

where relevant, the management company is, or is to

be, carried on;

(ii) the unit-holder to whom the

information is to be provided, when offered the

choice between information on paper or in another

durable medium, specifically chooses the medium

other than paper.

For the purposes of this Schedule, the provision of

information by means of electronic communications

shall be treated as appropriate to the context in

which the business between the Maltese UCITS or

its management company and the unit-holder is, or is

to be, carried on if there is evidence that the unit-

holder has regular access to the Internet. The

provision by the unit-holder of an email address for

the purposes of the carrying on of that business shall

be treated as such evidence.

B

€0.99

(1)

In these regulations, unless the context otherwise Interpretation

requires

"the Act" means the Investment Services Act;

"cross border merger" means a merger

(a)

between a Maltese UCITS and a

UCITS

established in another Member State or EEA State; or

(b)

between two UCITS established in other Member

States or EEA States into a newly constituted UCITS

established in Malta; or

(c)

between two UCITS established in Malta into a

newly constituted UCITS established in another Member State

or EEA State;

"custodian" means an institution entrusted with the duties of a

depositary in terms of the UCITS Directive and includes a custodian

licensed in terms of the Act;

"domestic merger" means a merger

(a)

between two or more UCITS established in Malta;

or

(b)

between two or more UCITS established in Malta

where at least one of the UCITS has notified the competent

authority that it intends to market its units in another Member

State or EEA State pursuant to the Investment Services Act

(Marketing of UCITS) Regulations;

"European UCITS" means a UCITS which is established and

authorised in accordance with the laws of another Member State or

EEA state;

"feeder UCITS" means a UCITS or subfund thereof which has

been approved to invest at least eighty-five per cent of its assets in

units of another UCITS or subfund thereof in terms of the UCITS

Directive;

"Implementing Directive" means Commission Directive 2010/

42/EU of 1 July 2010 implementing Directive 2009/65/EC of the

European Parliament and of the Council as regards certain provisions

concerning fund mergers, master-feeder structures and notification

procedure;

"the Regulation" means Commission Regulation (EU) No.583/

2010, specifying the form and contents of key investor information;

"key investor information" shall have the same meaning as is

assigned to it in the Investment Services Rules for Retail Collective

Investment Schemes;

"management company" means a company authorised by its

supervisory authority within the meaning of Article 6 of the UCITS

Directive and the regular business of which is the management of

UCITS;

"Maltese UCITS" means

(a)

an investment company, a partnership en

commandite or a limited partnership with its registered office

and head office situated in Malta and licensed in terms of the

Act;

(b)

where the UCITS is constituted as a common fund,

a UCITS domiciled in Malta in terms of the Investment Services S.L. 370.16

Act (Contractual Funds) Regulations, and licensed in terms of

the Act;

(c)

where the UCITS is established as a unit trust, a

unit trust whose proper law is the law of Malta;

"master UCITS" means a UCITS which

(a)

has, among its unit-holders, at least one feeder

UCITS;

(b)

is not itself a feeder UCITS; and

(c)

does not hold units of a feeder UCITS;

"merger" means an operation by two or more UCITS in

accordance with one of the merger techniques provided for in

regulation 3, and which may be a cross-border merger or a domestic

merger as herein defined;

"UCITS" means undertakings for collective investment in

transferable securities which are harmonized in accordance with the

UCITS Directive, or a subfund of such undertaking, and includes an

open ended investment company or a unit trust to which the UCITS

Directive applies;

"UCITS Directive" means Directive 2009/65/EC of the

European Parliament and of the Council of the 13th July, 2009 on the

coordination of laws, regulations and administrative provisions

relating to undertakings for collective investment in transferable

securities (UCITS) (recast);

(2) Words and expressions used in the Act shall, in these

regulations, have the same meaning as in the Act.

(3) In addition to the requirements set out in these regulations,

the provisions of Title I and Title II of Part VIII of the Companies Act Cap. 386.

shall apply mutatis mutandis to UCITS established as limited liability

companies or partnerships en commandite or limited partnerships

within the meaning of the Companies Act insofar as they are not

inconsistent with the provisions of these regulations, and -

(a)

any reference to a "company being acquired" shall

be construed as referring to the "merging UCITS";

(b)

any reference to "acquiring company" shall be

construed as referring to the "receiving UCITS";

(c)

any reference to "shareholders" shall be construed

as referring to "unit holders";

(d)

in the case of a merger by formation of a new

UCITS as described in regulation 3(1)(a)

(i) any reference to "merging companies" shall

be construed as referring to the "merging UCITS";

(ii) any reference to "the new company" shall be

construed as referring to the "receiving UCITS";

(iii) any reference to "commercial partnerships to

be substituted" shall be construed as referring to the

"merging UCITS"; and

(iv) any reference to "the new commercial

partnership" shall be construed as reference to the

"receiving UCITS";

(e)

any reference to "commercial partnership being

acquired" shall be construed as referring to the "merging

UCITS"; and

(f)

any reference to the "acquiring commercial

partnership" shall be construed as referring to the "receiving

Provided that

(i) notwithstanding the provisions of Title I of

Part VII of the Companies Act, in the case of UCITS

established in Malta in the form of a partnership, a merger

may only take place between UCITS established as

partnerships en comandite or limited partnerships;

(ii) for the purposes of articles 338 (1) and 350 of

the Companies Act, the Registrar of Companies shall only

register the documents indicated therein after the necessary

regulatory approvals for the merger have been obtained

from the competent authority in terms of these regulations

or from the European regulatory authority, in terms of the

UCITS Directive, as the case may be; and

(iii) where the Maltese UCITS is established as a

limited liability company, the provisions of article 344(2)

of the Companies Act shall not apply.

AUTHORISATION OF UCITS MERGERS

(1)

A domestic merger or a cross-border merger where Merger

a Maltese UCITS is the merging UCITS may be effected in the techniques.

following manner

(a)

one or more UCITS or subfunds thereof, the

"merging UCITS", on being dissolved without going into

liquidation, transfer all of their assets and liabilities to another

existing UCITS, or subfunds thereof, the "receiving UCITS", in

exchange for the issue to their unit-holders of units of the

receiving UCITS and, if applicable, a cash payment not

exceeding ten per centum of the net aset value of those units; or

(b)

two or more UCITS or subfunds thereof, the

"merging UCITS", on being dissolved without going into

liquidation, transfer all of their assets and liabilities to a UCITS

which they form or a subfund thereof, the "receiving UCITS", in

exchange for the issue to their unit-holders of units in the

receiving UCITS and, if applicable, a cash payment not

exceeding ten per cent of the net asset value of those units.

(2) The competent authority shall recognise a transfer of assets

resulting from a cross-border merger in accordance with Article 37(c)

of the UCITS Directive.

Where the merging UCITS is a Maltese UCITS, it shall Authorisation

apply to the competent authority to obtain prior written authorization by

competent

to undergo such merger.

authority.

(1)

In seeking the authorisation referred to in Information to

regulation 4, the merging UCITS shall provide the following be

the competent

information to the competent authority

authority.

(a)

the common draft terms of the proposed merger

duly approved by the merging UCITS and the receiving UCITS;

(b)

an up-to-date version of the prospectus and the key

investor information of the receiving UCITS, if this is

established in a Member State or EEA State other than Malta;

(c)

a statement by each of the custodians of the

merging and the receiving UCITS confirming that they have

verified that -

(i)

the identification of the type of merger and

UCITS involved;

(ii) the planned effective date of the merger; and

(iii) the rules applicable, respectively, to the

transfer of assets and the exchange of units,

are in accordance with the requirements of the UCITS Directive

and the fund rules or instruments of incorporation of their

respective UCITS; and

(d)

the information on the proposed merger that the

merging UCITS and the receiving UCITS intend to provide to

their respective unit-holders.

(2) The information referred to in sub-regulation (1) shall be

provided in such a manner as to enable both the competent authority

and the European regulatory authority of the Member State or EEA

State where the receiving UCITS is authorized in terms of the UCITS

Directive to read such information in the official language or in one

of the official languages of Malta and of the Member State or EEA

State where the receiving UCITS is authorized, or in a language

approved by the competent authority and by such European

regulatory authority.

(3) On receipt of all the information referred to in sub-

regulation (1), the competent authority shall immediately transmit

copies of this information to the European regulatory authority of the

receiving UCITS. The competent authority and the European

regulatory authority shall consider the potential impact of the

proposed merger on the unit-holders of the merging UCITS and of the

receiving UCITS respectively in order to assess whether appropriate

information is being provided to unit-holders.

(4) The competent authority may, if it considers it necessary,

require, in writing, that the information to unit-holders of the merging

UCITS be clarified.

(5) Where the receiving UCITS is a Maltese UCITS, the

competent authority may, if it considers it necessary, require in

writing, and no later than fifteen working days after receipt from the

European regulatory authority of the merging UCITS of the copies of

the complete information referred to in sub-regulation (1), that the

receiving UCITS modify the information to be provided to its unit-

holders. The competent authority shall also send an indication of its

dissatisfaction to the European regulatory authority of the merging

UCITS.

(6) The competent authority shall, within twenty working days

of being notified of the complete information modified in accordance

with sub-regulation (5), inform the European regulatory authority of

the merging UCITS as to whether it is satisfied with such modified

information.

Where a Maltese UCITS is the merging UCITS, the Authorisation

competent authority shall authorize the proposed merger in by

competent

accordance with regulation 4 if the following conditions are met

authority.

(a)

the proposed merger complies with all the

requirements of regulations 4 to 10;

(b)

the receiving UCITS has been notified to market its

units in Malta and in all other Member States or EEA States

where the merging UCITS is authorized or has been notified to

market its units in accordance with Article 93 of the UCITS

Directive; and

(c)

the competent authority and the European

regulatory authority of the receiving UCITS are satisfied with

the proposed information to be provided to unit-holders, or no

indication of dissatisfaction has been received from the

European regulatory authority of the receiving UCITS.

(1)

If the competent authority considers that the Request for

information requested in regulation 5 is not complete or is not additional

information by

submitted in full, it shall request additional information within ten the

authority.

working days of receiving the said information.

(2) The competent authority shall inform the merging UCITS

within twenty working days of submission of the complete

information requested in regulation 5, whether or not the merger has

been authorized.

(3) The competent authority shall also inform the European

regulatory authority of the receiving UCITS of its decision to

authorize the merger or otherwise.

(4) Where the receiving UCITS is a Maltese UCITS, the

competent authority may allow the receiving UCITS to derogate from

the applicable investment policies, objectives and restrictions as laid

down in the Investment Services Rules transposing the requirements

of Articles 52 to 55 of the UCITS Directive for a period of six months

following the authorization of the merger.

(1)

The common draft terms of merger referred to in Draft terms of

regulation 5(1)(a) shall be drawn up by the merging UCITS and the merger.

receiving UCITS and shall set out the following particulars

(a)

an identification of the type of merger and the

UCITS involved;

(b)

the background to and the rationale for the

proposed merger;

(c)

the expected impact of the proposed merger on the

unit-holders of both the merging UCITS and the receiving

(d)

the criteria adopted for valuation of the assets and,

where applicable, the liabilities on the date for calculating the

exchange ratio referred to in regulation 15;

(e)

the calculation method of the exchange ratio;

(f)

the planned effective date of the merger;

(g)

the rules applicable respectively to the transfer of

assets and the exchange of units; and

(h)

in the case of a merger taking place in accordance

with the provisions of regulation 3(1)(b), the fund rules or

instruments of incorporation of the newly constituted receiving

(2) The merging UCITS and the receiving UCITS may decide

to include further items in the common draft terms of merger but the

competent authority may not request the inclusion of any information

other than that indicated in sub-regulation (1).

THIRD PARTY CONTROL, INFORMATION TO UNIT

HOLDERS AND OTHER RIGHTS OF UNIT HOLDERS

The custodian of the merging UCITS and the custodian of

the receiving UCITS shall both verify the conformity of the following

elements with the requirements of the UCITS Directive and the fund

rules or instruments of incorporation of their respective UCITS

(a)

the identification of the type of merger and the

UCITS involved;

(b)

the planned effective date of the merger; and

(c)

the rules applicable respectively to the transfer of

assets and the exchange of units.

(1)

Where the merging UCITS is a Maltese UCITS, it Obligations of

shall appoint either its custodian or an independent auditor for the the

the auditor.

purpose of validating the following

(a)

the criteria adopted for valuation of the assets and,

where applicable, the liabilities on the date for calculating the

exchange ratio of units of the merging UCITS into units of the

receiving UCITS;

(b)

the cash payment per unit, where applicable; and

(c)

the calculation method of the exchange ratio as

well as the actual exchange ratio determined at the date for

calculation of that ratio.

(2) The statutory auditor of the merging UCITS or the

statutory auditor of the receiving UCITS shall be considered as an

independent auditor for the purposes of sub-regulation (1).

(3) A copy of the reports of the auditors mentioned in sub-

regulation (1) or, where applicable, of the custodian, shall be made

available on request and free of charge to the unit-holders of both the

merging UCITS and the receiving UCITS and to the competent

authority and to the relative European regulatory authority, as

applicable.

(1)

The merging UCITS and the receiving UCITS shall Information to

provide appropriate and accurate information on the proposed merger investors.

to their respective unit-holders so as to enable their respective unit-

holders to make an informed judgment of the impact of the proposed

merger on their investment and to exercise their rights under

regulations 12 and 13.

(2) The information referred to in sub-regulation (1) shall be

provided to the unit-holders of the merging UCITS and of the

receiving UCITS only after the proposed merger has been approved

by the competent authority in the case where the merging UCITS is a

Maltese UCITS, or by the European regulatory authority of the home

Member State of the merging UCITS, where the Maltese UCITS is

the receiving UCITS and shall include the following information

(a)

the background to and the rationale for the

proposed merger;

(b)

the possible impact of the proposed merger on unit-

holders, including but not limited to any material differences in

respect of investment policy and strategy, costs, expected

outcome, periodic reporting, possible dilution in performance,

and, where relevant, a prominent warning to investors that their

tax treatment may be changed following the merger;

(c)

any specific rights unit-holders have in relation to

the proposed merger, including but not limited to the right to

obtain additional information, the right to obtain a copy of the

report of the independent auditor or the custodian on request,

and the right to request the repurchase or redemption, or where

applicable, the conversion of their units without charge, as

specified in regulation 12, and the last date for exercising that

right;

(d)

the relevant procedural aspects and the planned

effective date of the merger; and

(e)

a copy of the key investor information of the

receiving UCITS.

(3) The information to be provided to unit-holders of the

merging UCITS and the receiving UCITS in terms of this regulation

shall be provided at least thirty days before the last date for requesting

repurchase or redemption or, where applicable, conversion without

additional charge in accordance with regulation 12.

(4) Where a Maltese UCITS is either a merging or a receiving

UCITS and has been notified in another Member State in terms of

Article 93 of the UCITS Directive, it shall provide the information

referred to in sub-regulation (2) in the official language or in one of

the official languages of the Member State in which it has been so

notified, or in a language approved by the European regulatory

authority of that Member State. The UCITS responsible for providing

the information referred to in sub-regulation (2) shall also be

responsible for producing the relative translation, and such translation

shall faithfully reflect the contents of the original.

(5) An up-to-date version of the key investor information of

the receiving UCITS shall be provided to existing unit-holders of the

merging UCITS.

(6) The key investor information of the receiving UCITS shall

be provided to existing unit-holders of the receiving UCITS where it

has been amended for the purpose of the proposed merger.

(7) In the period between the date when the information

referred to in sub-regulation (1) is provided to unit-holders and the

date on which the merger takes effect, such information and the up-to-

date key investor information of the receiving UCITS shall be

provided to each person who purchases or subscribes units in either

the merging UCITS or the receiving UCITS or asks to receive copies

of the fund rules or instruments of incorporation, prospectus or key

investor information of either UCITS.

(8) A Maltese UCITS shall also comply with the requirements

on information set out in the Schedule.

(1)

The unit-holders in a merging UCITS and in a Rights of unit-

receiving UCITS shall both have the right to request, without any holders.

charge other than those retained by the UCITS to meet disinvestment

costs, the repurchase or redemption of their units or, where possible,

to convert them into units in another UCTIS with similar investment

policies and managed by the same management company or by any

other company with which the management company is linked by

common management or control, or by a substantial direct or indirect

holding. That right shall become effective from the moment that the

unit-holders of the merging UCITS and those of the receiving UCITS

have been informed of the proposed merger in accordance with

regulation 11(1) and (2) and shall cease to exist five working days

before the date for calculating the exchange ratio.

(2) Without prejudice to subregulation (1) and by way of

derogation from the obligation of the UCITS to repurchase or redeem

its units at the request of any unit-holder, the competent authority

may require or allow the temporary suspension of the subscription,

repurchase or redemption of units if such suspension is deemed

justified for the protection of the unit-holders.

(1)

Where a Maltese UCITS is registered as a Approval by

company under the Companies Act, the approval of unit-holders unit-holders.

which is required in order for a merger of that UCITS to take place

shall not exceed 75% of the votes actually cast by unit-holders

present or represented at the general meeting of the unit-holders.

(2) The provisions of this regulation shall apply

notwithstanding the relevant provisions of the Companies Act and Cap. 386.

anything contained in the UCITS memorandum or articles of

association.

(3) The information on the proposed merger which is to be

provided to unit-holders, before they grant their approval thereto in

terms of subregulation (1), may contain a recommendation by the

management company of the UCITS or the Board of Directors of the

UCITS itself as to the course of action to be taken.

COSTS AND ENTRY INTO EFFECT OF MERGER

Except in cases where UCITS have not designated a

management company, any legal, advisory or administrative costs

associated with the preparation and the completion of the merger shall

not be charged to the merging UCITS, the receiving UCITS or to any

of their unit-holders.

(1) In the case of a domestic merger or in the case of a

cross border merger where the receiving UCITS is a Maltese UCITS,

the following shall apply

(a)

where the UCITS concerned are established as

companies, partnerships en comandite or limited partnerships

(i) the merger shall not take effect before the

lapse of three months from the last publication of the

statement relating to the extraordinary resolution

approving the merger required in terms of the Companies

Act;

(ii) the date for calculating the ratio for exchange

of units of the merging UCITS into units of the receiving

UCITS shall not be later than one working day from date

on which the approval is granted to the merger by the

competent authority or, in the case of a cross border merger

where the receiving UCITS is a Maltese UCITS, by the

European regulatory authority of the merging UCITS as

the case may be;

(iii) the date for determining the relevant net asset

value for cash payments, where applicable, shall not be

later than one working day from the date on which the

approval is granted to the merger by the competent

authority or, in the case of a cross border merger where the

receiving UCITS is a Maltese UCITS, by the European

regulatory authority of the merging UCITS as the case may

be;

(b)

where the UCITS concerned are established as

contractual funds or unit trusts

(i) the merger shall come into effect on the date

on which the approval is granted to the merger by the

competent authority or, in the case of a cross border merger

where the receiving UCITS is a Maltese UCITS, by the

European regulatory authority of the merging UCITS as

the case may be;

(ii) the date for calculating the ratio for exchange

of units of the merging UCITS into units of the receiving

UCITS shall not be later than one working day from the

date on which the approval is granted to the merger by the

competent authority or, in the case of a cross border merger

where the receiving UCITS is a Maltese UCITS, by the

European regulatory authority of the merging UCITS as

the case may be;

(iii) the date for determining the relevant net asset

value for cash payments, where applicable, shall not be

later than one working day from the date on which the

approval is granted to the merger by the competent

authority or, in the case of a cross border merger where the

receiving UCITS is a Maltese UCITS, by the European

regulatory authority of the merging UCITS as the case may

be.

(2) The competent authority shall ensure that, where

applicable, the dates referred to in sub-regulation (1) are set after the

approval of the merger by unit-holders of the receiving UCITS or the

merging UCITS.

(3) Where the receiving UCITS is a Maltese UCITS, the entry

into effect of the merger shall be notified to the competent authority

and to the European regulatory authority of the merging UCITS and

shall be made public by a notice on the website of the competent

authority.

(4) A merger which has taken effect as provided for in sub-

regulation (1) shall not be declared null and void.

CONSEQUENCES OF MERGER

(1)

A merger effected in accordance with regulation Consequences

of a merger.

3(1) shall have the following consequences

(a)

all the assets and liabilities of the merging UCITS

shall be transferred to the receiving UCITS or, where

applicable, to the custodian of the receiving UCITS;

(b)

the unit-holders of the merging UCITS shall

become unit-holders of the receiving UCITS and, where

applicable, they shall be entitled to a cash payment not

exceeding 10 per centum of the net asset value of their units in

the merging UCITS; and

(c)

the merging UCITS shall cease to exist on the entry

into effect of the merger.

The management company of a Maltese UCITS that is a

receiving UCITS shall confirm to the custodian of the said receiving

UCITS that transfer of assets and liabilities is complete. Where no

management company has been appointed, the said receiving UCITS

shall give such confirmation directly to its custodian.

MERGER OF MASTER AND FEEDER UCITS

(1)

If a master UCITS merges with another UCITS or

is divided into two or more UCITS, the feeder UCITS shall be

liquidated, unless, where the feeder UCITS is a Maltese UCITS, the

competent authority grants its approval to the feeder UCITS to

(a)

continue to be a feeder UCITS of the master

UCITS or another UCITS resulting from the merger or division

of the master UCITS;

(b)

invest at least eighty-five per cent of its assets in

units of another master UCITS not resulting from the merger or

the division; or

(c)

amend its fund rules or its instruments of

incorporation in order to convert into a UCITS which is not a

feeder UCITS.

(2) A merger or division of a master UCITS shall not become

effective unless the master UCITS has provided all of its unit-holders

and the European regulatory authorities of its feeder UCITS, or,

where the feeder UCITS is a Maltese UCITS, the competent

authority, with the information referred to or comparable with that

referred to in regulation 11 up to sixty days prior to the proposed

effective date of the merger or division, as the case may be.

(3) Where the feeder UCITS is a Maltese UCITS, unless the

competent authority has granted its approval in terms of sub-

regulation (1)(a), the master UCITS shall enable the feeder UCITS to

repurchase or redeem all units in the master UCITS before the merger

or division of the master UCITS becomes effective.

(1)

Where the feeder UCITS is a Maltese UCITS it

shall, not later than one month after the date on which such feeder

UCITS received the information of the planned merger or division

referred to in regulation 18(1), submit to the competent authority the

following

(a)

where the feeder UCITS intends to continue to be a

feeder UCITS of the same Master UCITS

(i)

its application for approval thereof;

(ii) its application for approval of the proposed

amendments to its fund rules or instrument of

incorporation, where applicable; and

(iii) the amendments to its prospectus and its key

investor information, where applicable;

(b)

where the feeder UCITS intends to become a

feeder UCITS of another master UCITS resulting from the

proposed merger or division of the master UCITS or where the

feeder UCITS intends to invest at least 85 per cent of its assets

in units of another master UCITS not resulting from the merger

or division

(i) its

application

for

approval

of

that

investment;

(ii) its application for approval of the proposed

amendments to its fund rules or instruments of

incorporation;

(iii) the amendments to its prospectus and its key

investors information; and

(iv) any other document as required in terms of

Investment Services Rules;

(c)

where the feeder UCITS intends to convert into a

UCITS that is not a feeder UCITS

(i) its application for approval of the proposed

amendments to its fund rules or instrument of

incorporation;

(ii) the amendments to its prospectus and its key

investor information; and

(d)

where the feeder UCITS intends to be liquidated, a

notification of that intention.

(2) Notwithstanding the requirements of this regulation, in

cases where the master UCITS provided the information referred to,

or comparable with, the information in regulation 11 to a feeder

UCITS which is a Maltese UCITS more than four months prior to the

proposed effective date of merger, such feeder UCITS shall submit to

the competent authority its application or notification in accordance

with sub-regulation (1) not later than three months prior to the

proposed effective date of the merger or division of the master

UCITS.

(3) The feeder UCITS shall inform its unit-holders and the

master UCITS of its intention to be liquidated without undue delay.

(4) For the purposes of this regulation, the expression

"continues to be a feeder UCITS of the same master UCITS" shall

refer to cases where

(a)

the master UCITS is the receiving UCITS in a

proposed merger;

(b)

the master UCITS is to continue materially

unchanged as one of the resulting UCITS in a proposed

division.

(5) For the purposes of this regulation, the expression

"becomes a feeder UCITS of another master UCITS resulting from

the merger or division of the master UCITS" refers to cases where

(a)

the master UCITS is the merging UCITS and, due

to the merger, the feeder UCITS becomes a unit-holder of the

receiving UCITS;

(b)

the feeder UCITS becomes a unit-holder of a

UCITS resulting from a division that is materially different to

the master UCITS.

(1)

Where the feeder UCITS is a Maltese UCITS, it

shall be notified within fifteen working days following the complete

submission of the documents referred to in regulation 19(1)(a) to (c),

whether the competent authority has granted the approval required in

terms of regulation 18. The feeder UCITS shall inform the master

UCITS of such approval upon receipt.

(2) After the feeder UCITS has been notified that the

competent authority has granted the necessary approvals pursuant to

regulation 19(1)(b), such feeder UCITS shall take the necessary

measures to comply with the applicable Investment Services Rules

without undue delay.

(1)

In the cases referred to in paragraphs of regulation Right of feeder

19(1)(b) and (c), where the feeder UCITS is a Maltese UCITS it shall UCITS

request

exercise the right to request repurchase and redemption of units in the repurchase

redemption of

master UCITS in accordance with the requirements of regulations units.

12(1) and 18(1), where the competent authority has not granted the

necessary approvals required pursuant to regulation 19 by the

working day preceding the last day on which such feeder UCITS can

request repurchase and redemption of its units in the master UCITS

before the merger or division is effected. In addition, the feeder

UCITS shall also exercise such right in order to ensure that the right

of its own unit-holders to request repurchase or redemption of their

units in the feeder UCITS in terms of the applicable Investment

Services Rules is not affected.

(2) A feeder UCITS shall, prior to exercising the right referred

to in sub-regulation (1) hereof, consider available alternative

solutions which may help to avoid or reduce transaction costs or other

negative impacts for its own unit-holders.

(3) Where the feeder UCITS requests repurchase or

redemption of its units in the master UCITS, it shall receive one of

the following

(a)

the repurchase or redemption proceeds in cash;

(b)

some or all of the repurchase or redemption

proceeds as a transfer in kind where the feeder UCITS so wishes

and where the agreement between the feeder UCITS and the

master UCITS provides for it

Provided that, where regulation 19(1)(a) applies, the feeder

UCITS may realize any part of the transferred assets for cash at any

time.

(4) Where the feeder UCITS is a Maltese UCITS, the

competent authority shall grant its approval in terms of regulation 18

on condition that any cash held or received in accordance with sub-

regulation (3) may be re-invested only for the purpose of efficient

cash management before the date on which such feeder UCITS is to

start to invest either in the new master UCITS or in accordance with

its new investment objectives and policy.