INVESTMENT SERVICES ACT (UCITS MERGERS) REGULATIONS (ucitsmerger)

SUBSIDIARY LEGISLATION 370.19

INVESTMENT SERVICES ACT

(UCITS MERGERS) REGULATIONS

1st July, 2011

LEGAL NOTICE 242 of 2011, as amended by Legal Notice 336 of 2012.

PRELIMINARY

(1) The title of these regulations is the Investment Services

Act (UCITS Merger) Regulations.

(2) 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 3(1), 4, 5, 6, 7, 22, and 23 of the

Implementing Directive as herein defined, and they shall be

interpreted and applied accordingly.

Amended by

L.N. 336 of 2012.

(Regulation 11)

Information to be provided by Maltese UCITS

which are in the process of merging

1.

1.1 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

1.2 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.

1.3 If a summary of the key points of the merger proposal is provided at the

beginning of the information document, it must cross-refer to the parts

of the information document where further information is provided.

2. Additional Information to be provided by the Maltese UCITS when it is the

merging UCITS

2.1 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.

2.2 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.

2.3 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

3.1 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.

3.2 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. Information to be provided to the unit holders of a Maltese UCITS in terms

of regulation 11(2)(d)

4.1 The information which Maltese UCITS are to provide to their unit

holders in terms of regulation 11(2)(d) of these regulations shall

include

(i)

where applicable, the procedure by which unit holders will be

INVESTMENT SERVICES ACT (UCITS MERGERS)

asked to approve the merger proposal and what arrangements

will be made to inform them of the outcome;

(ii)

the details of any intended suspension of dealing in units to

enable the merger to be carried out efficiently; and

(iii)

when the merger will take effect, in accordance with regulation

15(1).

5. Method of providing the Information to Unit-Holders

5.1 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.

5.2 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.

5.3 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.

(1)

In these regulations, unless the context otherwise

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 t erms of the UCITS D irectiv e an d incl udes 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 P arliam ent and of t he Counci l as regards cer tain

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 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;

" m e rg e r " m e a n s a n o p e r a t i o n b y t w o o r m o r e U C I T S i n

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 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 UCITS"

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

INVESTMENT SERVICES ACT (UCITS MERGERS)

(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 a

Maltese UCITS is the merging UCITS may be effected in the

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

apply to the competent authority to obtain prior written

authorization to undergo such merger.

(1) In seeking the authorisation referred to in regulation 4,

the merging UCITS shall provide the following information to the

competent 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

competent authority shall authorize the proposed merger in

accordance with regulation 4 if the following conditions are met

(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

information requested in regulation 5 is not complete or is not

submitted in full, it shall request additional information within ten

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

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

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 UCITS;

(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 UCITS.

(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 t he fund ru les or in st rum ent s of incorporatio n o f t heir

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 shall

appoint either its custodian or an independent auditor for the

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

provide appropriate and accurate information on the proposed

merger 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

m e rg i n g U C I T S a n d t h e r e c e i v i n g U C I T S i n t e r m s o f t h i s

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

(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.

12. (1) The unit-holders in a merging UCITS and in a

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

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 company

under the Companies Act, the approval of 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

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

INVESTMENT SERVICES ACT (UCITS MERGERS)

(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 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

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

shall exercise the right to request repurchase and redemption of

units in the master UCITS in accordance with the requirements of

regulations 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 paragraph (b) 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.

INVESTMENT SERVICES ACT (UCITS MERGERS)