What changed between the draft committee report and the plenary report

Removed:Article 2 – paragraph 1 – point 4, Article 18a – paragraph 3: deleted

Added:Competent authorities shall provide data to ESMA to contribute to that report ... [by X months before the date specified in the first subparagraph].’

Removed:Directive 2009/65/EC

Added:(4b) Article 14 is amended as follows:

Removed:Article 2 – paragraph 1 – point 4, Article 18a – paragraph 4: 4. ESMA shall develop draft regulatory technical standards on criteria for the selection and use of suitable liquidity management tools by the management companies for liquidity risk management, including appropriate disclosures to investors, taking into account the capability of such tools to reduce undue advantages for investors that redeem their investments first, and to mitigate financial stability risks. Those standards shall recognise that the primary responsibility for liquidity risk management remains with the UCITS. They shall allow adequate time for adaptation before they apply, in particular for existing UCITS.

Added:(a) the following paragraph is inserted :

Removed:Directive 2009/65/EC

Added:2a. Where an AIFM intends to manage an AIF on behalf of a third-party, including but not limited to under a mandate in accordance with Article 6(4)(a) or under a delegation in accordance with Article 20, and where the third-party is to have significant control over the AIF’s design, distribution and management, the AIFM shall employ heightened scrutiny of the potential for conflicts of interest. AIFMs engaging in such a relationship shall submit detailed explanations and evidence on their compliance with paragraphs 1 and 2 of this Article to the competent authorities of their home Member State. In particular, they shall specify how they prevent systematic conflicts of interest or any other material conflicts of interest arising from the relationship, how any existing or potential conflicts are effectively managed in the best interest of investors and how this is clearly and comprehensively disclosed to investors.

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 1: 1. A management company shall regularly report to the competent authorities of its home Member State on the markets and instruments in which it trades on behalf of the UCITS it manages, and other relevant economic and accounting information contained in paragraph 1a.

Added:(b) the following paragraph is added:

Removed:Directive 2009/65/EC

Added:“4a. In order to ensure uniform conditions of application of this Article, ESMA shall develop draft regulatory technical standards to specify:

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 1a (new): 1 a. A management company shall regularly report to the competent authorities of its home Member State information regarding delegation arrangements concerning portfolio management or risk management functions and in particular: / (i) information on the entities to which such functions have been delegated (name and legal entity identifier of each delegate, its jurisdiction of establishment and, where relevant, its supervisory authority); / (ii) information on the function delegated, the type of delegation (full or partial), and the date of the delegation agreement or contract; / (iii) where sub-delegation arrangements are in place, the same information in respect of the sub-delegates and the functions sub-delegated; / (iv) the date of conclusion and expiration of the delegation and sub-delegation arrangements; / (v) a description of periodic due diligence measures carried out by the management company to oversee, monitor and control the delegate, including the date of performance of these measures, the issues identified and, where relevant, the measures and timeline adopted to address those issues.

Added:(a) the types of relationship between the AIFM and a third-party when the AIFM manages an AIF on behalf of the third-party and of conflicts of interest as referred to in paragraph 2a;

Removed:Directive 2009/65/EC

Added:(b) the criteria to be used by the relevant competent authorities to assess whether AIFMs comply with their obligations under paragraph 2a.

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 2 – subparagraph 1: ESMA shall develop draft regulatory technical standards specifying the details to be reported in accordance with paragraphs 1 and 1a of this Article. ESMA shall take into account other reporting requirements to which the management companies are subject and the report issued in accordance with Article 20b.

Added:Power is conferred on the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

Removed:Directive 2009/65/EC

Added:(5) Article 15 is amended as follows:

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 3 – subparagraph 1 – point a: (a) the format and data standards for the reports referred to in paragraphs 1 and 1a;

Added:(a) in paragraph 3, the following point (d) is added:

Removed:Directive 2009/65/EC

Added:‘(d) for loan originating activities, other than in respect of shareholder loans where such loans do not exceed in aggregate 150 % of the capital of the AIF, implement effective policies, procedures and processes for the granting of credit, for assessing the credit risk and for administering and monitoring their credit portfolio, keep those policies, procedures and processes up to date and effective and review them regularly and at least once a year.’;

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 3 – subparagraph 1 – point b a (new): (ba) methods and arrangements for submitting the reports referred to in paragraphs 1 and 1a, including methods and arrangements to improve data standardisation and efficient sharing and use of data already reported within any Union reporting framework by any relevant competent authority, at Union or national level.

Added:(b) the following paragraphs 4a to 4ea are inserted between the paragraphs 4 and 5:

Removed:Directive 2009/65/EC

Added:‘4a. An AIFM shall ensure that a loan originated to any single borrower by the AIF it manages does not exceed 20 % of the AIF’s capital where the borrower is one of the following:

Removed:Article 2 – paragraph 1 – point 5, Article 20a – paragraph 3 – subparagraph 1a (new): 1a. When developing those draft technical standards, ESMA shall take into account international developments and standards agreed at Union or global level and the findings of the report issued in accordance with Article 20b.

Added:(a) a financial undertaking within the meaning of Article 13(25) of Directive 2009/138/EC;

Removed:Directive 2009/65/EC

Added:(b) a collective investment undertaking within the meaning of Article 4(1), point (a), of this Directive or within the meaning of Article 1(2) of Directive 2009/65/EC.’

Removed:Article 2 – paragraph 1 – point 6 – point a, Article 22a – paragraph 2 – point c: (c) the depositary has exercised all due skill, care and diligence in the selection and the appointment of any third party to whom it intends to delegate parts of its tasks, except where that third party is a central securities depository acting in the capacity of an issuer CSD as defined in the delegated act adopted on the basis of Articles 29(3) and 48(10) of Regulation (EU) No 909/2014 and continues to exercise all due skill, care and diligence in the periodic review and ongoing monitoring of any third party to which it has delegated parts of its tasks and of the arrangements of the third party in respect of the matters delegated to it. / (deleted)

Added:The restriction set out in the first subparagraph shall be without prejudice to the thresholds, restrictions and conditions set out in Regulations (EU) 2015/760, (EU) 345/2013 and (EU) 346/2013.

Removed:Directive 2009/65/EC

Added:4b. The investment limit of 20 % laid down in paragraph 4a shall:

Removed:Article 2 – paragraph 1 – point 6 – point b, Article 22a – paragraph 4: 4. For the purposes of this paragraph, the provision of services by a central securities depository acting in the capacity of an issuer CSD as defined in the delegated act adopted on the basis of Articles 29(3) and 48(10) of Regulation (EU) No 909/2014 shall not be considered a delegation of the depositary’s custody functions. ;

Added:(a) apply by the date specified in the rules or instruments of incorporation of the AIF;

Removed:Directive 2009/65/EC

Added:(b) cease to apply once the AIF starts to sell assets in order to redeem investors' units or shares after the end of the life of the AIF;

Removed:Article 2 – paragraph 1 – point 8, Article 84 – paragraph 2 – point b: (b) in the interest of the unit-holders or of the public, in exceptional circumstances and after consulting the UCITS, competent authorities of a UCITS home Member State may require a UCITS to activate a liquidity management tool referred to in points 1 or 2 of Annex IIA or selected and notified by the UCITS in accordance with Article 18a(2), whichever is more suitable considering the type of UCITS and the risks that necessitate taking this measure.

Added:(c) be temporarily suspended for up to 12 months where the AIF raises additional capital or reduces its existing capital.

Removed:Directive 2009/65/CE

Added:4c. The application date referred to in paragraph 4b, point (a), shall take account of the particular features and characteristics of the assets to be invested by the AIF, and shall be no later than half the life of the AIF as indicated in the AIF’s constitutive documents. In exceptional circumstances, the competent authority of the AIFM, upon submission of a duly justified investment plan, may approve an extension of this time limit by no more than one additional year.

Removed:Article 2 – paragraph 1 – point 8, Article 84 – paragraph 3 – subparagraph 1: Where a UCITS uses one of the liquidity management tools listed at points 1 to 4 of the list set out in Annex IIA, in situations of liquidity stress, it shall notify, without delay, the competent authorities of its home Member State and the competent authorities of all Member States in which it markets its units.

Added:4d. The AIF shall not grant loans to the following entities:

Removed:Directive 2009/65/EC

Added:(a) its AIFM or the staff of its AIFM;

Removed:Article 2 – paragraph 1 – point 8, Article 84 – paragraph 3 – subparagraph 2: The competent authorities of the home Member State of the UCITS shall inform, without delay, ESMA about any notification received in accordance with this paragraph. The competent authorities of the home Member State of the UCITS shall inform ESRB if there is any potential risk to stability and integrity of financial system.

Added:(aa) an entity within the same group as the AIFM as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and the Council, except where that entity is a financial undertaking that exclusively finances borrowers that are not mentioned in points (a), (b) and (c) of this paragraph;

Removed:Directive 2009/65/EC

Added:(b) its depositary and delegates of its depositary;

Removed:Article 2 – paragraph 1 – point 8, Article 84 – paragraph 3a: 3a. The competent authorities of the UCITS home Member State shall notify the competent authorities of all Member States in which the UCITS markets its units, ESMA prior to exercising powers pursuant to paragraph 2, point (b). The competent authorities of the home Member State of the UCITS shall inform ESRB if there is any potential risk to stability and integrity of financial system.

Added:(c) the entity to which its AIFM has delegated functions in accordance with Article 20.

Removed:Directive 2009/65/EC

Added:4da. The proceeds of the loan, minus the fees for the administration of the loan, shall be attributed to the fund in full. All costs and expenses linked to the administration of the loan shall be clearly disclosed in accordance with Article 23 of this Directive.

Removed:Article 2 – paragraph 1 – point 8, Article 84 – paragraph 3b: 3b. The competent authority of the Member States in which a UCITS markets its units may request the competent authority of the UCITS home Member State to exercise powers laid down in paragraph 2, point (b), specifying the reasons for the request and notifying ESMA and, in case of any potential risk to the stability and integrity of the financial system, the ESRB thereof.

Added:4e. An AIFM shall ensure that the AIF it manages retains, on an ongoing basis and until maturity, 5% of the notional value of the loans it has originated and subsequently sold on the secondary market.

Removed:Directive 2009/65/EC

Added:The requirement set out in the first subparagraph does not apply to the loans that the AIF has purchased on the secondary market or where one of the following applies: