On May 25th 2018, ESMA issued the updated version of its UCITS Q&A creating a new Section on “Remuneration”. ESMA clarified that the remuneration-related disclosure requirements under Article 69(3)(a) of the UCITS Directive also apply to the staff of the delegate of a management company to whom investment management functions (including risk management) have been delegated.
ESMA mentioned two ways to comply that are in line with ESMA’s UCITS remuneration guidelines:
- If the delegate is subject to regulatory requirements on remuneration disclosure for its staff that are equally as effective as those prescribed by Article 69(3)(a) of the UCITS Directive, the management company should use the information disclosed by its delegate to fulfill its own obligations.
- In any other cases, appropriate contractual arrangements should be put in place with the delegates. These agreements should allow the management company to receive (and disclose in the annual report for the relevant UCITS that it manages) necessary information to comply with the UCITS remuneration-related disclosure requirements. ESMA established the minimum information that should be included. ESMA further noted that the disclosure should be done on a prorated basis for the part of the UCITS’ assets which are managed by the identified staff within the delegate.
In both situations, the disclosure may be provided on an aggregate basis meaning the presentation of a total amount for all the delegates of the management company in relation to the relevant UCITS.