UCITS: ESMA/EU Commission Position On Fee Rebates

In November 2021, a question on fee rebate arrangements was added in the ESMA FAQ on UCITS.

In fact, ESMA did not answer itself but forwarded the question to the EU Commission (as allowed by Article 16b (5) of the ESMA Regulation).

The question relates to the applicability of the UCITS inducement rules (i.e. Article 29 of the UCITS Level 2 Directive):

• to rebate arrangements where UCITS management companies ("UCITS Mancos") pay these rebates from their own resources (payment vis-à-vis an individual investor);
• the payment of fees by UCITS Mancos from their own resources to separate investors (e.g. by concluding side letters with institutional investors, subscribing investment fund units on behalf of their clients).