The UK government has granted equivalence for UCITS under the UK Overseas Fund Regime ("OFR"), meaning that UCITS can be marketed into the UK without meeting any additional UK requirements.
In a statement made to the House of Commons on 30 January 2024, the Treasury announced that equivalence would be granted for all UCITS vehicles in the European Economic Area (EEA) including EU member states.
The long-awaited decision follows the introduction of the new OFR in 2021 to create a more streamlined process for overseas investment funds to be sold to UK investors and a detailed assessment of the EU regime conducted by Her Majesty's Treasury. Legislation will be required to formally enact the decision.
In a welcome development, the statement confirms that the UK government does not intend to require overseas funds to comply with any additional UK requirements as part of the equivalence determination. The decision will apply to all UCITS, with the exception of money market funds ("MMFs"), as the rules applicable to MMFs are under ongoing regulatory development.
A question remains as to whether the UK's Sustainability Disclosures Requirements ("SDR") will apply to funds recognised under the OFR; the UK government intends to consult on broadening the scope of the SDR to apply to overseas funds.
The existing temporary permissions regime ("TMPR") allowing EEA funds that were marketed in the UK prior to its withdrawal from the EU to continue to do so (which had been due to expire at the end of 2025) will be extended until the end of 2026 to allow for a smooth transition to the OFR.
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