Undertakings for collective investment in transferable securities (UCITS) are pooled investment schemes, otherwise known as investment funds or mutual funds, which meet the criteria laid down by EU Directives in this area. UCITS benefit from a "European passport" which permits the underlying shares or units to be offered for sale throughout the European Union following authorisation of the fund in one Member State.

The European Union recently reviewed the legislative framework for UCITS. The UCITS IV Directive provides that Directive 85/611/ECC, as amended, was repealed with effect from 1 July 2011, without prejudice to the obligations of the Member States relating to the time limits for transposition into national law and application of the Directive. The Luxembourg law implementing the UCITS IV Directive into national law (Law of 17 December 2010) provides that the previous legislation (Law of 20 December 2002, as amended) will be repealed with effect from 1 July 2012 (except Articles 127 and 129 which have already been repealed with effect from 1 January 2011). As from 1 July 2011, all UCITS are governed by the Law of 17 December 2010. However, funds created before this date are allowed to use their simplified prospectus instead of the key investor information document (KIID) until 1 July 2012.

UCITS funds can be sold to all types of investors.

Investment funds governed by the UCITS Directive benefit from a European passport, whereby a UCITS fund authorised in one Member State may be marketed in the other EU Member States subject to notification to the host Member State authorities.

A UCITS may take the legal form of a common fund (FCP - fonds commun de placement) or may be constituted as an investment company (SICAV - Société d'investissement à capital variable or SICAF - Société d'investissement à capital fixe). The FCP has no legal personality and thus must be managed by a management company. The SICAV/SICAF can either appoint a management company or designate itself as "self-managed".

These different entities may be set up as a single fund or as an umbrella fund consisting of multiple compartments, each with a different investment policy. The fund and compartments respectively may have an unlimited number of share classes, depending on the needs of the investors to whom the fund is distributed.

All three entities must be open-ended.

The net assets of an FCP may not be less than EUR 1.250.000. This minimum must be reached within a period of six months following its authorisation.

The minimum capital of a self-managed SICAV/SICAF may not be less than EUR 300.000 at the date of authorisation. The capital of any SICAV/SICAF must reach EUR 1.250.000 within a period of six months following its authorisation.