Circular 2/2013 of 9 May from the CNMV on the Key Investor Information Document and the Prospectus of Collective Investment Institutions (Errata) (Amended by Circular 3/2022 of 21 July)

OFFICIAL STATE GAZETTE No. 124 Friday 24 May 2013 Sec. I. Page 39416 I. GENERAL PROVISIONS NATIONAL SECURITIES MARKET COMMISSION 5453 Circular 2/2013 of 9 May from the National Securities Market Commission on the Key Investor Information Document and the Prospectus of Collective Investment Institutions. The new European legislation includes as one of its main novelties the Key Investor Information Document, replacing the previous simplified prospectus, thereby achieving European harmonisation of the document that collects those fundamental data on UCITS that an investor needs to know in order to make an informed decision on their investment, presented in a short, concise and clear format. This document is set out in Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), which entered into force on 1 July 2011. On the other hand, both the form and content of the Key Investor Information Document are detailed in Commission Regulation (EU) No 583/2010 of 1 July 2010 laying down implementing measures of Directive 2009/65/EC of the European Parliament and of the Council as regards the key investor information and the conditions to be met when providing that information or the prospectus on a durable medium other than paper or through a website. In order to adapt our legislation to Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009, both the content of Law 35/2003 of 4 November on Collective Investment Institutions (LIIC), as amended by Law 31/2011 of 4 October amending Law 35/2003 of 4 November on Collective Investment Institutions, and Royal Decree 1082/2012 of 13 July approving the Regulation developing Law 35/2003 of 4 November on Collective Investment Institutions (RIIC), have been modified, culminating the process of transposing the aforementioned Directive into Spanish CII legislation. In line with these legislative modifications and those arising from European regulation, as well as with the various recommendations of CESR (currently ESMA, "European Securities and Markets Authority"), it is necessary to review Circular 3/2006 of 26 October from the National Securities Market Commission on explanatory prospectuses of Collective Investment Institutions, in order to adapt its content. With a view to facilitating investors' comparison between similar products, while avoiding asymmetry in the information provided, and for reasons of homogeneity and transparency, the requirement for the Key Investor Information Document has been extended to CIIs that do not have UCITS status (non-harmonised CIIs), as it does not seem reasonable for two different marketing documents to coexist for CIIs depending on whether they are UCITS or not, despite the fact that the aforementioned Directive only applies to harmonised CIIs. Nevertheless, given that the Key Investor Information Document as regulated in Commission Regulation (EU) No 583/2010 of 1 July 2010 is a document designed for UCITS, i.e. financial CIIs that comply with Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009, to which it applies directly, extending the requirement for this document to all CIIs makes it necessary to establish, for certain types of non-harmonised CIIs (in particular, real estate CIIs and free investment CIIs), specific exceptions as well as to make certain adjustments regarding the content and form of said document as provided for in the aforementioned Regulation, in order to adapt it to the specific characteristics of this type of CII. To that end, the CNMV is expressly empowered to establish, regarding non-harmonised CIIs and in those cases where it is necessary depending on the class, type or category to which the CII belongs, certain special provisions regarding what is provided for in Commission Regulation (EU) No 583/2010 of 1 July 2010. cve: BOE-A-2013-5453

OFFICIAL STATE GAZETTE No. 124 Friday 24 May 2013 Sec. I. Page 39417 non-harmonised CIIs and in those cases where it is necessary depending on the class, type or category to which the CII belongs, certain special provisions regarding what is provided for in Commission Regulation (EU) No 583/2010 of 1 July 2010. Therefore, this Circular pursues a triple objective: first, to regulate the Key Investor Information Document, establishing those special provisions that are necessary for real estate CIIs and free investment CIIs; secondly, to establish the models for the Key Investor Information Document and the CII prospectus; finally, to adapt the content of the Circular to the recent legislative modifications relating, among other things, to new circumstances granting participants the right of withdrawal. Likewise, in order to avoid regulatory fragmentation, the list of essential elements of CIIs set out in the main body of the Circular has been reviewed and updated. Regarding the structure, the structure of Circular 3/2006 of 26 October has generally been maintained, adapting its content to the legislative modifications described and including new rules relating to the Key Investor Information Document. However, it should be noted as an exception that the information contained in the previous second rule is now set out in four separate rules (second to fifth). Thus, in this Circular, the second rule briefly describes those informative documents of CIIs referred to in Article 17.1 of Law 35/2003 of 4 November that are included in the scope of the Circular, as well as their different forms of presentation and models, setting out those common provisions that affect both documents. For its part, the third and fourth rules detail the form and content of the prospectus and the Key Investor Information Document, respectively, while the fifth rule describes the special provisions relating to the Key Investor Information Document of non-financial CIIs, free investment CIIs and reference free investment CIIs, among others regarding their maximum extent or the determination of the risk profile of these CIIs. The principles relating to the design and language of the Key Investor Information Document detailed in the fourth rule of the Circular are extracted from a Level 3 development (CESR 10-1320). On the other hand, two new rules have been included in the Circular in line with another Level 3 development (ESMA/2012/832): the eleventh rule, which sets out the special provisions relating to the prospectus and the Key Investor Information Document of CIIs whose investment policy is to replicate or reproduce, or to use as a reference, a specific stock or fixed-income index that complies with the requirements described in point (d) of paragraph 2 of Article 50 of Royal Decree 1082/2012 of 13 July, as well as of listed investment funds and listed index SICAVs, and the twelfth rule, which describes other prospectus contents relating to efficient portfolio management techniques and financial derivative instruments, as well as collateral management in relation to this activity. Additionally, it is appropriate to amend certain Circulars of the National Securities Market Commission, in particular Circular 4/2008 of 11 September on the content of the quarterly, semi-annual and annual reports of collective investment institutions and the position statement, Circular 6/2010 of 21 December on transactions with derivative instruments by collective investment institutions, Circular 6/2008 of 26 November on the determination of the net asset value and operational aspects of collective investment institutions, to adapt them to ESMA recommendations on exchange-traded funds (ETFs) and other matters concerning UCITS, as well as Circular 5/2007 of 27 December on material events of collective investment institutions. Likewise, it has been necessary to adapt the models included as annexes to the Circular, replacing the simplified prospectus models with Key Investor Information Document models (annexes C and D), based on the template provided as an example in another Level 3 development (CESR 10-1321), and adapting the content of the prospectus model (annexes A and B) to the recent legislative modifications, which had as their objective, among others, to maintain consistency between the information collected in the prospectus and that in the Key Investor Information Document. By means of this Circular, compliance is given to the mandate of Article 17.6 of Law 35/2003 of 4 November, which states that the CNMV shall establish the standardised models for the Key Investor Information Document and the CII prospectus. Likewise, Royal Decree 1082/2012 of 13 July establishes, in its Article 24.1, that the CNMV shall determine the content and form of presentation of the informative prospectus and may establish special provisions when necessary depending on the class, type or category to which the CII belongs, and in its Article 24.2, that the CNMV may require the inclusion in prospectuses of any additional information, warnings or explanations deemed necessary for the adequate information and protection of investors and market transparency. On the other hand, Article 25.2 of the aforementioned Royal Decree expressly empowers the CNMV to determine the content and form of presentation of the Key Investor Information Document, as well as to establish for non-harmonised CIIs, and depending on the class, type or category to which the CII belongs, the special provisions that are necessary regarding what is provided for in Commission Regulation (EU) No 583/2010 of 1 July 2010 in relation to the Key Investor Information Document of these CIIs. As regards the amendments to the prospectus and the Key Investor Information Document, according to Article 24.1 of Royal Decree 1082/2012 of 13 July, the CNMV shall establish the elements of the prospectus that are considered essential and require prior registration and, in the case of funds, prior verification, for them to enter into force, requiring the update of the prospectus when the essential elements are modified. Pursuant to Article 25.3 of the aforementioned Royal Decree, the provisions of Article 24 regarding the determination of essential elements and their modification shall apply to the Key Investor Information Document. On the other hand, Article 14 of Royal Decree 1082/2012 of 13 July, relating to the modification of drafting projects, statutes, regulations and prospectuses, determines that the CNMV may establish that participants shall have the right to individualised information in those modifications that it deems to be of special relevance. In its virtue, the Council of the National Securities Market Commission, in its session of 9 May 2013, following a report from the Advisory Committee, has ordered the following: Rule 1. Scope of application. This Circular shall apply to the prospectus and the Key Investor Information Document that the Collective Investment Institutions (CIIs) referred to in Article 2.1.a) of Law 35/2003 of 4 November on Collective Investment Institutions (LIIC) or, where applicable, their respective management companies and depositaries, submit to the CNMV for registration and additionally, in the case of investment funds, for prior verification. Rule 2. Key Investor Information Document and CII prospectus. Content, forms of presentation and models. Common provisions.

1. The management company, for each fund it manages, and the investment companies or, where applicable, their management companies or entities holding their representation, shall publish for dissemination among shareholders, participants and the general public, a prospectus and a Key Investor Information Document. The CII depositary shall verify the accuracy, quality and sufficiency of the information contained in said documents, and sign off on their submission to the CNMV.
2. The prospectus and the Key Investor Information Document shall contain the information necessary for investors to form an informed judgment on the investment proposed to them and its risks. The content of the Key Investor Information Document shall be consistent with the corresponding parts of the prospectus.
3. The prospectus and the Key Investor Information Document shall be governed by the provisions of Law 35/2003 of 4 November and Royal Decree 1082/2012 of 13 July approving the Regulation developing Law 35/2003 of 4 November on Collective Investment Institutions, as well as by this Circular. The Key Investor Information Document shall also be governed by the provisions of Commission Regulation (EU) No 583/2010 of 1 July laying down implementing measures of Directive 2009/65/EC of the European Parliament and of the Council of 13 July as regards key investor information and the conditions to be met when providing that information or the prospectus on a durable medium other than paper, or through a website, with the exceptions provided for in this Circular in relation to CIIs that do not comply with the requirements of Directive 2009/65/EC of the European Parliament and of the Council of 13 July.
4. For the purposes of complying with the information obligations established in Article 18 of Law 35/2003 of 4 November, the following forms of presentation to investors of the aforementioned informative documents shall be admitted, where applicable: a) Key Investor Information Document, which shall refer to the most specific level available for the CII: i) If the CII has no compartments or classes of participations or series of shares, a single Key Investor Information Document shall be drawn up. ii) If the CII has compartments but no classes of participations or series of shares, only one Key Investor Information Document shall be drawn up for each compartment. iii) If the CII has classes of participations or series of shares, regardless of the existence or not of compartments, only one Key Investor Information Document shall be drawn up for each class of participation or series of shares, without prejudice to what is established in Article 26 of Commission Regulation (EU) No 583/2010 of 1 July regarding representative classes or series. b) CII prospectus, which shall contain information on the CII as well as, where applicable, on each of the compartments and classes of participations or series of shares. c) Compartment prospectus, which shall contain, in addition to the general information on the CII, exclusively the information relating to that compartment. d) Class of participation or series of shares prospectus, which shall contain, in addition to the general information on the CII and, where applicable, its compartment, exclusively the information relating to that class of participation or series of shares.
5. CIIs that do not comply with the requirements of Directive 2009/65/EC of the European Parliament and of the Council of 13 July shall clearly state in their Key Investor Information Document and in their prospectus that they are non-harmonised CIIs. On the other hand, harmonised CIIs shall identify such status in their prospectus.
6. Information relating to the ongoing charges indicator borne by the CII over the year shall appear in the Key Investor Information Document and in the prospectus, and shall match that recorded in the last report corresponding to the second semester of the CII registered with the CNMV. Notwithstanding the foregoing, in those cases where said ongoing charges indicator ceases to be reliable, an estimate shall be made that is reasonably considered indicative of the amount of expenses that the CII will presumably have to cover in the future.
7. Information relating to the performance fee received in the last financial year, expressed as a percentage of net assets, shall appear, where applicable, in the Key Investor Information Document and in the prospectus, and shall match that recorded in the last report corresponding to the second semester of the CII registered with the CNMV. cve: BOE-A-2013-5453

OFFICIAL STATE GAZETTE No. 124 Friday 24 May 2013 Sec. I. Page 39418 registered with the CNMV. 8. Information relating to the historical development of the CII shall appear in the prospectus and shall match that recorded in the Key Investor Information Document. Rule 3. Form and content of the prospectus.

1. The form and content of the CII prospectus shall comply with the models included as annexes to this Circular. Specifically: a) The prospectus for investment funds shall comply with the model set out in annex A of this Circular. b) The prospectus for investment companies shall comply with the model set out in annex B of this Circular.
2. The CNMV may require CIIs or, where applicable, their managers and depositaries to include in the prospectus any additional information, warnings or explanations deemed necessary for the adequate information and protection of investors and market transparency. Managers may request the CNMV, where applicable, to update of their own motion the prospectus of the CIIs they manage, in order to include the warnings referred to in the previous paragraph, when this affects a large number of CIIs.
3. The management regulations or articles of association form an integral part, as an annex, of the prospectus for funds and investment companies. Rule 4. Form and content of the Key Investor Information Document.
4. The Key Investor Information Document shall be impartial, clear and not misleading, and shall be provided in such a way that there is certainty that investors are able to distinguish it from other available information. This document shall be drafted concisely and in non-technical language understandable by the average investor, in order to enable them to reasonably understand the essential characteristics, nature and risks of the investment product offered to them and to make informed investment decisions without needing to refer to other documents. This document shall be brief, containing only that information necessary for the investor to make a reasoned decision on the investment proposed to them. Efforts shall be made to avoid the use of complex vocabulary, legalisms and technical jargon, as well as the use of financial slang, and instead, whenever possible, commonly used words shall be used. In drafting this document, information shall be presented clearly, using short sentences and avoiding the use of complex constructions, as well as the inclusion of redundant text, obvious statements, vagueness and imprecision. The name of the CIIs shall not be misleading regarding their investment policy nor their risk and return indicator.
5. The form and content of the Key Investor Information Document for CIIs shall comply with the models included as annexes to this Circular. Specifically: a) The Key Investor Information Document for investment funds shall comply with the model set out in annex C of this Circular. b) The Key Investor Information Document for investment companies shall comply with the model set out in annex D of this Circular.
6. The CNMV may require CIIs that do not comply with the requirements of Directive 2009/65/EC of the European Parliament and of the Council of 13 July, or where applicable, their managers and depositaries, to include in the Key Investor Information Document any additional information, warnings or explanations deemed necessary for the adequate information and protection of investors and market transparency. Managers may request the CNMV, where applicable, to update of their own motion the Key Investor Information Document of the CIIs they manage, in order to include the warnings referred to in the previous paragraph, when this affects a large number of CIIs.
7. The synthetic risk indicator referred to in Section 2 of Chapter III of Commission Regulation (EU) No 583/2010 of 1 July relating to the risk and return profile, shall consist of a number within a scale of 1 to 7 (ordered from lowest to highest risk), based on the historical volatility level of the CII and shall be calculated according to the methodology appropriate to each type of CII. The determination of the synthetic risk indicator shall be the responsibility of the management company or, where applicable, the investment company.
8. The performance scenarios referred to in Section 5 of Chapter IV of Commission Regulation (EU) No 583/2010 of 1 July relating to structured CIIs, shall replace the information relating to the historical performance evolution for such CIIs. In this regard, the definition of structured CII contained in paragraph 1 of Article 36 of said Regulation shall be taken. These scenarios shall consist of three illustrative examples of the potential performance of the CII (low or, where applicable, negative performance for the investor, medium performance and high performance, in that order), and shall be based on prudent and reasonable hypotheses regarding future market conditions and price variations.
9. Regarding the method of calculation as well as the circumstances for mandatory updating of the risk indicator, and the preparation of the performance scenarios, the provisions of the Recommendations relating to the synthetic risk indicator (CESR 10-673) and to the performance scenarios of structured CIIs (CESR 10-1318), or any others that replace or modify them in the future, shall be taken into account, provided that the CNMV has confirmed to ESMA its compliance...