On June 23, 2016, the UK voted to leave the European Union, triggering Article 50 of the Lisbon Treaty and initiating a two-year withdrawal process. This decision would significantly affect financial services, including asset managers across multiple jurisdictions.

Loss of EU Passporting

The primary consequence involves UK firms losing their ability to manage and market funds across the EU. Passports have been used extensively to further the single market, enabling asset managers to concentrate operations in hubs like Dublin and Luxembourg, or allowing non-EU managers to establish UK-based operations. Post-Brexit, UK firms would no longer qualify for a passport under existing EU legislation.

UCITS and AIF Management

UCITS funds must be EU-domiciled and managed by EU companies. UK-established UCITS funds would lose passport protections, becoming categorized as alternative investment funds (AIFs) under AIFMD instead.

Structural Reorganization

Management companies may need to establish new entities in EU jurisdictions or reorganize existing group affiliates. New management companies could delegate portfolio management to existing firms while complying with UCITS delegation requirements for non-EU managers.

Investment Mandate Changes

Funds must reassess investment parameters, particularly UCITS restrictions limiting non-UCITS collective investment scheme exposure to 30% of assets. Broader investment mandates require updating to accommodate a fragmented EU-UK landscape.