An open-end investment fund, such as a common fund under Art. 3 para 3 of Directive 2009/65/EC or open-ended alternative investment funds under Art. 2 para 2 letter a of Directive 2011/61/EU (for short: fund), contains a pool of assets that is managed by a management company, unit trust, investment company or a manager of an alternative investment fund (for short: fund manager) on behalf of investors.

The above Directives do not harmonise the legal structure for funds, nor the related insolvency proceedings. In particular, Directive 2009/65/EC does not prescribe for a fund to have “legal personality”, i.e. to be “in a position to act by itself”. (cf. recital (3) of Directive 2009/65/EC as of 13.07.2009) Nonetheless, as far as we are aware, for any fund offered in the EU, the fund manager must keep the assets in the fund separate from the assets in all other funds as well as the assets that it holds for its own account. This implies that the only obligations that a fund manager may pay from the assets in a fund are the obligations that the manager has taken out for the account of that fund.

The aim of the “Guidelines on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013” (EBA/GL/2016/07) is “to ensure a consistent use of the definition of default and to ensure that a harmonised approach is taken across institutions and jurisdictions” (Executive Summary of the Final Report, 2nd paragraph). Given the separation of assets for open-end investment funds irrespective of the legal construct, a consistent application of the definition of default for open-end investment funds can only be achieved when a fund is regarded as obligor irrespective of whether it has legal personality, or not.