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Principles for the KIID

The KIID was introduced as a replacement for the simplified prospectus which was often simply just a “copy/paste” of the full prospectus, with poor design, full of technical terms and lengthy. Due to lack of direction and guidance, the simplified prospectus became an administrative burden with material variations across member states with no real investor benefit.

In July 2010, CESR issued four consultation papers on the KIID including:

  • its pre-defined template (ref CESR/10-794)
  • a guide to clear language and layout (ref CESR/10-532)
  • guidelines for the transition from the simplified prospectus to the KIID (ref CESR/10-672)
  • selection and presentation of performance scenarios for structured UCITS (ref CESR/10-530)

These documents, together with the Commission Regulation have formed the cornerstones of the creation, production and dissemination of the KIID.

KIID best practices: a plain language, a clear layout to have an effective document

• Avoid the use of:

- jargon, complex concepts and specialist language
- words with different meanings in normal usage which could be misleading
- legalistic or foreign words

• KII will require:

- just the essential pre-defined information
- complex information to be clearly presented
- short sentences of less than 25 words
- the use of clear layout

• KII replaces the simplified prospectus as consumer communication

• It is short, well structured and clearly laid out

• The KII should be effective and accessible to all investors

• It must be engaging and attract the reader’s attention

• The KII should not appear to be a legal document

• “A good design makes a document easier to read and understand.”

- choose an easy to read type font
- ensure legible type size
- clear hierarchy of headings and sub-headings
- limited use of colour to add visual appeal

Contacts

  • Lou Kiesch
    Partner - Regulatory Consulting
  • Xavier Zaegel
    Partner - Capital Markets/Financial Risk
  • Francois-Kim Hugé
    Directeur - Fund Registration Services
  • Christopher Stuart-Sinclair
    Directeur - Regulatory Consulting

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