THE REFORM of the EU legal framework for investment funds known as UCITS (Undertakings for Collective Investment in Transferable Securities) was originally expected to introduce a "management company passport", under which firms based in one EU state could manage funds registered in another.

France, Britain and Germany strongly support this idea as it would allow big funds with pools of money distributed in different EU member states to be able to manage them from one central location.

But regulators in Ireland and Luxembourg - where many investment funds are currently registered - say this could undermine the ability of national regulators to supervise the industry properly.

Irish financial experts had also warned that the passport represented a threat to Ireland's position as a centre for the registration of international investment funds in the EU.

In the run-up to the referendum on the Lisbon Treaty, the European Voice newspaper suggested Mr McCreevy was postponing the "management company passport" to assuage concerns among Irish fund managers.

But Mr McCreevy's spokesman yesterday strongly denied that Irish considerations had any influence on his decision and dismissed as "wild spin" a suggestion that the delay to the passport had anything to do with the referendum.

"It was discovered at a quite late stage of the process regarding the company management passports that there were substantial difficulties as far as national supervision and sufficient investor protection were concerned," said the spokesman, who noted that the commission had asked the Committee of European Security Regulators to look at the issue.

The committee has until November to advise the commission about how to address the concerns.

It is possible that the passport could at a later date be included in the proposal for the UCITS directive, which must still be debated by MEPs and the member states.