The act of December 21 2012 (Bill 6366, referred to as the 'Family Office Act'), which regulates family office activities in Luxembourg, was published on December 28 2012. The purpose of this act is, among other things, to establish a new licensing procedure for financial sector professionals exercising family office activities.
The Family Office Act introduces a legal framework for the activities of family officers, which include the provision of professional services and advice of a patrimonial nature to natural persons, families or entities belonging to natural persons or families. To fall under the scope of the Family Office Act, a family officer must provide services to more than one family, natural person or entities having more than a single person as the ultimate economic beneficiary.
Certain categories of Luxembourg-based professional are allowed to act as family officer, including:
- credit institutions;
- investment advisers;
- asset managers;
- corporate domiciliation agents (under Article 28-9 of the act of April 5 1993 on the financial sector, as amended, referred to as the 'Financial Sector Act');
- professionals providing company formation and management services (under Article 28-10 of the Financial Sector Act);
- attorneys at law and European lawyers practising under their home country's professional title;
- auditors; and
- chartered accountants.
These professionals are not subject to additional professional obligations or specific licence requirements for the purpose of exercising family office activities.
This Family Office Act creates a new category of professional – 'specialised financial sector professional approved for family office' – authorised to exercise family office activities, subject to compliance with the new Article 28-6 of the Financial Sector Act. In order to be approved as family officer by the Luxembourg financial sector regulator, the Commission de surveillance du secteur financier, these professionals must have a share capital of €50,000. Furthermore, they must comply with particular professional duties, such as those introduced by the Anti-money Laundering Act of November 12 2004 and those relating to professional secrecy. Under the Financial Sector Act, family officers are also subject to transparency rules regarding remuneration received in connection with customers' assets.
The illegal exercise of family office activity constitutes a criminal offence under the Family Office Act.
In terms of transitional provisions, the Family Office Act states that any entity exercising family office activities must comply with its provisions within six months of the date on which it became effective – January 1 2013.
The Family Office Act aims to create a new supervised advisory profession for wealthy families. It is expected to enhance protection for investors and thus strengthen the appeal of Luxembourg as a financial centre.
For further information on this topic please contact Josée Weydert or Arnaud Joseph at NautaDutilh by telephone (+352 26 12 29 1), fax (+352 26 68 43 31) or email (firstname.lastname@example.org or email@example.com).
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Emmanuelle Valding assisted in the preparation of this update.