Implementation of the Directive 2011/61/EC of the European Parliament and of the Council of 8 June, 2011 on alternative investment fund managers into Luxembourg law.

As announced within our previous newsletter as of 12 September, 2012 , Luxembourg has implemented the Directive 2011/61/EC of the European Parliament and of the Council of 8 June, 2011 on alternative investment fund managers (the “AIFM Directive”).

The draft Law n°6471 has finally been adopted by the Luxembourg parliament on 12 July, 2013 (the “Law”) and has been published on 15 July, 2013 in the Luxembourg Official Gazette (Mémorial). It comes into force the day of its publication in line with the official transposition deadline set on July 22, 2013 in the AIFM Directive.

Amendments to Luxembourg Laws

The Law foresees major amendments to several existing Luxembourg laws; the main amendments in particular are going to have an impact on the Luxembourg financial centre and will affect:

  • The Law of 10 August, 1915 on commercial companies, as amended (the “Company Law”),
  • The Law of 15 June, 2004 relating to the company in risk capital (“SICAR”), as amended (the “SICAR Law”),
  • The Law of 17 December, 2010 concerning Undertakings for Collective Investment (“UCI”), as amended (the “UCI Law”),
  • The Law of 13 February, 2007 on Specialised Investment Funds (“SIF”), as amended (the “SIF Law”) – which was already amended in March 2012 in order to implement few elements of the AIFM Directive , 
  • The Law of 5 April, 1993 on the financial sector, as amended (the “PSF Law”),
  • The Law of 13 July, 2005 on institutions for occupational retirement as pension savings company with variable capital and pension savings associations (“SEPCAV/ASSEP”), as amended (the “SEPCAV/ASSEP Law”).

The New Regime and its consequences on Luxembourg laws

In principle the Law follows the main pillars of the AIFM Directive . Pursuant to the regime introduced by the AIFM Directive, all AIFMs to AIFs with assets exceeding the above mentioned thresholds introduced by the Law (and being exactly the ones already provided for by the AIFM Directive) need to be authorised as AIFMs. The detailed requirements governing the authorisation and supervision as well as ongoing organisational requirements of AIFMs have been defined by the Law, including the details relating to the European passport.

Taking into consideration the different Luxembourg laws, amended by the Law, and to summarise in brief, the regulated vehicles such as SIFs, SICARs and UCIs governed by Part II of the UCI Law with more than one investor qualify as AIFs, subject to the specifications detailed in the amendments to the respective laws and regulations applicable to said entities. With regard to SOPARFIs, - as stated above - a qualification as an AIF will depend on the structural details of each of such unregulated vehicle.

By amending the Luxembourg law of 5 April, 1993 on the financial sector, the Law (laying down the mandatory appointment of an independent depositary by the AIFs) provides a new category of professional of the financial sector (“PSF”), that will enable non-credit institutions to act as a depository for AIFs whereby these AIFs need (inter alia) to be closed-ended (5 years period) and will not (in general) be allowed to invest in financial instruments.

By amending the Company Law, the Law:

  1. brings up-to-date the existing partnership (Société en Commandite Simple, the “SCS”) in view of making it more appealing to investors who are familiarised with the UK partnership pattern, and
  2. introduces a new company form, the new special limited partnership (Société en Commandite Spéciale, the “SCSp”) which will allow more flexibility. Thus, Luxembourg now follows countries like Scotland, England, Jersey and Guernsey which already provide the private equity market with such a kind of tax transparent and tailor-made vehicle.

If not already done, any concerned market players will need to analyse their current structures in order to implement this new regime.