On 11 July 2023, the Luxembourg Parliament voted with an absolute positive majority on the bill of law 8183 which was proposed by the Luxembourg Government on 24 March 2023. The bill of law 8183 is expected to come into law very shortly (the ”Modernisation Law”).

The Modernisation Law, as soon as published, will amend the following key laws regulating investment funds and their managers in Luxembourg:

• the Luxembourg Law of 17 December 2010 on undertakings for collective investment, as amended (the UCI Law)
• the Luxembourg Law of 15 June 2004 on investment companies in risk capital, as amended (the SICAR Law)
• the Luxembourg Law of 13 February 2007 on specialised investment funds, as amended (the SIF Law)
• the Luxembourg Law of 23 July 2016 on reserved alternative investment funds, as amended (the RAIF Law)
• the Luxembourg Law of 12 July 2013 on alternative investment fund managers, as amended (the AIFM Law)

The Modernisation Law aims to enhance and modernise the Luxembourg investment funds’ toolbox and to increase the attractiveness and competitiveness of the Luxembourg financial centre. The proposed changes, to be read in conjunction with the new ELTIF regime, are a response from the Luxembourg legislator to the increasing trend from alternative fund managers seeking to raise capital from retail investors across the world. The Modernisation Law is very much welcomed by the Luxembourg fund industry and is considered to be an important milestone toward alternative offerings to retail investors by Luxembourg investment funds.
 
Among a myriad of amendments, the following are of particular interest in the context of the aim to increase the attractiveness and competitiveness of the Luxembourg financial centre for retail investors: 

• Amendment of the definition of “well-informed investors” under the RAIF Law, the SICAR Law and the SIF Law. The minimum investment threshold of €125,000 will be lowered to €100,000. The definition of “well-informed investor” will also be harmonised throughout the SIF Law, the SICAR Law and the RAIF Law, with a clear cross reference to MiFID II.
• Extension of the deadline to meet the minimum amount of assets under management. Previously, (a) the minimum of €1,250,000 needed to be reached (i) within six months as of its authorisation for a Part II UCI, (ii) within 12 months of its authorisation for a SIF, (iii) within 12 months of its establishment for a RAIF; and (b) the minimum of €1,000,000 must be reached within 12 months of its authorisation for a SICAR. The Modernisation Law will extend the deadline to 12 months for a Part II UCI and to 24 months for SIFs, RAIFs, and SICARs. 
• New legal forms available to structure Part II UCIs. Previously, Part II UCIs could only be structured as SAs. Pursuant to the amendments stemming from the Modernisation Law, a Part II UCI may also be established as an SCA, an SCSp, an SCS, a S.à r.l. or an SCSA., in line with what is allowed for RAIFs and SIFs. 
• More flexible rules for the issuance price of closed-ended Part II UCI units. Previously, units of all Part II UCIs needed to be issued at NAV (as is the case for UCITs). The Modernisation Law will amend the UCI Law to allow the constitutive documents of closed-ended Part II UCIs to freely determine the issuance price.
• Subscription Tax for ELTIFs. Part II UCIs, RAIFs and SIFs authorised as ELTIFs are exempt from subscription tax.
• Marketing of RAIFs, SICARs and SIFs to retail investors in Luxembourg. The Modernisation Law will amend the RAIF Law and the AIFM Law to (i) clarify, with respect to RAIFs and (ii) allow with respect to SICARs, and SIFs, to be marketed to non-professional investors in Luxembourg, provided they qualify as well-informed investors (noting that this is already possible for Part II UCIs in relation to retail investors).

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