The Luxembourg Parliament passed the law on the transposition of the AIFMD1 (the “AIFM Law”) on 10 July 2013. The AIFM Law will become effective on the day it is published in the Luxembourg official gazette, which will take place in the coming days but in any case before 22 July 2013 to meet the deadline set under the AIFMD. Luxembourg is among the first EU member states transposing the AIFMD into their national law.
The AIFM Law creates an entirely new regime for alternative investment fund managers (“AIFMs”), closely replicating the AIFMD. The AIFM Law amends fifteen existing Luxembourg laws, including the law of 17 December 2010 on undertakings for collective investment, as amended (the “UCI Law”), the law of 13 February 2007 on specialised investment funds, as amended (the “SIF Law”), the law of 15 June 2004 on investment companies in risk capital, as amended (the “SICAR Law”), the law of 5 April 1993 on the financial sector, as amended, the law of 10 August 1915 on commercial companies, as amended, and tax laws as well as the Commercial Code.
The AIFM Law goes beyond the mere implementation of the AIFMD into Luxembourg law – it overhauls the regime of Luxembourg limited partnerships, creates a new depositary license, extends the scope of services of a non-UCITS management company under chapter 16 of the UCI Law (the “Chapter 16 Management Company”) and introduces several technical improvements regarding Luxembourg alternative investment funds (“AIFs”).
By way of background, an AIFM is any legal person whose regular business is the management of one or more AIFs. Alongside internally managed Luxembourg AIFs, the AIFM Law distinguishes between two types of AIFMs: (i) the management company under chapter 15 of the UCI Law (the “UCITS Management Company”), if authorised to manage AIFs in addition to UCITS, and (ii) the manager authorised as an AIFM pursuant to the AIFM Law. A Chapter 16 Management Company can only manage AIFs (formed at any time) during a transitional period that ceases on 22 July 2014. After this transitional period, a Chapter 16 Management Company may only manage funds that are not subject to the provisions of the UCITS Directive2 or the AIFMD (unless such company delegates management of such an AIF to a duly authorized AIFM). A UCITS Management Company or a Chapter 16 Management Company managing an AIF (that is, providing, either directly or by delegation, at least portfolio management and risk management to an AIF) within the scope of the AIFMD before 22 July 2013 (the “Grandfathered AIFM”) has until 22 July 2014 to submit an application to the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (the “CSSF”), to be authorised as an AIFM. A manager formed after 22 July 2013, which intends to manage an AIF within the scope of the AIFMD, must be authorised as an AIFM pursuant to the AIFM Law before commencing such activities.
An AIF refers to any collective investment undertaking, including its sub-funds, which (i) raises capital from a number of investors, with a view to investing such capital in accordance with a defined investment policy for the benefit of those investors, and (ii) does not require authorisation pursuant to the UCITS Directive. A number of different types of Luxembourg AIFs will fall within the scope of the AIFM Law: (i) undertakings for collective investment under part II of the UCI Law; (ii) specialised investment funds under part II of the SIF Law; (iii) investment companies in risk capital under part II of the SICAR Law; and (iv) to a lesser extent, unregulated companies.
AIFs (including those that have appointed an investment manager) formed before 22 July 2013 or managed by a Grandfathered AIFM (irrespective of when the AIF was formed) can operate, until 22 July 20143 , under the regime in existence prior to the AIFM Law. According to the CSSF FAQ4, Luxembourg AIFs benefiting from this transitional period must submit to the CSSF, by 1 April 2014, a file containing information as to how they expect to comply with the AIFMD by 22 July 2014. Internally managed AIFs formed after 22 July 2013 must comply with the AIFM Law upon their formation.
Further details on the AIFM Law can be found in the attached summary.
1 Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers.
2 Directive 2009/65/ EC of the European Parliament and of the Council of 13 July 2009 on certain undertakings for collective investment in transferable securities (UCITS).
3 ESMA proposed in its consultation paper on guidelines on reporting obligations under article 3 and article 24 of the AIFMD (ESMA/2013/592) that all AIFMs (and internally managed AIFs) should report for the first time by 31 January 2014 for the period from 23 July 2013 (or the relevant formation day afterwards) to 31 December 2013. If this proposal is retained, Grandfathered AIFMs (including grandfathered internally managed AIFs) must comply with the AIFM Law reporting obligations before the end of the transitional period.
4 The CSSF released Frequently Asked Questions (FAQ) on 18 June 2013 can be found here.