Luxembourg Adopts Brexit Law for Financial Services

Dechert LLP

On 26 March 2019, the Luxembourg Parliament adopted the first few of a series of Brexit laws, including bill of law n°7401. In the event of a no deal Brexit, this bill will entrust the Luxembourg supervisory authorities for the financial and insurance sectors (the CSSF and CAA, respectively) to grant a 21-month grandfathering period for services provided to Luxembourg funds and clients by UK based financial service providers (including investment firms, AIFMs and management companies). The law will become effective as of the date of withdrawal of the UK from the EU if no deal is agreed between the UK and the EU. Services are limited to those that were in place or are closely connected to the latter before the withdrawal date.

Bill of law n°7426, addressing certain Brexit-related matters affecting Luxembourg-regulated undertakings for collective investment (UCITS, Part II UCIs and SIFs), was debated in the Finance and Budget Commission. This bill, which was submitted to Parliament on 20 March 2019, provides for a 12-month grace period to mitigate Brexit-caused breaches of investment restrictions. The bill also provides clarifications on the use of the passport of UK UCITS during the 12-month grace period. Unlike bill n°7401, provisions of bill n°7426 would also become effective if a deal was agreed between the UK and the EU as it has not been voted yet.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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