(Originally published on October 28, 2011)
In the context of the implementation of the Alternative Investment Fund Managers Directive (AIFMD), a new draft bill (New Bill) amending the existing law on specialized investment funds (SIF law) has been tabled to the Luxembourg Parliament. The New Bill aims to introduce, as of now, certain elements of AIFMD in order to anticipate its later implementation into national law. In addition, SIFs will benefit from simplified administrative requirements which have already been introduced for Luxembourg UCIs through the law of 17 December 2010.
The main changes proposed by the New Bill can be summarized as follows:
- Risk Management: SIFs will have to provide for portfolio and risk management.
- Conflicts of Interest Management: SIFs will need to implement effective procedures to limit conflicts of interest.
- Delegation of Investment Management Functions: The delegation of investment management functions of a SIF will, in principle, be reserved to entities regulated and supervised in their home country as asset managers.
- Cross Investments: Under certain conditions a sub-fund may invest in one or more sub-funds of the same umbrella SIF.
- Prior Approval: A SIF will need to get prior approval from the Luxembourg supervisory authority (CSSF) before beginning its activities.
- Articles: The notarial deed of incorporation of a SIF taking a corporate form and any additional notarial deeds can be drafted up either in English, German or French (without the requirement for a translation as before).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
