This brochure presents the Luxembourg Law of 12 July 2013 on alternative investment fund managers ("AIFM Law") in consolidation with the AIFMD and the Level 2 AIFM Regulation , as well as consolidating, in a single document, all relevant AIFM legislation and guidelines.

The January 2017 edition includes the last updates of the ESMA Q&A on AIFMD and of the CSSF FAQ on the AIFM Law and the Level 2 AIFM Regulation.

Part I: Law of 12 July 2013 on Alternative Investment Fund Managers

CHAPTER I - GENERAL PROVISIONS

Article 1 AIFM Law: Definitions

[Art. 4 AIFMD]

For the purpose of this Law, the following definitions shall apply:

  1. "EBA": the European Banking Authority established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council;
  2. "ESMA": the European Securities and Market Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council;
  3. (3) "competent authorities": the national authorities of Member States which are empowered, by law or regulation, to supervise AIFMs. In Luxembourg, the CSSF is the competent authority for the supervision of AIFMs subject to this Law;
  4. "supervisory authorities" in relation to non-EU AIFMs: the national authorities of a third country which are empowered, by law or regulation, to supervise AIFMs;
  5. (5) "competent authorities of an EU AIF": the national authorities of a Member State which are empowered, by law or regulation, to supervise the AIFs. The CSSF is the competent authority for the supervision of AIFs established in Luxembourg;
  6. "supervisory authorities" in relation to non-EU AIFs: the national authorities of a third country which are empowered, by law or regulation, to supervise the AIFs;
  7. "competent authorities" in relation to a depositary:

    1. if the depositary is a credit institution authorised under Directive 2006/48/EC, the competent authorities as defined in point 4) of Article 4 thereof;
    2. if the depositary is an investment firm authorised under Directive 2004/39/EC, the competent authorities as defined in paragraph (1), point 22) of Article 4 thereof;
    3. if the depositary falls within a category of institution referred to in point c) of the first subparagraph of paragraph (3) of Article 21 of Directive 2011/61/EU, the national authorities of its home Member State which are empowered, by law or regulation, to supervise such categories of institution;
    4. if the depositary is an entity referred to in paragraph (3), third subparagraph of Article 21 of Directive 2011/61/EU, the national authorities of the Member State in which that entity has its registered office and which are empowered, by law or regulation, to supervise such entity or the official body competent to register or supervise such entity pursuant to the rules of professional conduct applicable thereto;
    5. if the depositary is appointed as depositary for a non-EU AIF in accordance with paragraph (5), point b) of Article 21 of Directive 2011/61/EU and does not fall within the scope of points a) to d) of this point, the relevant national authorities of the third country where the depositary has its registered office;
  8. "initial capital": the funds which are referred to in points a) and b) of the first paragraph of Article 57 of Directive 2006/48/EC;
  9. "marketing": a direct or indirect offering or placement, at the initiative of the AIFM or on behalf of the AIFM, of units or shares of an AIF it manages, to or with investors domiciled or with a registered office in the European Union;
  • FAQ published by CSSF (Appendix XV) Section XXI Definition of marketing and reverse solicitation Question 21.a)
  1. "control": control as defined in Article 1 of Directive 83/349/EEC;
  2. "prime broker": a credit institution, a regulated investment firm or another entity subject to prudential regulation and ongoing supervision, offering services to professional investors primarily to finance or execute transactions in financial instruments as counterparty and which may also provide other services such as clearing and settlement of trades, custodial services, securities lending, customised technology and operational support facilities;
  3. "ESRB": the European Systemic Risk Board established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council;
  4. "CSSF": the Commission de Surveillance du Secteur Financier (the Commission for the Supervision of the Financial Sector);
  5. (14) "Directive 77/91/EEC": Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect* capital, with a view to making such safeguards equivalent;
  6. "Directive 83/349/EEC": Council Directive 83/349/EEC of 13 June 1983 based on Article 54 (3) (g) of the Treaty on consolidated accounts, as amended;
  7. "Directive 95/46/EC": Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data;
  8. "Directive 97/9/EC": Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes;
  9. "Directive 98/26/EC": Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems;
  10. "Directive 2002/14/EC": Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community;
  11. "Directive 2003/41/EC": Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision;
  12. "Directive 2003/71/EC": Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC;
  13. "Directive 2004/25/EC": Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids;
  14. "Directive 2004/39/EC": Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments;
  15. "Directive 2004/109/EC": Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC;
  16. "Directive 2006/48/EC": Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions;
  17. "Directive 2006/49/EC": Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions;
  18. "Directive 2006/73/EC": Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive;
  19. (28) "Directive 2009/65/EC": Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
  20. (29) "Directive 2011/61/EU": Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010;
  21. "leverage": any method by which the AIFM increases the exposure of an AIF it manages whether through borrowing of cash or transferable securities, or leverage embedded in derivative positions or by any other means;
  22. "issuer": an issuer within the meaning of paragraph (1), point d) of Article 2 of Directive 2004/109/EC, where that issuer has its registered office in the European Union, and where its shares are admitted to trading on a regulated market within the meaning of paragraph (1), point 14) of Article 4 of Directive 2004/39/EC;
  23. "parent undertaking": a parent undertaking within the meaning of Articles 1 and 2 of Directive 83/349/EEC;
  24. "established":

    1. for AIFMs, "having its registered office in";
    2. for AIFs, "being authorised or registered in" or, if the AIF is not authorised or registered, "having its registered office in";
    3. for depositaries, "having its registered office or branch in";
    4. for legal representatives that are legal persons, "having its registered office or branch in";
    5. for legal representatives that are natural persons, "domiciled in";
  25. "Member State": a Member State of the European Union. The States that are contracting parties to the Agreement creating the European Economic Area other than the Member States of the European Union, within the limits set forth by this Agreement and related acts, are considered as equivalent to Member States of the European Union.
  26. "home Member State of the AIF":

    1. the Member State in which the AIF is authorised or registered under applicable national law, or in case of multiple authorisations or registrations, the Member State in which the AIF has been authorised or registered for the first time; or
    2. if the AIF is neither authorised nor registered in a Member State, the Member State in which the AIF has its registered office and/or head office;
  27. "home Member State of the AIFM": the Member State in which the AIFM has its registered office; for non-EU AIFMs, all references to "home Member State of the AIFM" in this Law shall be read as the "Member State of reference", as provided for in Chapter 7;
  28. "host Member State of the AIFM": any of the following:

    1. a Member State, other than the home Member State, in which an EU AIFM manages EU AIFs;
    2. a Member State, other than the home Member State, in which an EU AIFM markets units or shares of an EU AIF;
    3. a Member State, other than the home Member State, in which an EU AIFM markets units or shares of a non-EU AIF;
    4. a Member State, other than the Member State of reference, in which a non-EU AIFM manages EU AIFs;
    5. a Member State, other than the Member State of reference, in which a non-EU AIFM markets units or shares of an EU AIF;
    6. a Member State, other than the Member State of reference, in which a non-EU AIFM markets units or shares of a non-EU AIF;
  29. "Member State of reference": the Member State determined in accordance with paragraph (4) of Article 37 of Directive 2011/61/EU;
  30. (39) "Alternative Investment Funds (AIFs)": collective investment undertakings, including investment compartments thereof, which:

    1. raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and
    2. do not require authorisation pursuant to Article 5 of Directive 2009/65/EC;
  31. "EU AIF":

    1. an AIF which is authorised or registered in a Member State under the applicable national law; or
    2. an AIF which is not authorised or registered in a Member State, but has its registered office and/or head office in a Member State;
  32. "non-EU AIF": an AIF which is not an EU AIF;
  33. "feeder AIF": an AIF which:

    1. invests at least 85% of its assets in units or shares of another AIF (hereafter the "master AIF");
    2. invests at least 85% of its assets in more than one master AIF where those master AIFs have identical investment strategies; or
    3. has otherwise an exposure of at least 85% of its assets to such a master AIF;
  34. "master AIF": an AIF in which another AIF invests or has an exposure in accordance with point (42);
  35. "subsidiary": a subsidiary undertaking as defined in Articles 1 and 2 of Directive 83/349/EEC;
  36. "own funds": own funds as referred to in Articles 56 to 67 of Directive 2006/48/EC. For the purposes of applying this definition, Articles 13 to 16 of Directive 2006/49/EC are applied mutatis mutandis;
  37. "Alternative Investment Fund Managers (AIFMs)": legal persons whose regular business is managing one or more AIFs;
  38. "EU AIFM": an AIFM which has its registered office in a Member State;
  39. "non-EU AIFM": an AIFM which is not an EU AIFM;
  40. "external AIFM": an AIFM which is the legal person appointed by the AIF or on behalf of the AIF and which, through this appointment, is responsible for managing the AIF;
  41. "managing AIFs": performing at least investment management functions referred to in point 1a) or b) of Annex I of Directive 2011/61/EU for one or more AIFs;
  42. "financial instrument": an instrument as specified in Section C of Annex I to Directive 2004/39/EC;
  43. "carried interest": a share in the profits of the AIF accrued to the AIFM as compensation for the management of the AIF and excluding any share in the profits of the AIF accrued to the AIFM as a return on any investment by the AIFM into the AIF;
  44. "professional investor": an investor which is considered to be a professional client or may, on request, be treated as a professional client within the meaning of Annex II to Directive 2004/39/EC;
  45. "retail investor": an investor who is not a professional investor;
  46. "close links": a situation in which two or more natural or legal persons are linked by:

    1. participation, namely ownership, directly or by way of control, of 20% or more of the voting rights or capital of an undertaking;
    2. control, namely the relationship between a parent undertaking and a subsidiary, as referred to in Article 1 of the Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts, or a similar relationship between a natural or legal person and an undertaking; for the purposes of this point a subsidiary undertaking of a subsidiary undertaking shall also be considered to be a subsidiary of the parent undertaking of those subsidiaries.
    A situation in which two or more natural or legal persons are permanently linked to the same person by a control relationship shall also be regarded as constituting a "close link" between such persons;
  47. "UCITS": an undertaking for collective investment in transferable securities authorised in accordance with Article 5 of Directive 2009/65/EC;
  48. "qualifying holding": a direct or indirect holding in an AIFM which represents 10% or more of the capital or of the voting rights, in accordance with Articles 9 and 10 of Directive 2004/109/EC, taking into account the conditions regarding aggregation of the holding laid down in paragraphs (4) and (5) of Article 12 thereof, or which makes it possible to exercise a significant influence over the management of the AIFM in which that holding subsists;
  49. "third country": a State which is not a Member State;
  50. "legal representative": a natural person domiciled in the European Union or a legal person with its registered office in the European Union, and which, expressly designated by a non-EU AIFM, acts on behalf of such non-EU AIFM vis-à-vis the authorities, clients, bodies and counterparties to the non-EU AIFM in the European Union with regard to the non-EU AIFM's obligations under Directive 2011/61/EU;
  51. "employees' representatives": employees' representatives as defined in point e) of Article 2 of Directive 2002/14/EC;
  52. "UCITS management company": a management company authorised pursuant to Chapter 15 of the amended Law of 17 December 2010 on undertakings for collective investment;
  53. "holding company": a company with shareholdings in one or more other companies, the commercial purpose of which is to carry out a business strategy or strategies through its subsidiaries, associated companies or participations in order to contribute to their long-term value, and which is either a company:

    1. operating on its own account and whose shares are admitted to trading on a regulated market in the European Union; or
    2. not established for the main purpose of generating returns for its investors by means of divestment of its subsidiaries or associated companies, as evidenced in its annual report or other official documents;
  54. "non-listed company": a company which has its registered office in the European Union and the shares of which are not admitted to trading on a regulated market within the meaning of paragraph (1), point 14) of Article 4 of Directive 2004/39/EC;
  55. "securitisation special purpose entities": entities whose sole purpose is to carry on a securitisation or securitisations within the meaning of paragraph 2) of Article 1 of Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions and other activities which are appropriate to accomplish that purpose;
  56. "branch": when relating to an AIFM, a place of business which is a part of an AIFM, which has no legal personality and which provides the services for which the AIFM has been authorised; all the places of business established in the same Member State by an AIFM with its registered office in another Member State or in a third country shall be regarded as a single branch.

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Footnote

* In the French version "société anonyme".

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.