The Luxembourg government published Bill of Law no. 8183 (the “Bill”) in late March 2023, amending five asset management-related laws, namely the UCI Law (1), SICAR Law (2), SIF Law (3), RAIF Law (4) and AIFM Law (5).
The aim of the proposed amendments is to upgrade the current Luxembourg legal framework and develop new structuring solutions to facilitate retail investors' access to alternative asset classes, in light of market trends in recent years.
The Bill provides for four main changes that are worthy of note:
Introduction of structuring flexibilities for Part II
The Bill proposes broadening the corporate structuring options of Part II (which is available to retail investments), to align its regime with that of other Luxembourg AIFs. Hence, under the Bill, Part II may be set up in the form of a partnership limited by shares, a limited partnership, a special limited partnership, a limited liability company or a cooperative society organised as a public limited company.
This change aims to complete the Part II fund toolbox with some of the preferred legal forms for private funds, enhancing the structuring attractiveness of Part II funds for the private fund industry. As a concrete foreseeable impact, we may expect this structuring flexibility to benefit ELTIFs, since they are generally organised under Part II funds.
The Bill also proposes introducing structuring flexibilities for asset valuation (introduction of the fair-value principle) and, for closed-ended funds, a determination of share/unit prices based on the funds' constitutive document (rather than on a principle of NAV calculation).
Lowering the minimum investment applicable to “other” Well-Informed Investors (SIFs, SIC-ARs and RAIFs)
The Bill proposes amending the RAIF, SICAR and SIF Laws by lowering the requirement for a minimum investment (or commitment) amount applicable to non-professional investors from €125,000 to €100,000.
This change aims to align Luxembourg with the European standard (such as EuSEF and EuVECA applying a €100,000 threshold) and hence re-affirm the RAIF, SICAR and SIF as privileged private wealth solutions.
Extension of the ramp-up period to 24 months (Part II, SIFs, SICARs and RAIFs)
The Bill proposes extending the ramp-up period (6 months for Part II and 12 months for SICARs, SIFs and RAIFs, respectively) to reach the minimum subscribed capital up to 12 months and 24 months respectively. This change aims to address some of the market demand of the private fund sector and hence strengthen the attractiveness of Luxembourg fund products.
Possibility for Luxembourg authorised AIFMs to appoint tied-agent
Last but not least, the Bill also introduces the possibility for authorised Luxembourg-based AIFMs to appoint tied agents within the meaning of and under the conditions set forth by the Luxembourg Mi-FID implementing law, namely, the Law of 5 April 1993 on the financial sector, as amended.
This proposed change aims to align the AIFM regime with the regime applicable to UCITS management companies and hence to broaden the Luxembourg marketing and pre-marketing solutions, notably for third-country asset managers using Luxembourg-based AIFMs.
The Bill is being discussed through the usual Luxembourg legislative process and is expected to be adopted shortly.
If adopted, these amendments would increase the attractiveness and competitiveness of Luxembourg as a financial centre and would likely bring the Luxembourg private funds toolbox one step further towards the private wealth industry.
In view of these upcoming changes, NautaDutilh's Investment Funds team remains at your disposal for any questions related to the ongoing update of the European and national regulatory frameworks for private equity.
Written by Géraldine Léonard, Partner
1. the law of 17 December 2010 as amended, relating to undertakings for collective investment (UCI) (the “UCI Law”);
2. the law of 15 June 2004 as amended, relating to the investment company in risk capital (SICAR) (the “SICAR Law“);
3. the law of 13 February 2007 as amended, relating to specialised investment funds (SIF) (the “SIF Law”);
4. the law of 23 July 2016 as amended, on reserved alternative investment funds (RAIF) (the “RAIF Law”).
5. the law of 12 July 2013 as amended, on alternative investment fund managers (AIFM) (the “AIFM Law”)