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Amended Luxembourg regulatory regime for Specialised Investment Funds - What are the main changes? | Brochure


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New SIF lawThe Law of 26 March 2012 amending the Law of 13 February 2007 on Specialised Investment Funds is enforced as from 
1 April 2012.

We draw your attention to the main new features of the amended SIF regulatory regime.

This new Law on Specialised Investment Funds (“SIFs”) has been written with three considerations in mind:

  1. The adoption of Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD)
  2. Improving the SIF Law taking into account the practical experience developed by CSSF, acting as supervisor of Luxembourg SIFs, since the adoption of the 2007 Law
  3. Integrating within the SIF Law certain new developments introduced for UCITS by the law of 17 December 2010 on Undertakings for Collective Investment
Main requirements Reference
Activities SIFs will have to provide the service of portfolio management in order to clearly exclude purely passive investment vehicles like Luxembourg SPFs (Société de Gestion de Patrimoine Familial) of the scope of SIFs. Art. 1
Well-informed investors SIFs will have to implement procedures allowing them to verify that their investors qualify as well-informed investors. Art. 2
Translation of constitutional documents The new Law provides an exemption to translate the articles of incorporation or any modification to the articles of incorporation or any notarial deeds into French or German in the case these documents have been originally drafted in English. Art. 3 (2)
Reporting For SIFs under certain corporate form: There will be no obligation to send the annual report, the independent auditor’s report, the management report and the observation of the supervisory board to registered shareholders at the same time as the convening notice to the annual general meeting of the shareholders. Art. 3 (3)
Convening notices For SIFs under certain corporate forms: Convening notices can provide that the quorum to the shareholder meetings would be determined with respect to shares issued and outstanding 5 days before the day of the meeting. Art. 3 (4)
Preliminary approval by CSSF It will not be possible anymore to launch SIFs prior to the approval from CSSF on their constitutive documents, choice of custodian and identity of the directors and persons in charge of the portfolio management. Art. 5
Risk management Risk management policy and appropriate systems will have to be put in place to detect, measure and manage the risks associated with the portfolio positions and the impact of these positions with respect to the general risk profile of the portfolio. The Law commits the CSSF to provide further clarifications on the implementation of these requirements. Art. 6 (1)
Conflicts of interest SIFs will have to be structured and organised so as to restrain risks of any conflict of interest. The Law commits the CSSF to provide further clarifications on the implementation of these requirements. Art. 6 (2)
Delegations

CSSF will have to be adequately informed of all delegations made by the SIF.

If the delegation concern portfolio management, the mandate can only be given to persons or entities which are authorised or registered for the purpose of asset management and subject to prudential supervision. Should this condition not be met, the delegation will have to be subject to prior approval from CSSF. Furthermore, it is expressly excluded to delegate investment management to the SIF’s custodian.

Art. 7
Cross sub-fund investments Subject to certain conditions, sub-funds of a multiple compartment SIF will be permitted to make investments within other sub-funds of the same SIF. Art. 16

Deloitte developed a comprehensive gap analysis methodology to assess your specific situation with regards to the new SIF regulatory framework. Through responses to a series of questions we will benchmark your fund and management company structure with the requirements of the law. This will assist you to identify the key areas which need to be assessed.

Deloitte is able to assist you with the development and the implementation of the following new required policies and procedures:

  • Risk governance will be one of the main elements to be monitored and developed according to the SIF specificities;
  • Identification of conflict of interests and assistance with the conflict of interest policies review;
  • General requirements related to procedure and the organisation of the management company.

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