On 11 July 2023, the Luxembourg Parliament (Chambre des Députés) voted in favour of the new Bill of law n°8183 aiming at improving and modernising the legal background of the Luxembourg investment fund industry, also referred to as the “Luxembourg investment fund toolbox law” (the « Fund Toolbox Law »). A second constitutional vote is expected to pass the Fund Toolbox Law definitely.
Pursuant to the Fund Toolbox Law, which was prepared by the Ministry of Finance (Ministre des Finances) in coordination with the relevant market players in the investment fund sector, Luxembourg aims at ensuring that it remains attractive and competitive enough to stay at the forefront of the internationalisation of the investment fund industry.
The Fund Toolbox Law provides substantial amendments to the following five main laws currently regulating investment funds and/or their respective fund managers in Luxembourg:
Here is a summary highlighting the most relevant points and salient features of the Fund Toolbox Law:
Firstly, the Fund Toolbox Law amends and updates the definition of “well-informed investor” (investisseur averti), as mentioned in the SICAR Law, SIF Law and the RAIF Law respectively, to make it more coherent between the different laws and to align the Luxembourg regime with the European standard by lowering the current investment threshold from 125,000 to 100,000 euros.
Secondly, the Fund Toolbox Law extends the period during which the minimum capital must be reached for SICARs, SIFs and RAIFs (i.e. doubling the current 12-month period to 24 months) as well for Part II funds of the UCI Law (doubling the six-month period to 12 months), to adapt these laws to the needs of the market requiring more time for fund-raising.
Thirdly, the Fund Toolbox Law makes certain amendments to the UCI Law. It introduces the possibility for SICAVs subject to Part II of the said law to adopt, in addition to the form of a public limited company (société anonyme), the form of a corporate partnership limited by shares (société en commandite par actions), a private limited liability company (société à responsabilité limitée), a common or special limited partnership (société en commandite simple /spéciale) or a cooperative organised in the form of a public limited company (société coopérative organisée sous forme de société anoyme).
In addition, the Fund Toolbox Law introduces the possibility for AIFMs to call on the services of so-named « Tied Agents », thus aligning the legal framework applicable to them with that of management companies authorised under Part IV, Chapter 15 of the UCI Law. Specific amendments have also been made in the AIFM Law to (i) clarify the relationship between the AIFM and other legislations with respect to the marketing of alternative investment funds in Luxembourg, and (ii) restate certain definitions within the AIFM Law.
Furthermore, the Fund Toolbox Law extends the regime of voluntary liquidation regime (liquidation non judiciaire) to management companies and AIFMs, which currently applies to undertakings for collective investment regulated by the UCI Law and reforms the regime of the “commissaire de surveillance“ in case of a removal of an entity supervised by the CSSF from the official list held by the CSSF.
Finally, the Fund Toolbox Law updates the subscription tax regime (taxe d’abonnement) on three specific points (exemption rules) related to money market funds to support the emergence of new European products such as European Long-Term Investment Funds (ELTIFs) and pan-European individual pension savings products (PEPPs) as a result of the European Commission’s efforts to create a true Capital Markets Union (CMU).
Last but not least, the specific notarial deed as « set-up confirmation » for RAIFs (constat de constitution) will no longer be required, if the incorporation of such RAIF is made by a notarial deed (e.g. for SA, S.à r.l. and SCAs).