On 11 July 2023, the Luxembourg Parliament has voted a significant bill aimed at modernising the legislative framework governing investment funds. Main modifications are:
1) Definition harmonisation: The bill harmonises the definition of “informed investor” across the laws governing Specialised Investment Funds (SIFs), Investment Company in Risk Capital (SICARs), and Reserved Alternative Investment Funds (RAIFs). This includes referencing “professional investors” as defined in MiFID II, lowering the investment threshold from 125,000 euros to 100,000 euros, and aligning the list of entities authorised to certify the experience of other investors.
2) Extended minimum capital formation period: To accommodate illiquid strategies, the bill extends the time within which the subscribed capital must reach the legal minimum. For SICARs, SIFs, and RAIFs, the period is extended to 24 months, while for Part II funds, it is extended to 12 months.
3) Enhanced legal forms for SICAV Part II: The bill harmonises the available legal forms for Part II Investment Companies with Variable Capital (SICAV) with those available under the laws governing SIFs, SICARs, and RAIFs. Following the bill’s adoption, a SICAV Part II can also be established as a partnership limited by shares, a simple limited partnership, a special limited partnership, a limited liability company, or a cooperative in the form of a public limited company.
4) Streamlined issuance and redemption conditions: The bill simplifies the issuance and redemption of securities or shares for closed-end Part II funds, ensuring clarity and aligning with the fund’s statutes or partnership agreement.
5) Facilitated establishment of RAIFs: The bill simplifies the constitution formalities when establishing a RAIF under statutes and clarifies that marketing RAIFs to all well-informed investors (even those that do not qualify as professional investors) in Luxembourg is authorised.
6) Part II funds, RAIF, and SIF authorized as ELTIFs, UCITS, Part II Funds, RAIF, and SIF authorised as short-term MMFs for institutional investors with the highest credit rating, and UCITS and Part II Funds subscribed to a Pan-European Pension Product are all subscription tax-exempt; whereas other UCITS and UCI/Part II funds authorised as MMFs are subject to a reduced subscription tax rate of 0.01%.
The bill also includes important provisions concerning delegation, replacement of depositaries, dissolution of investment funds, and fund managers. It addresses these matters to improve and harmonise the existing rules in this regard.
Next Steps: This bill was voted on 11 July 2023 and will come into effect upon publication in the Mémorial A. Please note that certain transitional provisions will apply to specific amendments.
Should you require any further information, please reach out to our Fund Administration team led by Jérôme Geier, Xavier Hamori and Amélie Frontain.