AIFM Directive: Forthcoming implementation by Luxembourg

The Luxembourg government has just introduced a draft bill before Parliament towards implementing the Alternative Investment Fund Managers Directive into Luxembourg law.

The proposed implementation goes one step further as it also comprises a "package" of measures, aiming at enhancing the legal framework applicable to the alternative funds industry.

Below is a summary of the most relevant provisions of the draft bill:

I. Transposition of the AIFMD

It consists of the general provisions relating to the literal implementation of the AIFM Directive.

As a reminder, these provisions cover several areas, e.g.:

  • General provisions, authorisation and operating conditions
  • Governance of AIF depositaries
  • Transparency, delegation, valuation and leverage requirements
  • Management and marketing passport
  • Specific rules related to third countries
  • Supervision

II. Amendments to sectorial laws

The second part of the law is dedicated to amendments to several sectorial laws, including those governing the regulated vehicles that will be influenced by the implementation of the Directive into Luxembourg law.

The significant amendments refer to:

  • the sectorial laws which apply to regulated investment vehicles, i.e. UCIs (Part II of the 17 December 2010 Law), SIFs (13 February 2007 Law) and SICARs (15 June 2004 Law)
  • the 5 April 1993 Law on financial sector professionals ("FSP") by introducing a new FSP status of "depositary for assets other than financial instruments"
  • the 10 August 1915 Law on commercial companies by modernising the Luxembourg limited partnerships and introducing a limited partnership of a new type

The Limited Partnership

The expected changes will further be reflected in the legal framework applicable to the investment company in risk capital (SICAR) and specialised investment funds (SIF).

The new Luxembourg limited partnerships will constitute an attractive alternative to the Anglo-Saxon LPs.

The most significant proposals are inter alia the following:

  • Large contractual freedom will prevail in LP structuring
  • Concept of partnership interests will be clarified
  • Transferability regime will be clarified
  • New management rules allowing for investor rights
  • Confidentiality of limited partners is safeguarded
  • Contributions in industry in addition to the already existing contributions in cash and kind are permissible
  • New tax provisions in the Luxembourg income tax law allowing full tax transparency of the LP
  • Creation of a new vehicle, the "special limited partnership" without legal personality, benefiting of simplified accountancy and reporting regimes

* * *

The proposals laid down in the draft bill are expected to strengthen Luxembourg’s position as a prominent financial centre for the alternative investment funds industry.

If you wish to read our tool kit related to the implementation of AIFM directive, click here.

If you wish to read our tool kit related to the new Luxembourg Limited Partnership, click here.

If your wish to receive more information, please liaise with your usual Linklaters contact.

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