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Luxembourg Investment Fund Managers take note:

New Substance Circular now in force

Substance in Luxembourg: CSSF Circular 18/698

On 23 August 2018 the CSSF issued its long-awaited Circular 18/698 on the substance of Luxembourg management companies. After a relatively short but (as it seems) intense consultation process the CSSF has made public what can be seen as a new cornerstone in the Luxembourg regulatory landscape.

In 101 pages the CSSF summarises its positions and expectations regarding the establishment, approval and running of Luxembourg management companies. Outlined below is what this means for your business.

The three things you need to know

Here are the key aspects of the new law on Substance that you need to know. You can also read an unofficial English translation of CSSF Circular 18/698.
1

New circular will be the cornerstone in the Luxembourg regulatory landscape

“Looking at the volume and detail of the circular one may wonder what it means for Luxembourg-based management companies. Is this the start of a new era? Or a mere transcript of regulatory practice already in place? The answer is that it is neither, but it will be integral to the sector moving forwards.”

Silke Bernard, Investment Funds Partner

2

It should be read carefully!

While it ‘officialises’ many regulatory practices that have been applied by the CSSF over years, it contains some clarifications that were so far not common regulatory practice. By including them in the circular they have now become generally applicable rules - some of these aspects may easily be overseen - so it is important to fully understand what precise expectations one will have to comply with.
3

It will make Luxembourg an even more welcoming place for asset managers

The new circular provides a great level of transparency, reliability and comfort to the market while at the same time keeping a considerable level of flexibility that will allow the CSSF to adjust its individual regulatory assessment to specific situations.

For a view on why this new circular will make Luxembourg an even more welcoming place for asset managers, click here.