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Luxembourg's AIFM Directive transposition law awaits scrutiny by Parliament

October 2012 - Finance. Legal Developments by Chevalier & Sciales .

More articles by this firm.

With the deadline for transposition of the European Union's Alternative Investment Fund Managers Directive into national law now barely nine months away, on July 22, 2013, the Luxembourg authorities have demonstrated their determination to adopt the directive in plenty of time in order to allow fund industry participants the maximum time to prepare.

The draft bill of law was submitted to the Chamber of Deputies by Finance Minister Luc Frieden on August 24. Following a detailed examining in committee and a debate and vote by the full parliament, the legislation is expected to become law before the end of 2012, making Luxembourg one of the first EU countries to complete the transposition process - as it has been in the past with a succession of Ucits directives.

A total of 14 existing pieces of legislation will be amended, including the laws governing Specialised Investment Funds (SIFs) and Risk Capital Investment Companies (Sicars). As we reported to you earlier this year, the SIF law has already been separately revised, in part to bring its rules on risk management and delegation of functions to third-party entities into line with those set out in the AIFM Directive.

Guided by the country’s financial regulator, the CSSF, the Luxembourg legislation offers a maximum of flexibility in areas where the top-level directive gives member states discretion, notably in creating a new category of financial sector professional entity, beyond traditional custodian banks, that may act as depository for funds investing in illiquid, non-financial assets, and in authorising in principle the marketing of alternative funds to retail investors.

The readiness of the government and financial sector authorities to act swiftly to implement new EU rules at an early stage in order to give fund managers, promoters and service providers the maximum preparation time has been a key element in the grand duchy’s development into an internationally-recognised fund jurisdiction over the past quarter-century.

In this case, despite the continuing uncertainty about other rules and guidelines detailing implementation of the directive that have yet to be finalised, Luxembourg’s presence among the handful of EU member states that are well advanced in the legislative process may well increase its attractiveness to alternative fund promoters and managers, especially those outside the EU, seeking a solid legal platform for the launch of funds aimed at sophisticated European investors.

The article, entitled Luxembourg’s AIFMD transposition law awaits scrutiny by Parliament can be found by clicking “download article" below. It highlights the key provisions of the legislation (the changes to the limited partnership regime are covered in a separate note) and provides an overview of the different sections of the law. We will keep you updated on our website www.cs-avocats.lu over the coming weeks and months about the progress of the legislation through parliament. In the meantime, please contact us if you would like to discuss in greater detail elements any issues regarding the AIFM Directive and how they may affect your business.

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