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Press releases and law firm thought leadership

This page is dedicated to keeping readers informed of the latest news and thought leadership articles from law firms across the globe.

If your firm wishes to publish press releases or articles, please contact Shehab Khurshid on +44 (0) 207 396 5689 or shehab.khurshid@legalease.co.uk

 

Legal Developments Worldwide

Articles contributed by Chevalier & Sciales

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Luxembourg exchange becomes international leader for green securities

April 2017 - Finance. Legal Developments by Chevalier & Sciales .

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Since the autumn of 2016, the Luxembourg Stock Exchange has operated the first listing and trading platform worldwide reserved exclusively for environment-focused financial instruments. The Luxembourg Green Exchange (LGX) provides access to securities from a broad range of issuers that are recognised globally as authentically green and offers enhanced information about their environmental characteristics.

Luxembourg’s one-euro company provides major incentive for entrepreneurs

February 2017 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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Luxembourg’s law of July 23, 2016, which came into force on January 16, 2017, creates an incentive for entrepreneurs to establish a business in the grand duchy by introducing the simplified private limited liability company (sociĂ©tĂ© Ă  responsabilitĂ© limitĂ©e simplifiĂ©e or SĂ rl-S) – also known as the one-euro company.

ESMA sets out new rules for UCITS share classes

February 2017 - Finance. Legal Developments by Chevalier & Sciales .

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On January 30, the European Securities and Markets Authority issued an opinion on the minimum principles that management companies must apply when establishing different UCITS share classes. The opinion is aimed at ensuring a harmonised approach throughout the EU, where different national approaches have been observed up to now.

UCITS investment limits to be applied to umbrella funds on look-through basis

December 2016 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has updated its Q&A documents on details of the UCITS rules in November of this year with two additional queries regarding the interpretation of investment limits when a UCITS invests in an umbrella fund.

Modernisation of Luxembourg Company Law: changes affecting the S.Ă  r.l.

November 2016 - Finance. Legal Developments by Chevalier & Sciales .

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The law of 10 August 2016 modernising the law concerning commercial companies of 10 August 1915 and amending the Civil Code as well as the law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of companies (the “Law”), entered into force on 23 August 2016. The Law is immediately applicable for all newly incorporated companies. Existing companies have been granted a period of 24 months to adapt their articles of association. The below is a summary of the main changes which affect private limited liability companies (“sociĂ©tĂ© Ă  responsabilitĂ© limitĂ©e” (“S.Ă r.l.”)):

Luxembourg regulator updates rules for UCITS depositaries

November 2016 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg’s Financial Sector Supervisory Authority (CSSF) has issued on October 11, 2016 Circular 16/644, which sets out revised rules applicable to all Luxembourg credit institutions acting as depositary banks for UCITS funds as well as to all Luxembourg UCITS, including self-managed funds, and/or their management companies. The circular sets out regulatory requirements clarifying rules under the updated Luxembourg investment fund law implementing the UCITS V directive, which came into force on June 1, and the European Commission’s Level 2 delegated regulation EU2016/438 regarding the obligations of depositaries, as well as various other matters.

UCITS V regulation on depositaries’ obligations comes into force

October 2016 - Finance. Legal Developments by Chevalier & Sciales .

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The Commission’s delegated regulation (EU) 2016/438 of December 17, 2015, which updates the UCITS regime provisions on the obligations of depositaries, has taken effect as of October 13. The UCITS V Level 2 regulation sets out detailed uniform rules in particular regarding the duties of the depositaries of UCITS funds. The regulation lays down requirements regarding depositaries’ duties, delegation arrangements and the liability regime for UCITS assets under custody, designed to provide a high level of investor protection.

 

Simplified faster legal publication regime in Luxembourg

July 2016 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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The new simplified regime regarding legal publication relating to companies and associations has been implemented in Luxembourg on June 1, following approval of the legislation by the Chamber of Deputies on May 10. The legislation, which was published in Luxembourg’s Official Journal on May 30 as the Law of May 27, 2016, is complemented by a circular issued by the Luxembourg Trade and Companies Register on March 24 (Circular RCSL 16/01).

CSSF confirms AIFs’ ability to grant loans in updated AIFM law FAQ

June 2016 - Finance. Legal Developments by Chevalier & Sciales .

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On June 9, 2016 the CSSF issued the latest update of its Frequently Asked Questions document on the Luxembourg law of July 12, 2013 implementing the AIFMD and the European Commission’s Level 2 regulation on implementation of the directive, last revised on August 10, 2015. The new version provides clarity about the ability of Luxembourg-domiciled alternative funds to conduct loan origination, participation and acquisition, an important issue given the role of Luxembourg as a leading centre for funds conducting or investing in loans.

UCITS V legislation to come into force in Luxembourg in June

May 2016 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg’s Chamber of Deputies has approved legislation incorporating the European Union’s UCITS V directive into national law, following a legislative odyssey lasting just over nine months. Bill of law no. 6845 amends the grand duchy’s fund legislation of December 17, 2010, which transposed UCITS IV, and was finalised by publication on May 12 in the MĂ©morial, the country’s official journal, as the Law of May 10, 2016, the day it was signed by Grand Duke Henri. The legislation will come into force at the beginning of June.

Proposed Luxembourg legislation introduces changes affecting SIFs, SICARs and Part II Funds

April 2016 - Finance. Legal Developments by Chevalier & Sciales .

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The Luxembourg government has placed before parliament on January 18 draft legislation amending provisions relating to specialised investments funds (SIFs), risk capital investment companies (SICARs) and non-UCITS funds issued under Part II of the grand duchy’s collective investment fund legislation. The proposals would notably restrict SIF funds and sub-funds that invest in so-called exotic assets to professional investors, a tighter definition than that for eligibility for SIF investments in general.

ESMA issues additional updates to AIFM Directive Q&A

November 2015 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has issued a fresh update on October 1 to its Questions and Answers document providing guidance and interpretation of the EU’s Alternative Investment Fund Managers Directive as well as the European Commission’s level II delegated regulations on implementation of the directive issued in December 2012 and May 2013.

Luxembourg moves ahead with UCITS V adoption

October 2015 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg is pushing ahead with legislation to adopt the UCITS V directive into national law. Bill no. 6845, transposing Directive 2014/91/EU of July 23, 2014, was approved by the cabinet on July 10 and placed before parliament on August 5. It is expected to be debated and adopted during the fourth quarter of the year.

CSSF clarifies marketing rules in updated AIFMD law Q&A

September 2015 - Finance. Legal Developments by Chevalier & Sciales .

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On August 10, the CSSF issued the latest update of its Frequently Asked Questions document on the grand duchy’s law of July 12, 2013 implementing the AIFMD and the European Commission’s Level 2 regulation on implementation of the directive, last revised on December 29, 2014. The FAQ document has now run to nine versions over the past year and a half. Its aim is to highlight aspects of the AIFMD rules from a Luxembourg perspective, for the benefit primarily of alternative funds and managers established in the grand duchy. It complements Q&A documents on the AIFMD published by ESMA, itself most recently updated last month, and by the European Commission.

 

ESMA says Jersey, Guernsey and Switzerland are ready for AIFMD passport

August 2015 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has published – with a slight delay of six days beyond the July 22 deadline – its advice on extending access to the EU market under the Alternative Investment Fund Managers Directive to non-EU alternative investment fund managers and funds, recommending that the AIFMD passport be granted to Guernsey, Jersey and Switzerland.

CSSF circular 15/612: information to be communicated to the CSSF by Luxembourg-established AIFMs

June 2015 - Finance. Legal Developments by Chevalier & Sciales .

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On May 5 the Luxembourg Financial Supervisory Authority issued CSSF Circular 15/612, addressed to all managers of alternative funds subject to the 2013 legislation implementing the Alternative Investment Fund Managers Directive, regarding reporting on unregulated alternative funds, whether established in Luxembourg, another EU member state or in a non-EU jurisdiction, as well as alternative funds regulated outside the EU.

Legislation filed for new Luxembourg S.àr.l. Simplifiée company form

April 2015 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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Following the announcement by the government in January of formal plans to establish a new type of Luxembourg company, the sociĂ©tĂ© Ă  responsabilitĂ© limitĂ©e simplifiĂ©e (simplified private limited liability company, or SARL-S), implementing legislation was placed before parliament on February 2. The initiative, filed with the Chamber of Deputies as Bill 6777, is also known as the “1 euro” or “1-1-1” company because it can be founded by one person, with one euro, in one day.

Luxembourg's Direct Tax Administration publishes circular on residency certificates for funds

April 2015 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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Luxembourg’s Direct Tax Administration has published a circular on February 12 clarifying issues relating to residency certificates for Luxembourg funds. These are applicable to both UCITS and non-UCITS funds regulated by Luxembourg’s investment fund legislation of December 17, 2010, which transposed the UCITS IV Directive, as well as Specialised Investment Funds set up under the law of February 13, 2007.

ESMA issues final report on UCITS V delegated acts

April 2015 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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On November 28 the European Securities and Markets Authority issued its final report to the European Commission regarding two delegated acts on depositary requirements that must be issued to complement the primary legislative text of the UCITS V directive.

The report, drawn up in response to a request from the Commission on July 3 for technical advice, was issued following a period of consultation with the industry, which closed on October 24, on a preliminary draft of ESMA’s advice.

ESMA received 60 responses to the consultation paper from asset managers, depositary banks, industry groups, consumer representatives, public authorities and a law firm, as well as an academic and one individual.

In their feedback, the asset management industry associations regretted the short deadline for responses to the consultation, arguing that this would compromise what should be an objective exercise allowing the Commission to justify its policy choices according to its internal impact assessment guidelines. In fact ESMA did delay its submission to the commission, for which the original deadline was October 15.

Respondents also insisted that it was important to ensure that the Level 2 delegated legislation issued by the Commission would be applied in the same way throughout the EU, requiring national regulators to refrain from ‘gold-plating’ the measures with additional requirements in their jurisdictions, and urged that consistency be ensured between the UCITS delegated acts and their AIFMD counterparts.

The new depositary requirements are designed to broadly align the provisions of the UCITS regime with those of the Alternative Investment Fund Managers Directive regarding the rules on depositaries’ duties, delegation, eligibility to act as custodian, and liability.

In addition to the rules governing depositaries set out in the AIFMD, UCITS V contains additional requirements relating to the insolvency protection of fund assets in cases where the depositary delegates safekeeping duties to a third party, and the requirement for the management company and depositary to act independently of each other.

UCITS V stipulates that any third party to which custody is delegated by the depositary must take all necessary steps to ensure that in the event of the third-party custodian’s insolvency, the fund assets it holds should not be available for distribution to or realisation on behalf of its creditors.

The consultation paper proposes measures, arrangements and tasks to be undertaken by the third-party custodian, as well as measures to be implemented by the depositary, to be included in the Commission’s legislation.

Some respondents cautioned that the protection offered by segregation of assets was at the mercy of any developments in insolvency laws and jurisprudence, and that based on past experience, the laws of many jurisdictions do not ensure the return of clients assets without hindrance or delay, or even guarantee that they will not be treated as part of the insolvent estate of the third-party custodian.

They urged ESMA and the Commission to support harmonisation at international level, through IOSCO, of insolvency laws in third-country jurisdictions to ensure effective asset segregation and protection. ESMA says that since this is not part of its mandate, it would be more appropriate for IOSCO or the Commission to take the lead.

UCITS V also stipulates that in carrying out their respective functions, the management company (and investment company) and the depositary should act independently and solely in the interest of the UCITS fund and its investors.

The Commission’s depositary acts should set out how this independence requirement is to be ensured. The report identifies common management and/or supervision and cross-shareholdings between the management and depositary entities as links that could threaten their independence and recommends measures to address these risks.

ESMA says it will now work closely with the Commission to help it adapt the technical advice into formal delegated legislation. The report can be consulted in its entirety athttp://www.esma.europa.eu/system/files/2014-1417.pdf. Please also see our previous article on this topic at http://www.cs-avocats.lu/legal-news/investment_management/esma-consults-depositary-requirements-ucits/. 

Luxembourg government approves draft FATCA legislation

April 2015 - Finance. Legal Developments by Chevalier & Sciales .

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On March 6 Luxembourg’s government adopted the draft legislation transposing into national law the grand duchy’s intergovernmental agreement with the US and facilitating compliance by the country’s financial institutions with the requirements of the Foreign Account Tax Compliance Act.

FATCA, which was signed into law in 2010 but only took effect last July, is designed to identify US persons (citizens, residents, green card holders, there spouses or other individuals with a connection to the US) who may be failing to declare tax purposes investments or assets in accounts with non-US financial institutions or other entities, which can include not only banks but insurance companies, asset management firms or funds and even trusts.

The legislation is designed to compel non-US institutions and entities to report to the Internal Revenue Service on any accounts held by US persons through an information reporting and withholding regime, in addition to existing reporting and withholding rules. Institutions failing to comply face the threat of a 30 per cent withholding levied on any US-sourced income.

Since compliance with the FATCA rules would have been contrary to legal restrictions on the sharing of information in various countries, as well as to reduce the administrative burden on financial institutions affected, Washington has signed a series of intergovernmental agreements with various jurisdictions designed to circumvent the legal issues and simplify practical compliance, in most cases by requiring institutions to report to their domestic tax authority, which will forward the data to the US, rather than directly to the IRS.

Luxembourg signed a Model 1 IGA, providing for institutions to report to their home authority, with the US Treasury on March 28 last year. The government’s approval of the draft legislation now paves the way for the ratification of the IGA signed with Washington and implementation of the measures required to enable Luxembourg institutions to comply.

The legislation will next be submitted to the Chamber of Deputies for approval. Once the law is enacted, the grand duchy’s Direct Tax Administration is expected to revise, finalise and implement two draft circulars issued at the beginning of this year. One expected change is that following a decision in the UK, it now appears that institutions will no longer be required to file a report even if they have no US-related accounts.

Following passage of the legislation and issue of the tax authority circulars, the first delivery of information is due to take place later this year, with reporting scheduled to take place by financial institutions to the Direct Tax Administration on June 30, then by the tax authority to the IRS on September 30.

The draft circulars issued by the Direct Tax Administration can be consulted at:

www.impotsdirects.public.lu/echanges_electroniques/FATCA/Projet-de-circulaire-ECHA-2---FATCA.pdf andhttp://www.impotsdirects.public.lu/archive/newsletter/2015/nl_02022015/Projet-de-circulaireECHA-n_-3---FATCA.pdf. 

Luxembourg's tax authorities issue draft circular on FATCA compliance

February 2015 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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On January 6, Luxembourg’ Direct Taxation Authority issued a draft administrative circular regarding compliance in the grand duchy with the US Foreign Account Tax Compliance Act and the implementation of automatic exchange of information between Luxembourg and the United States in line with the Model 1 FATCA Intergovernmental Agreement signed by the two countries on March 28 last year.

 

CSSF issues eighth update to AIFMD law Q&A

February 2015 - Finance. Legal Developments by Chevalier & Sciales .

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The CSSF is continuing to update its Frequently Asked Questions document on the grand duchy's law of July 12, 2013 implementing the AIFMD and the European Commission's Level 2 regulation on implementation of the directive, most recently on December 29, 2014.

ESMA consults on depositary requirements under UCITS V

November 2014 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has issued a consultation paper seeking feedback from asset management industry members on its draft advice to the European Commission regarding depositary requirements under the forthcoming UCITS V directive. The paper has been drawn up in response to a provisional request from the Commission on July 3 seeking technical advice on the content of two delegated acts on depositaries that the Commission is called on to issue to complement the primary UCITS V legislative text.

 

 

CSSF issues circular on investor notification of material changes to open-ended UCITS funds

August 2014 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg's Financial Sector Supervisory Authority According has published Circular 14/591 on July 22, addressed to all open-ended UCITS funds governed by the grand duchy's legislation of December 17, 2010, regarding the protection of investors in the event of a material change to an open-ended undertaking for collective investment. The CSSF says that according to well-established supervisory practice, in the event of such a material change to investors' interests in an open-ended fund under the 2010 law, the regulator requires that they be given sufficient time to take an informed decision, and that if they do not wish to accept the proposed change, they should be able to redeem or convert their shares or units free of charges.

CSSF issues new update to AIFMD law Q&A

July 2014 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg's Financial Sector Supervisory Authority has published on July 18 the latest update to its Frequently Asked Questions document on the grand duchy's law of July 12, 2013 implementing the European Union's Alternative Investment Fund Managers Directive and the European Commission's Level 2 regulation on implementation of the AIFMD.

The FAQ document, now in its seventh version in just over a year, is intended by the CSSF to highlight aspects of the AIFMD rules from a Luxembourg perspective for the benefit primarily of alternative funds and managers established in the grand duchy.

Luxembourg prepares for central role as AIFMD finally takes effect

July 2014 - Finance. Legal Developments by Chevalier & Sciales .

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As, after more than four years of preparation, the European Union's Alternative Investment Fund Managers Directive takes full effect for existing managers, Luxembourg finds itself in the position it wanted to be in - ideally placed to become a domicile and servicing platform for alternative funds distributed across borders in the same way that it has become for traditional retail funds under the UCITS regime.

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Countdown approaches for UCITS V implementation

June 2014 - Finance. Legal Developments by Chevalier & Sciales .

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The directive approved by the parliament in plenary session on April 15 is relatively limited in scope, covering depositary functions, remuneration policies and sanctions. More fundamental changes may come in the future from what will become UCITS VI. This measure, which is still at the preliminary discussion stage, could rethink the expansion of the range of assets eligible for investment by UCITS funds launched by the UCITS III directive in 2002.

ESMA draws up proposed AIFM directive passport questions for regulators

April 2014 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has issued on March 26 technical advice regarding information that must be provided by national regulators on the functioning of the Alternative Investment Fund Managers Directive as a precursor to the potential extension of the AIFMD passport to non-EU managers and funds after July next year.

CSSF updates Q&A on AIFMD implementation law

March 2014 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg's Financial Sector Supervisory Authority has published on March 17 an update to its Frequently Asked Questions document on the grand duchy's law of July 12, 2013 implementing the European Union's Alternative Investment Fund Managers Directive, as well as the European Commission's Level 2 regulation on implementation of the AIFMD. The CSSF says the FAQ document, which is now in its sixth version in nine months, is designed to highlight certain key aspects of the AIFMD rules from a Luxembourg perspective and is primarily aimed at alternative funds and managers established in the grand duchy.

 

ESMA Q&A targets common supervisory approach to AIFM Directive application

March 2014 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has published on February 17 a Question and Answers document on the Alternative Investment Fund Managers Directive, with the aim of promoting common supervisory approaches and practices in the application of the AIFMD and its implementing measures.

Luxembourg in pole position as AIFMD compliance looms

February 2014 - Finance. Legal Developments by Chevalier & Sciales .

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With little more than five months to go before alternative managers active in Europe must be fully compliant with the European Union's Alternative Investment Fund Managers Directive, Luxembourg is perfectly positioned to accommodate fund firms, from global investment houses to specialist boutiques, eager to exploit the potential of a passport to an EU-wide market.

 

ESMA publishes amended final AIFM Directive reporting rules

October 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has published on October 1st the final guidelines on the reporting obligations for alternative fund managers under Articles 3 and 24 the European Union's Alternative Investment Fund Managers Directive, which took effect on July 22, after incorporating changes arising from a consultation exercise with market stakeholders in June.

The guidelines set out how managers of alternative investment vehicles including hedge funds, private equity and real estate funds will be required to report certain information regularly to national regulators. They clarify provisions of the AIFM Directive on the information required, which aims to provide supervisors with a more comprehensive and consistent oversight of managers' activities.

CSSF publishes guidance on AIFM Directive for Luxembourg based managers

July 2013 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg's financial regulator, the Financial Sector Supervisory Authority, has published practical guidance for alternative fund managers on how they should approach the issue of becoming registered or authorised under the Alternative Investment Fund Managers Directive, which was transposed into Luxembourg law through legislation that came into force on July 15. The CSSF says any entity established in Luxembourg that could potentially be categorised as an alternative manager under the new law must conduct a self-assessment of whether it qualifies, and if so, whether it will be subject to a requirement for registration or authorisation.

CSSF announces transitional measures for managers and funds under the AIFM Directive

July 2013 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg's financial regulator, the Financial Sector Supervisory Authority (CSSF), has published a series of Frequently Asked Questions  (FAQs ) on June 18, 2013 regarding the draft legislation that will implement the European Union's Alternative Investment Fund Managers Directive into national law and the European Commission's implementing regulation. The CSSF has decided to publish the FAQs to provide managers with greater clarity on the impact of the directive, and especially provisions regarding the transitional period of a year up to July 22, 2014, even though Luxembourg's Chamber of Deputies has not yet voted the draft legislation into law.

 

Law of April 6, 2013 on dematerialised securities

May 2013 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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The law of April 6, 2013 on dematerialised securities was published in Luxembourg’s official gazette, the MĂ©morial, on April 15, coming into force the following day. It creates a third category of securities alongside securities in bearer or registered form and introduces a general regime for them. The legislation also amends various existing Luxembourg laws such as the legislation of August 1, 2001 regarding the circulation of securities and other fungible instruments.

European Commission publishes regulations on AIFM Directive opt-in and member state of reference

May 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The European Commission published two implementing regulations forming part of the detailed framework of the Alternative Investment Fund Managers Directive in the EU Official Journal on May 15. The regulations are automatically binding on member states without any need for transposition into national legislation. They will enter into force on June 5 and apply from July 22, the deadline for adoption of the directive into the national law of member states and the date on which it takes effect.

Luxembourg's double tax treaty network

April 2013 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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Double taxation avoidance treaties concluded between two states seek to prevent the taxation in both countries of income and capital. Chevalier & Sciales has created this treaty table to provide you with an accurate and updated view of Luxembourg double tax treaties in force or currently pending.

Comparison table of Luxembourg investment vehicles

March 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The purpose of this investment memorandum is to provide an overview of the investment vehicles (i.e. regulated, lightly regulated and unregulated) that Luxembourg offers to (foreign) entrepreneurs and managers. The table compares the UCITS, part II fund, SIF, SICAR, SPF, securitization vehicle and soparfi. The overview covers inter alia the legal and regulatory requirements, the shareholding, the approval and supervision, taxation issues (such as the benefit from the EU Parent Subsidiary directive and double tax treaties and thin capitalisation rules), etc.

Update on authorisation of Luxembourg investment advisers to Luxembourg funds (UCITS, SIF, Part II)

March 2013 - Finance. Legal Developments by Chevalier & Sciales .

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Advisers to collective investment funds are henceforth included in the scope of application of the 1993 financial services legislation and must hold an investment adviser authorisation issued by the Finance Ministry, the CSSF has announced, following the entry into force of the law of December 21, 2012. The legislation transposed into Luxembourg law the so-called ‘Omnibus I’ Directive 2010/78/EU of November 24, 2010. The legislation came into force on December 31.

Luxembourg CSSF circular implements ESMA guidelines on ETFs and other UCITS issues

March 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The CSSF has published on February 18 Circular 13/559 implementing the guidelines published by European Securities and Markets Authority on 18 December 2012 for EU regulators and UCITS management companies on exchange-traded funds and other UCITS issues. The guidelines set out the information that such funds must publish in their prospectus, key investor information document and annual report, including monitoring of tracking error, the index replication method and leverage policy. For leveraged funds, the requirements include information on global risk calculation and management. For ETFs that engage in some sort of active management, how the investment policy is implemented must be specified.

Update AIFM Directive - ESMA final report on remuneration policies

February 2013 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority published on February 11 its final guidelines on sound remuneration policies under the Alternative Investment Fund Managers Directive. This is the latest step in Esma’s preparation of subsidiary measures and technical guidance ahead of the July 22, 2013 deadline for adoption of the directive by European Union member states into their national law, the date from which the guidelines will apply.

Luxembourg's AIFM Directive transposition law awaits scrutiny by Parliament

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

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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.

Special limited partnership (sociĂ©tĂ© en commandite spĂ©ciale) introduced under Luxembourg’s AIFM

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

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As part of the legislation transposing the European Union's Alternative Investment Fund Managers Directive into national law, the Luxembourg authorities have seized the opportunity to make the country's fund region more attractive to promoters and managers of funds employing alternative strategies and/or aimed at sophisticated investors - in particular of private equity, venture capital and real estate vehicles. The legislation introduces into national law a new regime to be known as the société en commandite special, or special limited partnership, along with the updating of the existing société en commandite simple, or standard limited partnership. The grand duchy also offers the société en commandite par actions, or partnership limited by shares.

CSSF regulation sets out risk management and conflicts of interest rules for SIFs

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

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Luxembourg’s financial regulator, the Financial Sector Supervisory Authority (CSSF) has published on August 13 a regulation setting out the provisions implementing Article 42b of the revised Specialised Investment Fund legislation regarding risk management and conflict of interest requirements. CSSF Regulation N° 12-01 specifically concerns paragraph 1 of the article, regarding the criteria for assessing the suitability of risk management systems used by SIFs, and paragraph 2, regarding structures and organisational requirements designed to minimise the risk of conflicts of interest arising.

CSSF publishes circular on non-launched, inactive and closed fund compartments

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

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Luxembourg’s financial regulator, the Financial Sector Supervisory Authority (CSSF) published on July 9 a circular aimed at all Luxembourg undertakings for collective investment established under the funds law of December 17, 2010 (implementing the Ucits IV Directive) and the Specialised Investment Fund law of February 13, 2007.

Luxembourg consolidates its position as alternative UCITS hub

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

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The European Union’s Alternative Investment Fund Managers Directive is finally on the way to become law next July, at least in Luxembourg and other EU countries with ambitions to attract a larger shares of the continent’s alternative investment business. However, the grand duchy is already benefiting for the preference among some hedge fund managers for a regulated structure that is already in place and benefits not only from free distribution throughout Europe but widespread acceptance elsewhere in the worlds – UCITS.

2012 hedgeweek guide to setting-up Luxembourg alternative investment funds

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

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Already the jurisdiction of choice for the establishment of UCITS funds, Luxembourg is carving out a competitive advantage for alternative funds as well, drawing on the success of the Specialised Investment Fund regime (and the Sicar vehicle for private equity and other risk capital investments). Recent updating has brought the SIF law into line with many provisions of the EU’s AIFM Directive, which the grand duchy is planning to adopt into national law before year-end – consolidating the country’s acknowledged strength as a regulated jurisdiction for the domicile and servicing of alternative investment funds and structuring vehicles, and for its proactive approach to meeting the fund industry’s needs.

Esma unveils draft remuneration guidelines for alternative fund managers

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

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The European Securities and Markets Authority has published on June 28 a consultation paper on proposed guidelines on remuneration of alternative investment fund managers, which will apply to managers of alternative funds including hedge funds, private equity funds and real estate funds.  Under the Alternative Investment Fund Managers Directive, which is due to be implemented by EU member states by July 22, 2013, all management firms covered by the directive will be asked to introduce sound and prudent remuneration policies and structures designed to increase investor protection and avoid conflicts of interest that could lead to excessive risk-taking.

AIFM Directive - Analysis highlights Commission divergence from ESMA level 2 proposals.

May 2012 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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The Alternative Investment Management Association has published an analysis of the divergences it has identified between the European Commission's draft Level 2 regulation implementing the Alternative Investment Fund Managers Directive and the technical advice provided to the Commission last November by the European Securities and Markets Authority.

European Commission publishes AIFMD level 2 implementation proposals

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

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The European Commission’s proposals for level 2 implementation measures for the Alternative Investment Fund Managers Directive has been circulated to European Union member states and to the European Parliament. The Commission’s draft has prompted criticism from hedge fund managers quoted in media reports and from a hedge fund industry body, the Alternative Investment Management Association, that in certain areas its proposals differ significantly from those put forward by the European Securities and Markets Authority (Esma) in its advice delivered to the Commission on November 16.

Luxembourg’s amended SIF law comes into force

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

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Luxembourg’s legislation amending the February 2007 law on Specialised Investment Funds came into force on April 1, following publication in the country’s official gazette, the MĂ©morial, on March 30. It is now identified as the law of March 26, 2012, the date on which it received royal assent.

ESMA refines proposed framework to deal with complexity of ETFs and other Ucits

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

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The European Securities and Markets Authority has published on January 30 a consultation paper proposing future guidelines for exchange-traded funds established as Undertakings for Collective Investment in Transferable Securities and other issues related to the Ucits regime. The Esma proposals cover both physical ETFs, which replicate the performance of stock, bond, commodity, currency or other indices by holding shares or other securities in the proportions that make up the index in question, or a sample thereof, and synthetic ETFs, which use swap transactions to obtain the economic performance of the index, using a basket of securities as collateral.

ESMA launches discussion paper on AIFMD technical standards

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

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The European Securities and Markets Authority has published on February 23 a discussion paper on key concepts of the Alternative Investment Fund Managers Directive and types of alternative fund manager to initiate a consultation process aimed at finalising its policy approach.

Esma says that in the light of responses to the discussion paper, it will draw up a consultation paper during the second quarter of this year setting out formal proposals for draft regulatory technical standards under Article 4(4) of the directive, “to determine types of AIFMs, where relevant in the application of this directive, and to ensure uniform conditions of application of this directive”.

The authority says it will use the results of the public consultation to finalising the draft regulatory technical standards, which it will submit to the European Commission for endorsement by the end of 2012. Comments must be received by March 23.

Luxembourg adopts ‘AIFMD-ready’ amended SIF legislation

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

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Luxembourg’s Parliament has adopted on March 6 legislation amending the February 2007 law on Specialised Investment Funds, adapting the highly successful SIF regime to European and international developments regarding regulation and transparency of alternative investments. The revised legislation reflects in particular the requirements of the European Union’s Directive on Alternative Investment Fund Managers, which will take effect on July 22, 2013. It also follows some aspects of Luxembourg’s funds legislation of December 17, 2010, which transposed into national law the Ucits IV Directive governing cross-border distribution of retail funds within the EU and introduced other changes affecting non-Ucits funds.                                                     

Esma advice increases certainty on third-country AIFM Directive questions

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

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The European Securities and Market Authority’s 500 pages of technical advice to the European Commission on Level 2 measures implementing the Alternative Investment Fund Managers Directive have helped to bring greater certainty to the global fund industry on what it can expect in July 2013 and thereafter.

2011 Guide to setting-up Luxembourg alternative investment funds

December 2011 - Finance. Legal Developments by Chevalier & Sciales .

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Please find below the link to the 2011 guide on the setting-up of Luxembourg alternative investment funds.

Esma finalises advice to European Commission on AIFMD Level 2 measures

November 2011 - Finance. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has published on November 16 its final advice to the European Commission on the detailed rules underlying and implementing the Alternative Investment Fund Managers Directive. The Commission is expected to issue the rules in the form of subsidiary legislation and regulation by the middle of next year. According to Esma, its proposed rules should establish a comprehensive framework for alternative investment funds, their managers and depositaries, and by achieving the directive’s aim of increasing transparency and mitigating systemic risk, ultimately contribute to improved protection of investors.

Adapting the SIF law for the AIFM Directive era

September 2011 - Finance. Legal Developments by Chevalier & Sciales .

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Four and a half years after Luxembourg introduced the law creating the Specialist Investment Fund regime for alternative vehicles, the grand duchy’s government has drafted legislation amending the SIF rules. The new legislation, which was placed before the Chamber of Deputies (Parliament) on August 12 and which is expected to become law before the end of this year, aims principally to adapt the SIF law to the requirements of the European Union’s Directive on Alternative Investment Fund Managers, which will take effect in July 2013, including rules on delegation, risk management and the handling of actual or potential conflicts of interest.

AIFM Directive to come into force on July 21

July 2011 - Finance. Legal Developments by Chevalier & Sciales .

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The European Union’s Directive on Alternative Investment Fund Managers will come into force on July 21 following its publication in the Official Journal of the European Union on July 1.

Use of Luxembourg management companies to access the AIFMD passport

May 2011 - EU & Competition. Legal Developments by Chevalier & Sciales .

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The European Union's Directive on Alternative Investment Fund Managers is expected to be formally adopted in the coming weeks and to take effect from around June 2013.

The directive will have extensive implications for managers based outside the EU. They will not be able to benefit from the directive's passporting arrangements for at least another two years, mid-2015 at the earliest, a period during which their only option will be distribution under national private placement rules.

This raises the question of whether non-EU managers of European-domiciled funds such as Luxembourg Specialised Investment Funds could gain access to professional investors in Europe by using a management company established in Luxembourg and able to benefit from the directive's provisions from 2013.

Esma seeks market views on AIFM Directive implementation

April 2011 - EU & Competition. Legal Developments by Chevalier & Sciales .

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The European Securities and Markets Authority has issued a discussion paper on its proposed approach to implementing measures of the European Union’s Alternative Investment Fund Managers Directive.

Esma is soliciting views from market participants on the policy options it is proposing to recommend to the European Commission, which is responsible for drafting so-called Level 2 regulations and subsidiary directives setting out the details of how the AIFM Directive should be applied.

Last December the Commission requested advice on Level 2 measures from Esma’s predecessor body, the Committee of European Securities Regulators. Following delays to the finalisation of the directive’s text, the deadline for Esma to submit its advice to the Commission has been put back to November 26.

Due to the broad scope of the directive, the Commission’s request for advice has been divided into four parts. Part I covers general provisions, authorisation and operating conditions, Part II the role of the depositary, Part III transparency requirements and leverage, and Part IV supervision.

The discussion paper notably asks for stakeholders’ views on how to identify the portfolios of alternative investment funds under management by a particular fund manager and the calculation of the total value of assets under management, how leverage influences assets under management, how to determine the value of a fund’s assets under management for a given calendar year, and how to treat potential cases of crossholding among funds.

It seeks the industry’s views on how to treat managers whose total assets occasionally exceed and/or fall below the relevant threshold for authorisation under the directive, and what registration requirements should exist for entities falling below the threshold.

The paper also invites comment on how the obligation on managers to register with national authorities should be implemented, suitable mechanisms for gathering information, and what procedures should exist for small managers to opt in to regulation under the directive.

Market participants have until May 16 to respond to the discussion paper. Contributions should be submitted online at www.esma.europa.eu under the heading ‘Consultations’.

Esma says the responses it receives will help to narrowing down its policy approach and develop a formal proposal for possible implementing measures for the AIFM Directive in the summer of 2011. This proposal will be subject to a public consultation, whose results will be used by Esma to finalise its advice to the Commission.

Guide to the migration or relocation of offshore funds to Luxembourg

March 2011 - Finance. Legal Developments by Chevalier & Sciales .

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Please find hereunder a link to our new brochure “Guide to the migration or relocation of offshore funds to Luxembourg” outlining the different ways in which funds established in offshore jurisdictions can be redomiciled to Luxembourg.

UCITS IV – removing barriers to Europe’s single fund market

March 2011 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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The European Union's latest directive on undertakings for collective investment in transferable securities, known as Ucits IV, which was formalised on July 13, 2009,will take effect from July 1 this year, the deadline for transposition of the directive into the national law of EU member states. Luxembourg became the first member state to do so on December 17, 2010.

AIFM directive –a new environment for alternative funds in Europe

March 2011 - Finance. Legal Developments by Chevalier & Sciales .

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The European Union's Directive on Alternative Investment Fund Managers, which was given a first reading by the European Parliament in November, is now completing the final stages of the legislative process and is set to become law during the first quarter of this year.

Migration or relocation of offshore funds to Luxembourg

July 2010 - Finance. Legal Developments by Chevalier & Sciales .

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The Madoff scandal which has led to the quasi-collapse of the banking sector has changed the fund industry landscape. The ability to relocate in Luxembourg opens new horizons to offshore promoters and investors.

Luxembourg Newcits or Sophisticated UCITS

June 2010 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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For a long time, Luxembourg hedge funds and funds of hedge funds have been set-up under several wrappers, namely funds submitted under part II of the law of 20 December 2002 on UCIs (the “2002” Law) and specialized investment funds (SIF) governed by the law of 13 February 2007 (the “SIF Law”). As of today, hedge fund managers are considering launching UCITS platforms (especially “sophisticated UCITS”). As widely known, UCITS funds are harmonized European retail fund vehicles that can be sold globally and which benefit from the European passport enabling investment managers to easily market their funds within the EU.

Luxembourg and the proposed Alternative Investment Fund Managers Directive (AIFM)

August 2009 - Finance. Legal Developments by Chevalier & Sciales .

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As part of a legislative package to tackle the financial crisis, the European Commission submitted on 29 April 2009 a Directive on Alternative Investment Fund Managers (“AIFM”) to the European Parliament and to the Council. This proposal emerged rather swiftly following a general consensus across European leaders that AIFM, which managed around EUR 2 trillion in assets at the end of 2008, should be subject to closer regulatory scrutiny. This proposed Directive marks the first attempt to create a comprehensive and effective supervisory and regulatory framework for AIFM in the European Union (“EU”) by imposing on European investment managers of non-UCITS investment funds a common set of rules in terms of licensing and supervision. In return, AIFM would benefit from a European passport for cross-border distribution to EU professional investors. The main innovations focus on the regulatory supervision, the disclosure requirements and the distribution of Alternative Investment Funds (“AIF”). Key elements of the proposed Directive are set out below. However, it should be pointed out that those proposals will only introduce a minimum threshold for Member States, and countries such as France and Germany will probably pass harsher requirements.

Luxembourg - SICAR changes bring new private equity boost

June 2009 - Finance. Legal Developments by Chevalier & Sciales .

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Luxembourg has long been a significant domicile for private equity vehicles but the jurisdiction has emerged as a major European centre for the industry since the introduction of the Sicar, or risk capital investment company, five years ago. Now a series of changes to the rules governing Sicars that were enacted last year promises to consolidate Luxembourg’s role, even at a time when the private equity industry is battling to adapt to a much-changed economic and financial environment.

The legislation of October 29, 2008 allows the promoters of private equity funds to create segregated compartments in a Sicar, putting the vehicle on the same basis as Specialised Investment Funds, which are widely used for a broad range of Luxembourg-domiciled alternative investment products. The changes restore the Sicar’s position as the vehicle (depending on the particular circumstances) perhaps best suited to private equity funds because unlike the SIF, it is not subject to risk diversification rules.

Role of the depositary in a Luxembourg UCITS fund - an overview as a result of the Madoff case

January 2009 - Finance. Legal Developments by Chevalier & Sciales .

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The effect of the alleged Ponzi scheme in which Bernard Madoff was implicated - involving losses of more than $50 billion - are already widespread. The CSSF has recently announed in its press release of 23 January 2009 that a number of funds and sub-funds (as set out hereunder) have decided to suspend their NAV as well as redemptions, subscriptions and conversions of shares/units. A consequence is that the liability of the main actors of the investment funds involved is called into question. Any finding of liability in the forthcoming litigations is likely to involve thorny issues. Indeed a fund requires the services of a large number of actors (the board of directors of the funds, the promoter, the depositary, the central administration agent, the auditor, etc.) and it is unclear how far in the hierarchy the liability shall extend. In any case, the diversity of the regimes of responsibility under which each actor is subject (whether it is contractual liability or not) will probably cloud the issue. Matters will also be made more complex by the wide variety of legislations that come into play as a result of the internationalization of investments.

 

Luxembourg - 2009 Tax Reform introduced by the Law of 16 December 2008

December 2008 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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On 16 December 2008, the Luxembourg Parliament has passed laws to enact the attractive measures already proposed by the bills number 5924 and 5913. These new measures which will be applicable as of 1 January 2009 aim at facilitating investments in and through Luxembourg. The main measures are: (i) the abolition of capital duty as of 2009, (ii) the exemption of withholding tax (under certain conditions) on dividends paid to treaty countries (in case of corporate shareholders), (iii) decrease of the combined corporate income tax to 28,59% as of 1 January 2009 and (iv) broadening the scope of the IP regime introduced by the law of December 2007.

Investment Funds - From UCITS III to UCITS IV

November 2008 - Finance. Legal Developments by Chevalier & Sciales .

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Undertakings for Collective Investment in Transferable Securities (UCITS III) were introduced by the law of 20 December 2002 (the “2002 Law”), and benefit from a European Passport enabling them to be freely marketable throughout the EU countries. However, unsatisfactory elements relating to the current state of the Law paved the way to discussions about a possible ‘mutation’ from UCITS III to UCITS IV.

Luxembourg Specialized Investment Fund - relationship between the custodian and prime broker

November 2008 - Finance. Legal Developments by Chevalier & Sciales .

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In a Circular issued on 5 September 2008, the CSSF clarified the interaction between the prime broker and the custodian of a SIF. In Luxembourg, the prime broker must be a financial institution subject to the control of a supervisory authority of a State with a supervisory regime recognised to be equivalent to that provided by EU legislation. Prime brokers are essential to SIFs that implement a hedge fund strategy or that make use of derivatives. By setting up four guidelines, the Circular should facilitate the use of prime brokers by SIFs.

LUXEMBOURG - Amendments to the SICAR law

October 2008 - Finance. Legal Developments by Chevalier & Sciales .

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On 15 October 2008, the Luxembourg Parliament amended the existing SICAR law of 15 June 2004 with the aim to make the SICAR regime more attractive to private equity and venture capital investors.

LUXEMBOURG - new draft bill - exemption of withholding tax on dividends paid to treaty countries

October 2008 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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On 1 October 2008, a draft bill (n°5924) introducing new favourable tax measures was submitted to the Luxembourg Parliament. We set out hereunder a brief overview of the main changes that are proposed and that relate to companies.

LUXEMBOURG - Investment Funds - legal update

September 2008 - Finance. Legal Developments by Chevalier & Sciales .

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In spite of wavering economic context, Luxenbourg, during the May/ June 2008 period, consolidated its position of a leading investment funds hub.

SIF, UCITS, UCI - Hedgeweek report - Guide to Luxembourg Investment Funds

August 2008 - Finance. Legal Developments by Chevalier & Sciales .

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The Luxembourg investment fund industry, largely benefi ting from its location in a strong financial centre, is now an internationally recognized label for investment funds. The greatest asset of Luxembourg is undoubtedly political voluntarism, demonstrated by a constant anticipation of the need of investors - either in the transposing of European legislation or in the shaping of national legislation - in order to create a stable and favorable environment according to the expected development of the market. hedgeweek_-_luxembourg_guide_on_alternative_investment_funds 

LUXEMBOURG HEDGE FUNDS

March 2008 - Finance. Legal Developments by Chevalier & Sciales .

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Over the past years an increasing number of Hedge Funds, and especially Funds of Hedge Funds, have been set up in Luxembourg following registration with the competent supervisory authority (Commission de Surveillance du Secteur Financier or "CSSF").  Luxembourg Hedge Funds and Funds of Hedge Funds are subject to the same legal and regulatory requirements applicable to other Luxembourg Funds, comprising the permanent supervision by the CSSF, the obligation to appoint a Luxembourg based custodian and an auditor, the obligation to produce a monthly net asset value calculation and to publish annual and semi-annual reports. The obligations may vary depending under which form the hedge fund is set up.  Luxembourg Hedge Funds may be set up under several wrappers: UCITS Fund, Fund submitted to CSSF Circular 02/80 or Specialised Investment Fund.

Luxembourg SICAR - private equity investment vehicle

February 2008 - Finance. Legal Developments by Chevalier & Sciales .

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A Luxembourg law of 15 June 2004 relating to the investment company in risk capital (the "Law on SICAR") has created a Luxembourg vehicle ("SICAR") whose principal object is investing in risk bearing capital issued by domestic and foreign companies. The main features and advantages of the Law on SICAR are its legal flexibility and interesting tax treatment. This new legal framework for Luxembourg private equity and venture capital funds is expected to have a significant impact in European private equity deal structures.

LUXEMBOURG – INTELLECTUAL PROPERTY – New draft law: 80% exemption on royalties

December 2007 - Intellectual Property. Legal Developments by Chevalier & Sciales .

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The Luxembourg government has recently introduced a draft law on 6 November 2007 that would provide for an 80% tax exemption of income derived from intellectual property ("IP") as well as capital gains realized on the disposal of such intellectual property. The aim of this new incentive is to encourage companies to invest more in research and development and will increase the attractiveness of Luxembourg for the holding of intellectual property. It is intended that the regime is applicable as from January 2008.

Comparison of Luxembourg private equity and investment fund vehicles - SIF, UCITS

December 2007 - Finance. Legal Developments by Chevalier & Sciales .

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The purpose of this comparison table is to set out the different Luxembourg investment vehicles (regulated, lightly regulated as well as unregulated) that Luxembourg offers to foreign investors such as private equity investors, real estate investors and hedge fund investors.

practical_approach_use_of_luxembourg_investment_vehicles_for_foreign_investors

For more information please visit www.cs-avocats.lu   

New tax treaty between Luxembourg and Hong Kong

December 2007 - Tax & Private Client. Legal Developments by Chevalier & Sciales .

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On 2 November 2007, Luxembourg signed a tax treaty with Hong Kong. The maximum withholding taxes that are set out are:

Securitization in Luxembourg

July 2007 - Finance. Legal Developments by Chevalier & Sciales .

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A new Luxembourg law of 22 March 2004 on Securitization (the "Law on Securitization") has laid the foundations for the legal, regulatory and tax framework for securitization vehicles in Luxembourg. The main features and advantages of the Law on Securitization as well as a practical application in which the firm was involved are discussed hereunder.

Specialized Investment Fund (SIF): a new Luxembourg investment vehicle is born

July 2007 - Finance. Legal Developments by Chevalier & Sciales .

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On 13th February 2007, the Luxembourg parliament passed a law that introduced the specialized investment fund (SIF) regime. The new law provides a more flexible framework for specialized investment funds. The SIF is a lightly regulated and tax efficient fund. The SIF gives fund promoters an on shore alternative to consider (as compared to traditional offshore jurisdictions such as Cayman and BVI) when deciding on the jurisdiction for setting up a fund and the type of fund vehicle to use.