Twitter Logo Youtube Circle Icon LinkedIn Icon

The Legal 500 Hall of Fame Icon The Legal 500 Hall of Fame highlights individuals who have received constant praise by their clients for continued excellence. The Hall of Fame highlights, to clients, the law firm partners who are at the pinnacle of the profession. In Europe, Middle East and Africa, the criteria for entry is to have been recognised by The Legal 500 as one of the elite leading lawyers for seven consecutive years. These partners are highlighted below and throughout the editorial.
Click here for more details

Luxembourg > Legal Developments > Law firm and leading lawyer rankings

Editorial

CSSF issues circular on governance and organisation of non-UCITS fund depositaries

December 2018 - Finance. Legal Developments by Chevalier & Sciales .

More articles by this firm.

Luxembourg's financial regulator, the Commission de Surveillance du Secteur Financier, published on August 23 CSSF Circular 18/697 on organisational requirements applicable to depositaries of funds that are not subject to the UCITS rules set out in Part I of the investment fund legislation of December 17, 2010 and to their branches.

The circular amends Circular CSSF 16/644 regarding the provisions applicable to banks acting as UCITS depositaries under Part I of the 2010 legislation or their management companies, as well as Circular IML 91/75 (in turn amended by Circular CSSF 05/177) regarding the revision and remodelling of the rules governing Luxembourg funds under the law of March 30, 1988.

The new circular, which will come into force on January 1, 2019, is applicable to all non-UCITS Luxembourg depositaries, as well as EU banks and investment firms or their branches that are currently providing depositary services in Luxembourg, or intend to apply for an authorisation to do so in the future, to three categories of non-retail funds.

These comprise alternative investment funds managed by an authorised management company or alternative investment fund manager; Luxembourg Part II funds managed by a fully authorised or registered AIFM that stipulate in their constitutive documents that they are not distributed to retail investors established in Luxembourg; and specialised investment funds (SIFs) and risk capital investment vehicles (SICARs) that do not qualify as AIFs or that do so and are managed by a registered AIFM.

Most of the rules set out in the circular supplement the AIFMD transposition legislation of July 12, 2013 and the Commission’s level 2 delegated regulation (EU) 231/2013 regarding depositaries, clarifying the organisational requirements of the categories of depositary covered.

These include the eligibility criteria for AIF depositaries, segregation rules, depositary rights of pledges, and the rules to be followed when providing services to funds that invest in assets including real estate, private equity, tangible assets and financial derivatives.

The circular also requires the alternative fund to ensure that on its appointment and on an ongoing basis the depositary has access without undue delay to all the relevant information it needs to comply with its obligations regarding depositary services for the AIF in question.

If the AIFM is not established in Luxembourg, the depositary must conclude a written agreement with it setting out the flow of information necessary for it to perform its functions, notably regarding the safekeeping of assets, monitoring of the fund, and the legislative, regulatory and administrative provisions applicable to the depositary. The parties to the contract appointing the depositary may agree that all or part of the information required may be transmitted electronically.

The full text of the circular (in French) is available here

Interview with...

Law firm partners and practice heads explain how their firms are adapting to clients' changing needs

International Law Firm Networks

International comparative guides

Giving the in-house community greater insight to the law and regulations in different jurisdictions.

Select Practice Area

GC Powerlist -
Europe

International Law Firm Networks