Since early days, Luxembourg has always been at the forefront of
financial regulations and maintained a solid reputation as a
pioneer jurisdiction for investment funds. Luxembourg is now the
first EU member state to implement Directive 2009/65/EC
("UCITS IV") through the new law on undertakings for
collective investment voted by Parliament on December 16, 2010.
UCITS IV: A Toolbox of Opportunities
With the aim to address structural inefficiencies in the
European funds market, the "UCITS IV Toolbox" as
introduced by the new law will bring about the main following
changes:
A harmonized framework for fund mergers and master-feeder
structures
Streamlined fund notification and optimized distribution
procedures
A full passport for management companies favouring cross-border
capabilities
Increased transparency with the standardized "Key Investor
Information"
Enhanced cooperation between EU financial supervisory
authorities
Building a Local Efficiency Framework
Beyond UCITS IV-related changes, the new law further seeks to
modernize the current regime for coordinated UCITS and other UCI in
Luxembourg with a series of local "efficiency measures"
including:
The possibility for cross-investment between sub-funds of the
same umbrella fund
The abolition of the subscription tax for tracker funds and
microfinance vehicles
Lightened requirements for shareholder meetings and
incorporation process
Tax exemption in Luxembourg for:
(i) Foreign UCITS or UCI managed by a Luxembourg management
company and whose place of effective management is Luxembourg;
and
(ii) Non-resident investors on gains realized on the sale of large
participations (10%) held in a corporate Luxembourg UCITS or
UCI.
Flexible transitional provisions for compliance from January 1,
2011 to July 1, 2012
With the advent of UCITS IV and the anticipation of AIFMD, a new
regulatory era for the EU asset management industry has begun.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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