On 14 July 2016 Luxembourg added the eagerly awaited Reserved
Alternative Investment Fund (RAIF) to its alternative investment
fund structuring toolbox.
The new RAIF is very familiar as it borrows interesting features
from both the SIF and the SICAR regimes. The investments must
respect the same risk-spreading rules as the SIF (a maximum 30% in
any asset) except if the RAIF invests solely in Risk Capital in
which case the RAIF can invest up to 100% in one asset. However,
unlike the SIF and the SICAR, the RAIF is not subject to any
approval or ongoing supervision by the CSSF. Investor protection is
built on the premise that only authorised AIFMs will be allowed to
establish and manage the RAIF giving investors a high level of
protection and transparency through the rules that the AIFM has to
respect. We expect the RAIF to be particularly appealing to
sophisticated investors who are looking for a robust structure to
quickly seize investment opportunities and who are comfortable with
the regulation of the Manager without direct regulation and
supervision of the Fund.
The RAIF's most interesting characteristics are as
Structuring flexibility: the RAIF can be set up as a
partnership, an investment company, or a contractual fund, either
as a stand-alone or umbrella fund and with the possibility to set
up several share classes.
Access to the AIFM marketing passport: the RAIF can be managed
by an authorised AIFM established in any EU Member State or in a
third country qualifying for a future AIFM passport regime, with
access to a marketing passport for professional investors across
Taxation: the RAIF will be subject to a subscription tax of
0.01% of NAV, with exemptions available for certain Money Market
Funds, for funds dedicated to pension fund investors, and for
microfinance funds. RAIFs that invest exclusively in Risk Capital
will be subject to income tax with exemptions for income derived
from transferable securities.
Transparency to investors: the RAIF must issue an Offering
Document that satisfies the AIFMD transparency requirements. It
must also produce an annual report audited by an Approved Statutory
Auditor, within six months of year-end.
The RAIF is able to be converted into a SIF or a SICAR.
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.
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