On 29 July 2016, the draft law 7024 was submitted to the Luxembourg Parliament.

This text proposes i.a. to clarify the depositary regime of undertakings for collective investment (UCIs) which are subject to the Part II (Part II funds) of the Law of 17 December 2010 (UCI Law) as introduced by the Law of 10 May 2016 transposing the UCITS V Directive (see our Fund News article on the transposition law).

Before the UCITS V transposition law, Part II funds were subject to a dual depositary regime: Part II funds managed by an authorised AIFM were subject to the AIFMD depositary regime, whereas Part II funds managed by a registered AIFM were subject to the depositary regime of the UCI Law. The Luxembourg legislator decided to take the opportunity of this transposition to extend the UCITS depositary regime to all Part II funds – whether they are distributed to retail investors or not – in order to ensure the same high level of protection to all retail investors.

Article 34 of the present draft law intends to clarify the depositary regime of Part II funds by amending Article 88-3 of the UCI Law. It proposes an exception to the recently introduced depositary regime, allowing Part II funds which are marketed exclusively to professional investors to remain under the depositary regime of the AIFM Law. Part II funds will be considered as distributed exclusively to professional investors when their offering document expressly restrict the marketing of their shares to professional investors on the Luxembourg territory in the meaning of Article 4(1) ag) of Directive 2011/61/UE on Alternative Investment Fund Managers (AIFMD).

Part II funds which are managed by a registered AIFM and whose offering documents expressly restrict the marketing of their shares to professional investors on the Luxembourg territory will be subject to the depositary regime of the Law of 13 February 2007 on Specialised Investment Funds (SIF Law).

The complete text of the draft law is available under the following web link.

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.