Luxembourg: The AIFMD And Its Implementation In Luxembourg - Update January 2017

Last Updated: 26 March 2017
Article by Elvinger, Hoss & Prussen

This brochure presents the Luxembourg Law of 12 July 2013 on alternative investment fund managers ("AIFM Law") in consolidation with the AIFMD and the Level 2 AIFM Regulation , as well as consolidating, in a single document, all relevant AIFM legislation and guidelines.

The January 2017 edition includes the last updates of the ESMA Q&A on AIFMD and of the CSSF FAQ on the AIFM Law and the Level 2 AIFM Regulation.

Part I: Law of 12 July 2013 on Alternative Investment Fund Managers

CHAPTER I - GENERAL PROVISIONS

Article 1 AIFM Law: Definitions

[Art. 4 AIFMD]

For the purpose of this Law, the following definitions shall apply:

  1. "EBA": the European Banking Authority established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council;
  2. "ESMA": the European Securities and Market Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council;
  3. (3) "competent authorities": the national authorities of Member States which are empowered, by law or regulation, to supervise AIFMs. In Luxembourg, the CSSF is the competent authority for the supervision of AIFMs subject to this Law;
  4. "supervisory authorities" in relation to non-EU AIFMs: the national authorities of a third country which are empowered, by law or regulation, to supervise AIFMs;
  5. (5) "competent authorities of an EU AIF": the national authorities of a Member State which are empowered, by law or regulation, to supervise the AIFs. The CSSF is the competent authority for the supervision of AIFs established in Luxembourg;
  6. "supervisory authorities" in relation to non-EU AIFs: the national authorities of a third country which are empowered, by law or regulation, to supervise the AIFs;
  7. "competent authorities" in relation to a depositary:

    1. if the depositary is a credit institution authorised under Directive 2006/48/EC, the competent authorities as defined in point 4) of Article 4 thereof;
    2. if the depositary is an investment firm authorised under Directive 2004/39/EC, the competent authorities as defined in paragraph (1), point 22) of Article 4 thereof;
    3. if the depositary falls within a category of institution referred to in point c) of the first subparagraph of paragraph (3) of Article 21 of Directive 2011/61/EU, the national authorities of its home Member State which are empowered, by law or regulation, to supervise such categories of institution;
    4. if the depositary is an entity referred to in paragraph (3), third subparagraph of Article 21 of Directive 2011/61/EU, the national authorities of the Member State in which that entity has its registered office and which are empowered, by law or regulation, to supervise such entity or the official body competent to register or supervise such entity pursuant to the rules of professional conduct applicable thereto;
    5. if the depositary is appointed as depositary for a non-EU AIF in accordance with paragraph (5), point b) of Article 21 of Directive 2011/61/EU and does not fall within the scope of points a) to d) of this point, the relevant national authorities of the third country where the depositary has its registered office;
  8. "initial capital": the funds which are referred to in points a) and b) of the first paragraph of Article 57 of Directive 2006/48/EC;
  9. "marketing": a direct or indirect offering or placement, at the initiative of the AIFM or on behalf of the AIFM, of units or shares of an AIF it manages, to or with investors domiciled or with a registered office in the European Union;
  • FAQ published by CSSF (Appendix XV) Section XXI Definition of marketing and reverse solicitation Question 21.a)
  1. "control": control as defined in Article 1 of Directive 83/349/EEC;
  2. "prime broker": a credit institution, a regulated investment firm or another entity subject to prudential regulation and ongoing supervision, offering services to professional investors primarily to finance or execute transactions in financial instruments as counterparty and which may also provide other services such as clearing and settlement of trades, custodial services, securities lending, customised technology and operational support facilities;
  3. "ESRB": the European Systemic Risk Board established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council;
  4. "CSSF": the Commission de Surveillance du Secteur Financier (the Commission for the Supervision of the Financial Sector);
  5. (14) "Directive 77/91/EEC": Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect* capital, with a view to making such safeguards equivalent;
  6. "Directive 83/349/EEC": Council Directive 83/349/EEC of 13 June 1983 based on Article 54 (3) (g) of the Treaty on consolidated accounts, as amended;
  7. "Directive 95/46/EC": Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data;
  8. "Directive 97/9/EC": Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes;
  9. "Directive 98/26/EC": Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems;
  10. "Directive 2002/14/EC": Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community;
  11. "Directive 2003/41/EC": Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision;
  12. "Directive 2003/71/EC": Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC;
  13. "Directive 2004/25/EC": Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids;
  14. "Directive 2004/39/EC": Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments;
  15. "Directive 2004/109/EC": Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC;
  16. "Directive 2006/48/EC": Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions;
  17. "Directive 2006/49/EC": Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions;
  18. "Directive 2006/73/EC": Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive;
  19. (28) "Directive 2009/65/EC": Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
  20. (29) "Directive 2011/61/EU": Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010;
  21. "leverage": any method by which the AIFM increases the exposure of an AIF it manages whether through borrowing of cash or transferable securities, or leverage embedded in derivative positions or by any other means;
  22. "issuer": an issuer within the meaning of paragraph (1), point d) of Article 2 of Directive 2004/109/EC, where that issuer has its registered office in the European Union, and where its shares are admitted to trading on a regulated market within the meaning of paragraph (1), point 14) of Article 4 of Directive 2004/39/EC;
  23. "parent undertaking": a parent undertaking within the meaning of Articles 1 and 2 of Directive 83/349/EEC;
  24. "established":

    1. for AIFMs, "having its registered office in";
    2. for AIFs, "being authorised or registered in" or, if the AIF is not authorised or registered, "having its registered office in";
    3. for depositaries, "having its registered office or branch in";
    4. for legal representatives that are legal persons, "having its registered office or branch in";
    5. for legal representatives that are natural persons, "domiciled in";
  25. "Member State": a Member State of the European Union. The States that are contracting parties to the Agreement creating the European Economic Area other than the Member States of the European Union, within the limits set forth by this Agreement and related acts, are considered as equivalent to Member States of the European Union.
  26. "home Member State of the AIF":

    1. the Member State in which the AIF is authorised or registered under applicable national law, or in case of multiple authorisations or registrations, the Member State in which the AIF has been authorised or registered for the first time; or
    2. if the AIF is neither authorised nor registered in a Member State, the Member State in which the AIF has its registered office and/or head office;
  27. "home Member State of the AIFM": the Member State in which the AIFM has its registered office; for non-EU AIFMs, all references to "home Member State of the AIFM" in this Law shall be read as the "Member State of reference", as provided for in Chapter 7;
  28. "host Member State of the AIFM": any of the following:

    1. a Member State, other than the home Member State, in which an EU AIFM manages EU AIFs;
    2. a Member State, other than the home Member State, in which an EU AIFM markets units or shares of an EU AIF;
    3. a Member State, other than the home Member State, in which an EU AIFM markets units or shares of a non-EU AIF;
    4. a Member State, other than the Member State of reference, in which a non-EU AIFM manages EU AIFs;
    5. a Member State, other than the Member State of reference, in which a non-EU AIFM markets units or shares of an EU AIF;
    6. a Member State, other than the Member State of reference, in which a non-EU AIFM markets units or shares of a non-EU AIF;
  29. "Member State of reference": the Member State determined in accordance with paragraph (4) of Article 37 of Directive 2011/61/EU;
  30. (39) "Alternative Investment Funds (AIFs)": collective investment undertakings, including investment compartments thereof, which:

    1. raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and
    2. do not require authorisation pursuant to Article 5 of Directive 2009/65/EC;
  31. "EU AIF":

    1. an AIF which is authorised or registered in a Member State under the applicable national law; or
    2. an AIF which is not authorised or registered in a Member State, but has its registered office and/or head office in a Member State;
  32. "non-EU AIF": an AIF which is not an EU AIF;
  33. "feeder AIF": an AIF which:

    1. invests at least 85% of its assets in units or shares of another AIF (hereafter the "master AIF");
    2. invests at least 85% of its assets in more than one master AIF where those master AIFs have identical investment strategies; or
    3. has otherwise an exposure of at least 85% of its assets to such a master AIF;
  34. "master AIF": an AIF in which another AIF invests or has an exposure in accordance with point (42);
  35. "subsidiary": a subsidiary undertaking as defined in Articles 1 and 2 of Directive 83/349/EEC;
  36. "own funds": own funds as referred to in Articles 56 to 67 of Directive 2006/48/EC. For the purposes of applying this definition, Articles 13 to 16 of Directive 2006/49/EC are applied mutatis mutandis;
  37. "Alternative Investment Fund Managers (AIFMs)": legal persons whose regular business is managing one or more AIFs;
  38. "EU AIFM": an AIFM which has its registered office in a Member State;
  39. "non-EU AIFM": an AIFM which is not an EU AIFM;
  40. "external AIFM": an AIFM which is the legal person appointed by the AIF or on behalf of the AIF and which, through this appointment, is responsible for managing the AIF;
  41. "managing AIFs": performing at least investment management functions referred to in point 1a) or b) of Annex I of Directive 2011/61/EU for one or more AIFs;
  42. "financial instrument": an instrument as specified in Section C of Annex I to Directive 2004/39/EC;
  43. "carried interest": a share in the profits of the AIF accrued to the AIFM as compensation for the management of the AIF and excluding any share in the profits of the AIF accrued to the AIFM as a return on any investment by the AIFM into the AIF;
  44. "professional investor": an investor which is considered to be a professional client or may, on request, be treated as a professional client within the meaning of Annex II to Directive 2004/39/EC;
  45. "retail investor": an investor who is not a professional investor;
  46. "close links": a situation in which two or more natural or legal persons are linked by:

    1. participation, namely ownership, directly or by way of control, of 20% or more of the voting rights or capital of an undertaking;
    2. control, namely the relationship between a parent undertaking and a subsidiary, as referred to in Article 1 of the Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts, or a similar relationship between a natural or legal person and an undertaking; for the purposes of this point a subsidiary undertaking of a subsidiary undertaking shall also be considered to be a subsidiary of the parent undertaking of those subsidiaries.
    A situation in which two or more natural or legal persons are permanently linked to the same person by a control relationship shall also be regarded as constituting a "close link" between such persons;
  47. "UCITS": an undertaking for collective investment in transferable securities authorised in accordance with Article 5 of Directive 2009/65/EC;
  48. "qualifying holding": a direct or indirect holding in an AIFM which represents 10% or more of the capital or of the voting rights, in accordance with Articles 9 and 10 of Directive 2004/109/EC, taking into account the conditions regarding aggregation of the holding laid down in paragraphs (4) and (5) of Article 12 thereof, or which makes it possible to exercise a significant influence over the management of the AIFM in which that holding subsists;
  49. "third country": a State which is not a Member State;
  50. "legal representative": a natural person domiciled in the European Union or a legal person with its registered office in the European Union, and which, expressly designated by a non-EU AIFM, acts on behalf of such non-EU AIFM vis-à-vis the authorities, clients, bodies and counterparties to the non-EU AIFM in the European Union with regard to the non-EU AIFM's obligations under Directive 2011/61/EU;
  51. "employees' representatives": employees' representatives as defined in point e) of Article 2 of Directive 2002/14/EC;
  52. "UCITS management company": a management company authorised pursuant to Chapter 15 of the amended Law of 17 December 2010 on undertakings for collective investment;
  53. "holding company": a company with shareholdings in one or more other companies, the commercial purpose of which is to carry out a business strategy or strategies through its subsidiaries, associated companies or participations in order to contribute to their long-term value, and which is either a company:

    1. operating on its own account and whose shares are admitted to trading on a regulated market in the European Union; or
    2. not established for the main purpose of generating returns for its investors by means of divestment of its subsidiaries or associated companies, as evidenced in its annual report or other official documents;
  54. "non-listed company": a company which has its registered office in the European Union and the shares of which are not admitted to trading on a regulated market within the meaning of paragraph (1), point 14) of Article 4 of Directive 2004/39/EC;
  55. "securitisation special purpose entities": entities whose sole purpose is to carry on a securitisation or securitisations within the meaning of paragraph 2) of Article 1 of Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions and other activities which are appropriate to accomplish that purpose;
  56. "branch": when relating to an AIFM, a place of business which is a part of an AIFM, which has no legal personality and which provides the services for which the AIFM has been authorised; all the places of business established in the same Member State by an AIFM with its registered office in another Member State or in a third country shall be regarded as a single branch.

To read this Brochure in full, please click here.

Footnote

* In the French version "société anonyme".

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.