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Luxembourg has moved swiftly to publish the bill of law implementing AIFMD 2 and UCITS 6 into national law.
On 3 October 2025, bill of law no 8628 implementing Directive (EU) 2024/927 on delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services and loan origination by alternative investment funds, commonly known as “AIFMD 2”, was submitted to the Luxembourg Parliament.
Key developments
The amendments will impact both the law of 2010 on UCIs (UCI Law) and the law of 2013 on AIFMs (AIFM Law). Most of the provisions in AIFMD 2 are being implemented “as is” into the UCI Law and the AIFM Law.
However, Luxembourg is taking the opportunity to introduce some additional flexibilities into these laws and has also provided important clarifications in the “commentary” (commentaires des articles), particularly regarding substance requirements, ancillary activities, delegation, loans and certain definitions which are helpful in the interpretation of AIFMD 2 and key to the Luxembourg fund industry.
Additional legal changes
Liquidity management tools: the bill of law authorises AIFs and UCITS to use additional liquidity management tools beyond those provided for in AIFMD 2.
Consumer loan restrictions: Luxembourg has chosen to prohibit AIFs that originate loans from granting loans to consumers within the country and to prohibit AIFs from servicing credits granted to such consumers on its territory although the commentary is more nuanced on the latter point.
Auditor report exemption: there will be a new exemption in Article 26 of the UCI Law from the requirement for a report by an independent auditor for any issue of units in exchange for contributions in kind, provided that unitholders are treated fairly. The commentary further clarifies that this exemption, although introduced for SICAV UCITS, should also apply to UCITS set up as common funds (fonds commun de placement or FCP) as well as for redemptions in kind. As UCITS can also be operated as ETFs, this change will increase the competitiveness of the Luxembourg environment not only for UCITS but also for ETFs, if the management body of the fund has the option to accept a contribution of assets in kind without such a report.
Additional flexibilities
As indicated above, the commentary provides important explanations on topics such as:
- Ancillary activities, the scope of which has been enlarged by AIFMD 2. This will give asset managers the opportunity to optimise the structuring of their entities (such as effectively combining skills and infrastructure within a single entity) in a cost-efficient manner.
- Substance: the new requirements should not have an impact in Luxembourg, as these are already generally required under Luxembourg administrative practice.
- Loan origination: there are clarifications regarding the 20% diversification rule, the 5% retention rule and leverage, which will ultimately benefit funds that originate loans.
Next steps & timeline
The bill of law is now subject to the legislative process and may therefore change. Once adopted by the Luxembourg Parliament, it will enter into force on 16 April 2026 except for the provisions on reporting which will only apply as from 16 April 2027.
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.
