Two new regulations recently released by the CSSF will have a significant impact on regulated investment vehicles in Luxembourg. These regulations specify rules on risk management and conflict of interest policies for SIFs and SICARs. Adopted on the last day of last year, the regulations were published in the Official Gazette on 13 January 2016 and are bound to enter into force on 1 February 2016.
Do the regulations apply to all types of SIFs and SICARs?
No, the regulations only apply to the following SIFs / SICARs:
- SIFs / SICARs managed by a registered alternative investment fund manager (AIFM); or
- SIFs / SICARs managed by a manager benefiting from an exemption to get authorized or to register by virtue of the Law of 12 July 2013 on alternative investment fund managers (the AIFM Law);
- SIFs / SICARs which do not qualify as alternative investment funds (AIFs) according to the rules set out in the AIFM Law.
SIFs / SICARs managed by an AIFM authorized as per the AIFM Law or the AIFM Directive 2011/61/UE are not subject to this CSSF regulation.
What measures do 'in scope' SIFs and SICARs need to take?
For SIFs, the CSSF regulation sets out criteria to be used in the assessment of the adequacy of their risk management systems. It also specifies de minima criteria for the detection of conflicts of interest, together with guidelines on the policies, processes and measures the SIF must implement in order to avoid as much as possible the conflicts of interest. Existing SIFs, who were subject to the 2012 regulation, are required to review their organisation and documents in order to ensure full compliance.
SICARs, who unlike SIFs, have not yet been subject to such regulation, must establish appropriate measures to avoid and manage conflicts of interests. The new CSSF regulation provides de minima criteria to be used for the detection, prevention and management of conflicts of interest, as well as guidelines for the setup of an efficient and operational policy within the SICARs organization.
How can my business ensure compliance?
By 31 March 2016, the 'in scope' SICARs must provide the CSSF with documented evidence of their compliance with the regulation. The SIFs, on the other hand, are called to check the adequacy and compliance with the regulation and, if needed, to update their existing policies and procedures and to inform the CSSF if required.
ATOZ can assist both SICARs and SIFs with the assessment of their policies and processes, with the implementation of the requirements set out by the CSSF regulations in the fund documentation and with the communication to the CSSF.
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.