Bill Of Law Implementing AIFMD Now Deposited With Luxembourg Parliament

On 24 August 2012, the bill of law (the "Bill") transposing the AIFM Directive has been submitted to the Luxembourg Parliament for approval.

The Bill purports to faithfully transpose the provisions of the AIFM Directive while also introducing a number of innovations which are designed to facilitate and improve the development of the alternative investment funds industry as a whole.

The Bill is expected to be adopted at the end of 2012, which is 6 months before the deadline for the AIFM Directive to be implemented and applied in all EU Member States. By transposing the AIFM Directive into law still in 2012, Luxembourg authorities intend to allow enough time for the industry to prepare for complying with any new requirements.

We have selected from the Bill a few topics which we consider of particular interest and have, for each of them, briefly developed what we deem to be their salient points and features:

the overall structure of the Bill; the new regime applicable to Managers; the new regime applicable to Depositaries; the new Special Limited Partnership; the new Carried Interest regime. For the purpose of this Newsflash, a "Full Scope AIF" refers to an alternative investment fund which qualifies as alternative investment fund ("AIF") under the AIFM Directive and which, on the basis of the provisions of the Bill, is required to be managed by a duly authorised AIFM (including AIF the AIFM of which benefits from, but has made no use of, the "small manager" derogation provided for in Article 3.2 of the AIFM Directive which has introduced certain de minimis thresholds).

  1. The overall structure of the Bill

    Although the AIFM Directive is more a "manager" directive than a "product" directive, it comprises a number of provisions which impact not only the managers but also the investment vehicles (the AIF) they manage.

    This is principally the reason why the Bill does not only transpose the AIFM Directive (Articles 1-59), but also amends a number of other existing laws such as Part II of the UCI Law (Articles 60-125), the SIF Law (Articles 126-152), the SICAR Law (Articles 153-172) and the Pension Fund Laws (Articles 173-177).

    The changes made by the Bill to Part II of the UCI Law, the SIF Law and the SICAR Law aim to a large extent at distinguishing between, on one hand, those Part II Funds, SIFs and SICARs that are Full Scope AIF (where the "product" requirements of the Directive apply) and, on the other hand, those Part II Funds, SIFs and SICARs that are either not AIF (this can only be the case for SIFs and SICARs because the Bill provides that all Part II Funds qualify as AIF) or, that are AIF but are managed by a manager with assets under management less than the de minimis thresholds introduced by the Directive. For the latter Part II Funds, SIFs and SICARs, the requirements remain substantially unchanged compared to their current regimes (including their depositary regime, see Section III of this Newsflash).

    A new non-UCITS and non-AIFM management company regime is introduced by the Bill through an amendment of the current Chapter 16 of the UCI Law (see Section II.4. of this Newsflash).

    The Law on the Financial Sector is also amended (Articles 178-179) principally to introduce a new type of Depositary (see Section III. of...

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