CSSF Issues Circular 18/697 On Organisational Arrangements Applicable To Depositaries Of Non-UCITS Funds

On 23 August 2018, the CSSF published a new Circular, CSSF Circular 18/697, which (i) specifies organisational requirements for depositaries of funds that are not subject to the PART I of the Law of 17 December 2010; (ii) modifies CSSF Circular 16/644 [see our article here] applicable to depositaries of Luxembourg UCITS subject to the Part I of the UCI Law of 17 December 2010 insofar as Annex 1 of the Circular 16/644 is replaced by Annex 1 of the new Circular 18/697 and (iii) repeals Chapter E of IML Circular 91/75, as amended by CSSF Circular 05/177.

Moreover, the Circular clarifies and brings additional information on certain aspects of the AIFM Law of 12 July 2013 (AIFM Law), of the EU delegated regulation 231/2013 (so-called "Level II"), and also to some aspects of the Luxembourg SIF and/or SICAR laws, in laying down the expected governance principles and detailing the organisational requirements and the best practices applicable to depositaries of non-UCITS Funds.

The present article aims at highlighting the main contributions of the new text.

Scope of Circular 18/697

The Circular is addressed to all non-UCITS depositaries:

Luxembourg credit institutions in the meaning of the PSF Law of 1993; Luxembourg investment firms which fulfil all the conditions of Art. 19(3) i) of the AIFM Law; Professional depositaries of assets that are not financial instruments, so-called "other assets", which fulfil all the conditions of Art. 19(3) i) 4th sub-paragraph of the AIFM Law; and EU credit institutions and investment firms or their branches which are acting or intend to apply for an authorisation to provide depositary services in Luxembourg. When these provide depositary services to:

AIFs managed by an Investment Fund Manager (IFM); The Luxembourg "Part II" funds managed by a fully authorised AIFM and having expressly specified in their constitutive documents that they are not distributed to retail investors established in Luxembourg; The Luxembourg "Part II" funds managed by a registered AIFM and having expressly specified in their constitutive documents that they are not distributed to retail investors established in Luxembourg; and SIFs and SICARs that do not qualify as AIFs or that qualify as AIFs but are managed by a registered AIFM. Main features of the generally applicable rules

The approval process The Circular revisits the documents necessary for the approval process. Depositaries who have received their approval before the entry into...

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