Luxembourg AIFM Law: Impacts On The Banking & Finance And Capital Market Sectors

Potential impacts of the new Luxembourg law on alternative investment fund managers adopted on 10 July 2013, effective since 15 July 20131, and implementing the Directive 2011/61/EU of the European Parliament and of the Council of 27 May 2011 regarding alternative investment fund managers (the "AIFM Law") on the Luxembourg Banking & Finance as well as the Capital Market sectors:

1) Private Placements

The AIFM Law impacts, inter alia, a so-called private placement in Luxembourg. A private placement consists in marketing of securities to a relatively small number of selected investors as a way of raising capital and, as such, does not principally fall within the scope of the Luxembourg law of 10 July 2005 on prospectuses for securities, as amended. In this respect, the Luxembourg supervisory authority of the financial sector (Commission de Surveillance du Sector Financier - the "CSSF") confirms in its recently published Frequently Asked Questions (dated 19 July 20132) that both EU and non-EU alternative investment fund managers (the "AIFM") may continue to market both their EU and non-EU alternative investment funds (the "AIFs") in Luxembourg under the existing Luxembourg private placement rules while remaining unaffected by the provisions of the AIFM Law until 22 July 2014 (being, however, uncertain as to whether this applies only to existing placements and/or also to new placements of existing AIFs). Thereafter, the EU AIFMs will have to comply with the provisions of the AIFM Law, being an authorisation by or registration with the CSSF as an AIFM (if other criteria are met and/or relevant exemptions are not applicable). In addition, further to ESMA's approval of centrally-negotiated co-operation arrangements with 34 non-EU securities regulators, the CSSF announced via press release on 31 May 2013 that it has signed a memorandum of understanding with each of these non-EU authorities such as, inter alia, Hong Kong, USA, Singapore, and Switzerland. As a consequence, those non-EU AIFMs may continue their marketing activities for EU and non-EU based AIFs in Luxembourg under the private placement regime until July 2015 (but after 22 July 2014 subject to the compliance of some requirements of the AIFM Law) and potentially with a passport thereafter.

2) New PSF

By amending the Luxembourg law of 5 April 1993 regarding the financial sector as amended (the "PSF Law") the AIFM Law (laying down the mandatory appointment of an independent depositary by...