UK AIFMs May Continue To Manage Luxembourg AIFs After No-Deal Brexit As Third Country AIFMs Subject To Certain Conditions

The CSSF issued a press release to alternative investment managers authorised in accordance with AIFMD in the United Kingdom and managing Luxembourg AIFs. UK AIFMs shall provide the CSSF with certain documents if they intend to continue their activities in Luxembourg as third-country managers after a hard Brexit.

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UK AIFMs which have not submitted a Brexit notification before 15 September 2019 will be considered as third-country managers.

UK AIFMs which have submitted a Brexit notification before 15 September 2019 may rescind their notification and opt for the status of third-country manager.

In both cases, UK AIFMs must file certain documents with the CSSF before 31 October 2019 in order to continue their activities in Luxembourg as third-country managers after a hard Brexit.

Context

With the deadline of 31 October 2019 approaching and in light of growing uncertainty as to how Brexit might play out, Luxembourg published two laws on 8 April 2019 regarding measures to be taken in relation to the financial sector in the event of a withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (the Brexit Laws).

The purpose of the Brexit Laws is in particular to anticipate the loss of passporting rights for managers established in the UK which would result from a hard Brexit, since these entities will then be considered to be "third-country managers". The CSSF has now provided additional clarification by publishing Press Release 19/48 on mandatory Brexit notifications.

Scope

Press Release 19/48 only applies to Luxembourg alternative investment funds (AIFs) whose direct or indirect investors are professional and/or well-informed investors or such other equivalent local law standard, when applicable (Professional Investors) and the alternative investment managers authorised in accordance with Directive 2011/61/EU (AIFMD) in the United Kingdom (UK AIFMs) of those AIFs. Press Release 19/48 is based on the assumption of a hard Brexit occurring on 31 October 2019.

Actions to be taken

For UK managers which have not submitted a Brexit notification before 15 September 2019

They will not be entitled to continue their activities under the benefit of the transitional period provided for under the Brexit Laws. They will be considered as third-country managers and will lose the benefit of their existing passporting rights under the AIFMD as from the date of the hard Brexit. They are required to seek the approval...