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2 Classification of Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
2.01 The object of Luxembourg-based UCIs is the collective investment of capital raised from investors. Depending on the nature of the assets to be collectively invested (instruments governed by Directive 2009/65 or other assets), the type of investor canvassed (traditional private investors, professional or well-informed investors), the marketing method used (public offering or private placement), or the area in which the fund is marketed (inside or outside the EEA), Luxembourg-based UCIs fall into one of the following three categories: These three categories of...
Contents »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
9 Dissolution and Restructuring of Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
9.01 The liquidation of UCIs is governed by the relatively distinct rules explained at 9.29 et seq because of the two different types of structures for collective investment schemes which may be established either as an incorporated vehicle in the case of SICAVs and SICAFs or a contractual vehicle in the case of FCPs. Only the principal features of the regime will be examined. For further information, the reader is referred to the more detailed explanations contained in books and articles devoted more specifically to company liquidations.1 The liquidation of FCPs...
4 Establishment of Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
4.01 For years the CSSF had taken the view that a UCI could not be authorized if its promoter did not meet a number of requirements. Thus, Luxembourg-based UCIs always had to have a promoter. The first major exception to this principle was created under the framework for SIFs,1 whereby such funds can be established in the Grand Duchy of Luxembourg without the need for a promoter, as further described in this chapter. This exception also applies to SICARs. It has now been extended to UCITS. Directive 2009/65 clearly indicates that a management company can not be...
Foreword to the Second Edition »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
Index »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
1 Introduction »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
1.01 Rather than introducing a general definition of undertaking for collective investment (UCI), the authors of the 2010 Act, in line with the 2002 Act and the previous 1988 Act, sought to define its constituent elements.1 Three basic criteria are required to constitute a UCI. A UCI is an investment structure: 1.02 Whereas the first of those three criteria—the raising of funds from the public—may be dispensed with in certain cases specified by law, the second and the third ones must always be met. These criteria were considered and clarified by the CSSF, the...
List of Abbreviations »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
7 Marketing the Units of Undertakings for Collective Investment in the Grand Duchy of Luxembourg »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
7.01 The legal rules governing the marketing of a UCI’s units differ according to whether the UCI in question is a Luxembourg-based UCI or a foreign UCI.1 In the latter case, an additional distinction is made between UCIs governed by Directive 2009/65 and other UCIs. 7.02 The marketing of units or shares by a Luxembourg-based UCI may be subject to certain provisions of the Act of 10 July 2005 and regulations made under Directive 2003/71. These requirements are examined separately at 7.34 et seq. However, UCIs may alternatively be governed with respect to public...
6 Parties Involved in the Operation of Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
6.01 The general business of all Luxembourg-based UCIs is conducted by persons invested with broad management and administration powers (‘conducting persons’ or ‘dirigeants’).1 Depending on a UCI’s legal form, the type of conducting person varies. FCPs are managed by a management company while investment companies are run by a board of directors or a management board (in a two-tier structure) (SA), or a general partner (SCA and SCS), or a board of managers (SARLs). These management bodies may delegate all or part of their daily management duties to other natural...
3 Permitted Activities for Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
3.01 The permitted investment activity of a coordinated UCITS is strictly defined by Directive 2009/65 and the 2010 Act.1 According to this legislation, a UCITS’ investments must comprise only one or more of the following: 3.02 The terms ‘comprise only’ do not prevent a coordinated UCITS from holding certain assets other than those listed above subject to compliance with certain criteria and limits as described at 3.88 et seq. They merely require that the only investment objective a UCITS can have is to invest in such assets. A coordinated UCITS may never adopt a...
13 Risk Capital Investment Companies »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
13.01 Luxembourg is no newcomer to investment in risk capital.1 Since the beginning of the 1980s, successive laws on UCIs have invariably allowed this type of investment. Circular 91/75 provides a framework of particular rules2 to UCIs ‘the principal object of which is the investment in risk capital’. 13.02 Moreover, Luxembourg has traditionally been home to risk capital companies not governed by the legislation on UCIs. As we have seen,3 an investment vehicle can avoid the status of UCI—even when it invests according to the principle of risk spreading—if it does...
5 Securities Issued by Undertakings for Collective Investment »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
5.01 In this chapter1 we will examine the different types of securities a UCI may issue, the rights they represent, and the conditions governing their transfer. 5.02 There is a fundamental distinction between units issued by FCPs and units or shares issued by investment companies. FCPs are essentially contractual schemes and may therefore issue all kinds of units, to which they may attach significantly varying rights. In contrast, investment companies are subject to the requirements applicable to the type of company that they have chosen. The promoters’ creativity...
14 Securitization Vehicles »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
14.01 As its name indicates, securitization allows the conversion of various financial instruments into negotiable securities by assigning them to a separate undertaking (the securitization vehicle) which issues securities to investors.1 The cash flow generated by these instruments is used to finance distributions on and redemptions of the securities issued by the vehicle, which are in turn backed by the instruments.2 14.02 Several types of securitization have been developed over the years. A distinction should be drawn between synthetic securitization and...
8 Supervision Duties and Powers of the CSSF »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
8.01 An offshoot of the former Institut Monétaire Luxembourgeois, the Commission de Surveillance du Secteur Financier (the CSSF) is the public body charged with the prudential supervision of UCIs in the Grand Duchy of Luxembourg.1 The supervision exercised by the CSSF is an ongoing duty, is carried out exclusively in the public interest.2 8.02 For a long time the CSSF exercised its supervisory duties essentially in relation to investment products, ie UCIs. Although it also supervised service providers, they were considered for the most part in relation to the UCI...
Table of Cases »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
Tables of Legislation, Treaties, and Conventions »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
10 Undertakings for Collective Investment and Criminal Law »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
10.01 UCIs may be confronted with criminal law in various situations, notably when their conducting persons violate certain strict rules set out in the 1915 and 2010 Acts and in the Act of 13 February 2007.1 That aspect has already been discussed2 and will not be examined further in this chapter. UCIs are also concerned by criminal law insofar as they must make sure they are not used for money laundering or terrorist financing purposes and that their conducting persons or certain service providers may come into possession of information protected by professional...
12 Undertakings for Collective Investment and European Law »
From: Collective Investment Schemes in Luxembourg: Law and Practice (2nd Edition)Claude Kremer, Isabelle Lebbe
12.01 The influence of European law on UCIs1 has been apparent since the implementation of Directive 85/611 concerning UCITS, as amended on several occasions,2 and most recently following Directive 2009/65 and AIFMD. 12.02 Now that Directive 2009/65 has been transposed into domestic national laws, it is the source for guidance on the interpretation of provisions in the national domestic laws transposing the Directive. Previously, if a Member State failed to transpose all or part of the Directive, an economic operator or a private citizen could seek to enforce its...
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