On 11 July 2023, the Luxembourg Parliament adopted a new law (the “Law”) amending the Luxembourg fund rules and bringing considerable developments to the Luxembourg fund toolbox.

Aiming at improving the competitiveness and appeal of the Luxembourg financial centre, the amendments relate to the five sectoral laws which currently regulate investment funds and fund managers in Luxembourg:

• the law of 15 June 2004, relating to the investment company in risk capital, as amended (“SICAR Law“);
• the law of 13 February 2007, relating to specialised investment funds, as amended (“SIF Law”);
• the law of 17 December 2010, relating to undertakings for collective investment, as amended (“UCI Law”);
• the law of 12 July 2013, on alternative investment fund managers, as amended (“AIFM Law”); and
• the law of 23 July 2016, on reserved alternative investment funds, as amended (“RAIF Law”).

The Law meets the demands of the professionals of the investment fund sector, as evinced by the promotion of new structuring options, the broadening of the ELTIFs legal structures, and the Marketing access to RAIFs’ alternative investment strategies by well-informed investors other than professional investors.

1. Entry into force 

The law will enter into force four days after its publication in the Luxembourg Memorial.

2. Key changes

• Harmonization of “well informed investor” definition: To increase consistency among SICAR Law, SIF Law and RAIF Law, the Law amends the definitions of "well informed investor" by (i) introducing a cross-reference to “professional investors” as defined in the MiFID II; and (ii) lowering the existing investment threshold to qualify as well informed investor from EUR 125,000 to EUR 100,000.
• Time extension to reach minimum capital: For funds governed by SICAR Law, SIF Law and RAIF Law, the period by which the minimum capital must be reached has been extended from 12 months to 24 months. Accordingly, an extension has been provided also for funds subject to Part II of the UCI Law, from 6 months to 12 months.
• Amendment and simplification of constitution formalities for SICAV/SICAF-RAIF: The Law has removed the requirement of a second notarial deed within 5 working days from the constitution of SICAV/SICAF-RAIFs incorporated by notarial deed.
• Restrictions to the issue and redemption of securities for SICARs and SICAVs/SICAFs: It has been prohibited by the Law the issue or the redemption of securities or partnership interests during any period where there is no depositary, as well as where the depositary is put into liquidation, declared bankrupt or subject to any similar proceedings.
• Introduction of delegation provisions in SICAR Law: Particular conditions for the delegation of functions have been introduced by the Law also for SICAR non-AIFs.
• Replacement of depositary of regulated funds: According to the Law, the contract concluded with the depositary must contain prior notice provisions. Notably, a replacement depositary must be appointed prior to the expiry of such notice period.
• Extension of bankruptcy rules to regulated funds: In case of judicial liquidation of UCITS, Part II UCIs, SIFs and SICARs, the Law envisages the possibility to apply to such liquidation all the rules governing bankruptcy.
• Additional legal forms for Part II SICAVs: Part II SICAVs are now allowed to take the corporate form of partnerships limited by shares (SCA), common limited partnerships (SCS), special limited partnerships (SCSp), private limited companies (Sàrl) or cooperatives in the form of a public limited company (SCSA), thus harmonizing the provision with SIF Law, SICAR Law and RAIF Law.
• Tax exemptions: Among tax exemptions, new subscription tax exemptions are envisaged, such as the subscription tax for Part II UCIs, SIFs and RAIFs (or their sub-funds) authorised as ELTIFs.