On January 18th 2016 the draft law No 6936 was deposited with the Luxembourg Parliament, amending the law of June 15th 2004 on SICARs (the “SICAR Law”), the law of February 13th 2007 on SIFs (the “SIF Law”), the law of December 17th 2010 on UCIs (the “UCI Law”) and the law of July 12th 2013 on AIFMs (the “AIFM Law”) (the “Draft Law”). The Draft Law has been approved by the Luxembourg Council of Government on December 16th 2015 and it is now expected to be approved by the Luxembourg Parliament.
Atypical assets such as wine, diamonds, art or animals to be eligible assets only for SIFs and Part II UCIs dedicated to professional investors
The principal aim of the Draft Law is to revise the scope of the SIF Law in order to enhance investor protection, in view of the increasing number of SIFs investing in atypical assets such as art, wine, diamonds or animals. Such assets, usually illiquid, may entail significant risks for investors. Therefore, the Draft Law proposes to maintain the current regime for SIFs the units of which are reserved only to professional investors within the meaning of the annex II of Directive 2014/65/UE on markets in financial instruments (the “MiFID II Directive”), such as banks, investment firms or national governments. Such SIFs will be entitled to continue to invest in all types of assets.
On the contrary, with regard to SIFs accessible to investors other than professional investors under the MiFID II Directive, the CSSF will be entitled to determine the types of eligible assets in which such funds are allowed to invest by means of a regulation. Under the same approach, the Draft Law confers the power to the CSSF to issue a regulation which will determine the types of eligible assets for UCIs under Part II of the UCI Law. The Draft Law provides that such CSSF regulations may provide for exemptions for SIFs and Part II UCIs or their sub-funds, which, as per the provisions of their issuing document, were authorised to invest in non-eligible assets before the entry into force of the regulations.
Further, the Draft Law aims to authorise closed-ended UCIs under Part II of the UCI Law to issue units or shares at a price other than the price based on their net asset value.
Lastly, the Draft Law updates the SICAR Law in order to align its provisions with the SIF Law and updates some definitions contained in the AIFM Law.
The Draft Law is available at: