How To Become An Asset Manager In Luxembourg?
The Grand Duchy of Luxembourg is one of the leading European countries in terms of economic activities and financial investments. Indeed, Luxembourg is seen as a welcoming country for entrepreneurs wishing to set up their company or to start their activity. There are also many advantages for those wishing to invest their assets in a stable financial centre.
By creating their company in Luxembourg, entrepreneurs enjoy favourable conditions such as simplified administrative formalities, no professional taxation, no company car tax, as well as social costs ranging amongst the lowest in Europe. The favourable tax regime of the Grand Duchy enables the country to be highly competitive on the European market.
Thanks to its geographical position, Luxembourg is one of the biggest European business hubs along with London, Paris or Switzerland nowadays. Studies conducted by the Luxembourg government and published in July 2015 have shown an increased economic growth, only strengthened by a 5% increase in GDP in 2014 and the ever-growing number of companies incorporated in Luxembourg.
Luxembourg is in second position behind the United States in the funds industry. Indeed, the Grand Duchy has more than 2.500 billions assets managed in the place. The number of fund increases each year, according by the CSSF.
Thanks to its political stability , its regulation and its funds diversification, Luxembourg is the place to be to become an asset manager and to find success.
Asset Manager In Luxembourg | Hance Law Firm
Becoming an asset manager necessitates researching the form of company to choose, as well as the conditions pertaining to the authorization of the company or the qualifications of the shareholders.
I. Incorporation of a management company
Which social form should be adopted ?
A management company is defined as follows: “ a company carrying an activity consisting in providing investment services to third parties in a professional capacity ”. It may be incorporated as a :
public limited company (S.A.)
limited liability company (S.A.R.L.)
“ The authorization granted for an activity which includes the management of third party funds can only be given to legal persons incorporated as either a public law institution or a commercial company ”.
The social object of the management company shall be limited to the management of investments funds, of which at least one must have been created in Luxembourg.
A required financial base ?
Luxembourg’s Regulatory Body (the Commission de Surveillance du Secteur Financier, “ CSSF ”) imposes a financial base for all professional activities performed in the financial sector. As such, if the company does not manage third party funds, funds that it has not created itself, the company must bring forward proof of a financial base amounting to a minimum €125,000. Otherwise, the company “would have to provide proof of a paid-up share capital of minimum €620.000” to obtain the approval of the CSSF.
How to obtain this approval ?
A file must be assembled and must contain several documents, such as the shareholder’s resumes, a presentation of the company’s structure, the range of activities it carries out …
The file must be submitted to the CSSF for approval. The authorization is delivered for an indefinite period and enables the management company to begin its activity.
II. Structure of the management company
A head office in Luxembourg
The CSSF subordinates its authorization “ to the proof of the existence in Luxembourg of the central administration of the applicant ”. This refers to the head office of the company, considered as the place where the premises of the company will be located and its activity will be carried out.
The company will also have to demonstrate it has a sound administrative and accounting organisation as well as adequate internal control procedures.
Supervision of shareholders
The law of March 12th 1998 specifies that the authorization of a legal person by the CSSF is subject to the disclosure to the Commission of the identities of the shareholders’ or direct members’ of the company. Any change must be notified to the Commission.
Moreover, the shareholders will have to prove their professional repute: “ the professional repute is assessed on the basis of the criminal record and any element which may help establishing that the concerned persons enjoy a good reputation and present all guarantees which may ensure irreproachable business conduct ”.
Furthermore, the person in charge of the management must possess adequate professional qualifications, such as the practice of comparable activities “ with a high level of responsibilities and autonomy “.
Which activities can a management company practice ?
Management companies can practice the following activities:
management of portfolios of investments. It consists in managing portfolios of financial instrument on behalf of their clients;
investment advice. It consists in providing recommendations to clients, regarding one or several transactions involving financial instrument ;
safekeeping and administration of units of UCIs, an ancillary service offered to the client ;
the purchase, sale, subscription, exchange, redeeming, holding or underwriting of particular financial instruments.
If you had any doubts or questions regarding the incorporation of your management company in Luxembourg, we hope that we have been able to shed some light. Hance Law Avocats will help you to go through the required formalities, will support your project, and the qualified members of our team will provide you with customized advice.