Do you want to set up a Specialized Investment Fund in Luxembourg?
Specialized Investment Funds Legal Basis
he Law of 13 February 2007 (“SIF law”) as amended by the Law of 12 July 2013 on alternative investment fund managers (AIFM Law). The SIF regime is now divided into two parts :
- General provisions applicable to all SIFs, and
- Specific provisions applicable to SIFs which qualify as Alternative Investment Funds (AIFs) and which have to be managed by an authorised Alternative Investment Fund Manager (AIFM).
The Objective of SIFs
A Specialised Investment Fund (“SIF”) is a regulated, operationally flexible and fiscally efficient multipurpose investment fund regime for an institutional and qualified investor base.
A specialized investment funds shall be any undertaking for collective investment located in Luxembourg whose sole object is collective investment of its funds in assets with the aim to diversify investment risks and to make its investors benefit from the results of the management of such assets.
Luxembourg specialized investment fund is a vehicle reserves its securities to one or more informed investors and its constitutive or issuing documents provide that they are submitted to the provisions of the current laws.
Investments into a SIF are limited to institutional investors, professional investors, other types of investors who declare to be informed and either invest a minimum of 125,000 EUR or have an according appraisal with this respect from a bank, an investment firm or a management company
Specialized Investment Funds Legal Structure:
A Luxembourg SIF may be structured as:
- a common contractual fund (Fonds Commun de Placement – FCP)
- an investment company with variable capital (Société d’Investissement à Capital Variable– SICAV) or fixed capital (Société d’Investissement à Capital Fixe– SICAF).
SICAF / SICAV Legal Forms
- SA – société anonyme (Public Limited Company);
- Sàrl – société à responsabilité limitée (Private Limited Company);
- SCA – société en commandite par actions (Partnership Limited by Shares);
- SCoSa – société coopérative organisée sous forme de société anonyme (Cooperative in the Form of a Public Limited Company).
A SIF may be set up as an umbrella structure with multiple compartments. A SIF Law also allows the creation of specialised investment funds under a contractual arrangement, i.e., co-ownership (fonds commun de placement – FCP).
The minimum capitalisation amounts to 1,250,000 EUR (including a share premium, if any) to be reached within twelve months after approval by the CSSF.
SIF Protection of Investors
Protection of investors is secured by following various steps :
- Only informed investors are able to subscribe shares of a SIF. Individuals that would like to invest a minimum of 125,000 EUR have to be sponsored by a bank or a finance officer (an individual should receive a passport to invest into a SIF).
- Audit has to be undertaken by an external auditor.
- The principle of risk-spreading applies. No quantitative, qualitative, geographical or other type of investment restrictions does.Net assets may not be less than 1,250,000 EUR (to be reached within twelve months).