Legal and technical

Investment funds are called Undertakings for Collective Investment (UCI) and can be set up as such under the Law of 17 December 2010 (the 2010 Law), which will repeal the former Law of 20 December 2002 (the 2002 Law) as from 1 July 2012. Alternatively, investment funds can be created as Specialised Investment Funds (SIF) and thus be subject to the Law of 13 February 2007 (the SIF Law).

Funds established under Part I of the 2010 Law comply with the UCITS Directive and hence benefit from a European passport, which means that they are freely marketable throughout the EU, provided local marketing requirements are met. By contrast, Part II investment funds – such as hedge funds, private equity funds, real estate funds and derivative investment funds – do not qualify for the European passport. Funds created under the 2010 Law may be sold to both retail and institutional investors.

The SIF law provides a regime for well-informed investors. Pursuant to article 2 of the SIF law, a well-informed investor is defined as an institutional investor, a professional investor or any other investor who meets certain conditions.

Luxembourg investment funds are either created under a contractual form (fonds commun de placement, FCP) or a corporate form (société d’investissement à capital variable, SICAV and société d’investissement à capital fixe, SICAF respectively). These different legal entities may have one or more sub-funds, each with a different investment policy.

Investment companies in risk capital are regulated by the Law of 15 June 2004 (the SICAR Law) and designed for private equity and venture capital investments.

The brochure “Luxembourg Regulated Investment Vehicles” gives a detailed description of the legal and regulatory requirements applicable in Luxembourg.

The Legal Observatory of the Luxembourg Financial Sector (Codeplafi) provides a library of all Luxembourg legislation relating to the banking, finance and insurance sectors.

ALFI has published numerous guidelines and recommendations over the years.

ALFI has also prepared a trilingual list of those terms that are commonly used in the Luxembourg investment fund sector.