Investment fund in Luxembourg in the form of SLP. Service offer

There are different types of funds in Luxembourg, for example:

• unregulated alternative investment funds;
• funds regulated by the AIFMD (Alternative Investment Fund Managers Directive);
• supervised funds (e.g. SIF and SICAR), registered funds (RAIF), and various types of retail funds (“Part II” funds, UCITS).

In July 2013, Luxembourg passed the Law on Alternative Investment Fund Managers (FIA fund managers), which, in addition to the introduction of EU Directive 2011/61/EU (AIFMD / Alternative Investment Fund Managers Directive), modernizes the legislation governing investment instruments, and also creates a new form of partnership.

Along with the already existing Common limited partnership (Société en Commandite Simple, abbreviated CLP), a Special limited partnership (Société en Commandite Spéciale abbreviated SLP) was introduced. The main difference between these partnerships is the fact that the SLP has no legal personality.

A fund (i.e. any structure that accumulates investors' funds and makes investments) is not required by default to be regulated as SIF[1], SICAR[2], UCI in accordance with Part II[3], etc. The only mandatory regulatory element is provided in the AIFMD[4] if total assets exceed the thresholds indicated below.

Unregulated Alternative Investment Funds (unregulated AIFs) are any investment structures in Luxembourg that carry out investment activities and are not subject to the AIFMD, i.e. because the total assets under management (AuM) are less than:

• EUR 100 million using leverage; or
• EUR 500 million if no leverage is used and no repayment is allowed for at least 5 years).

AIFMD regulation alone does not provide benefits, it requires AIF to comply with risk management rules, additional compliance, reporting, etc.

Accordingly, partnerships can be both unregulated and regulated structures:

• Unregulated CLPs / SLPs are primarily subject to Company Law;
• Regulated CLPs / SLPs are subject to specific regulations applicable to the selected regulated instrument, such as SIF law or SICAR law. In addition, CLPs and SLPs may be subject to AIFMD. Thus, the regulations applicable to CLPs and SLPs depend on the respective regulatory regime.

Certain regulated Luxembourg-based AIFs may create cells (which are separate investment pools). These are SIF and SICAR (including RAIF), but not regulated by the AIFMD directive.

SIF can only invest in diversified portfolios (at most 30% of investments in the same asset or similar assets, i.e. assets with the same risk).

SICAR can only invest in risk capital (e.g. venture capital, private equity, etc.).

Unregulated AIFs (except for simple “AIFs Above Thresholds”) cannot create segregated cells, however they do not have any investment restrictions.

In the absence of permission to create cells by virtue of the law, segregation can be "simulated" (i.e., achieve the main objectives that are set in segregation) by means of:

• certain agreements with investors (i.e., shareholder agreements) - please note that this will require additional costs for the services of lawyers for the preparation of documents;
• using an SPV or a master feeder structure - will require additional costs for each additional organization;
• or all of the above methods.

As a basic and simplest option for a structure to attract investment in Luxembourg, as well as a quick one in terms of implementation time, we suggest you consider creating a Luxembourg partnership (SLP = SCSp) under the management of a private limited liability company (SARL).

It is ideal for funds that invest in one or more asset classes. An unregulated fund does not need to diversify its portfolio.

1. Incorporation of a Private Limited Liability Company (SARL) that will act as the "Management Company" for an unregulated fund, i.e. will be appointed General Partner at SLP.
2. Creation of a Partnership (SLP) that will act as an unregulated fund. An SLP consists of at least one general partner (“GP”) and one or more limited partners.
3. Issuance of a Private Placement Memorandum (PPM): not mandatory for an unregulated fund, but recommended to avoid disputes between investors themselves and between investors and managers.
4. Initial notification to the financial regulator in Luxembourg (CSSF). The Commission for Supervision of the Financial Sector (FR. Commission de Surveillance du Secteur Financier, CSSF) is a state organization in Luxembourg, whose main task is to control and regulate the financial sector of the Luxembourg economy.
5. Further administration of structures:
   1. Compliance with accounting, taxation and corporate secretarial requirements for both organizations;
   2. FATCA and CRS requirements fulfillment.

Management Company

Fund

Private Placement Memorandum (PPM)

Notification of the financial regulator in Luxembourg

FATCA and CRS

Other

[1] Specialized Investment Fund (“SIF”) in accordance with the Law of 13 February 2007 on Specialized Investment Funds, as amended (“Law on SIF”).

[2] Risk Capital Investment Company (“SICAR”) in accordance with the Risk Capital Investment Companies Act of June 15, 2004, as amended (the “SICAR Act”).

[3] A collective investment undertaking (“UCI under Part II”) under Part II of the UCI Act of 17 December 2010, as amended (the “UCI Act”), may be organized as either an SCS or an SCSp. However, an undertaking for collective investment in transferable securities (“UCITS”) under Part I of the UCI Act cannot be organized in the form of an SCS or an SCSp. Unlike SIFs and SICARs, UCI under Part II can be sold to any type of investor, including retail investors.

[4] Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers.

[5] The cost of services is effective on the date of sending this offer.

[6] An updated register of beneficiaries is also submitted every time the beneficial ownership structure is changed.

[7] The cost does not include the introduction of additional changes not agreed in the TOR, as well as consultations on further application and regulation.

[8] Administration includes the management of the organizations (as directors of the General Partner / Fund, if applicable), provision of guidance support to external directors, and related administration services. Given the volatile nature of these services, they are provided on an elapsed time basis at hourly rates.

[9] The cost of accounting and audit services depends on the volume of transactions made, i.e. on the time spent by a specialist on processing documents. Billed on an hourly basis.