Over the last 12 months, Luxembourg industry practitioners, with the support of the Luxembourg government, have been designing the legal framework for a new type of Luxembourg alternative investment fund ("AIF") managed by an authorised AIFM, and this project is nearing completion so that the legislative process can start imminently.
This new type of AIF, referred to in the working documents as reserved alternative investment fund ("RAIF"), has substantially the same characteristics (and flexibilities) as a SIF (1) -AIF, the main difference being that the RAIF will not be subject to the supervision of the Luxembourg supervisory authority (the "CSSF").
Contrary to a SIF, there will be no need for CSSF approval for the creation and launch of a RAIF and, similarly, no authorisation will be required from any supervisory authority in the event of changes to a RAIF's constitutional documents, information documents or other documents governing the functioning of the RAIF. Investors in a RAIF will thus not have the benefit of the increased investor protection which the supervision by a supervisory authority entails, as is the case with the SIF, but the timeframe within which a RAIF can be set up and launched will be more attractive from a time-to-market perspective.
Because the RAIF is an AIF managed by an authorised AIFM (based in Luxembourg or in another EU Member State), the AIFM will ensure that the RAIF complies with all requirements of the AIFMD. Indirect supervision of the RAIF is therefore ensured through the supervision performed on its AIFM by the latter's supervisory authority.
In all other respects, the RAIF will have the same characteristics as a SIF-AIF, notably as regards the various different legal forms (corporate and contractual) which are available, no limitation as regards eligible assets or investment policies, the possibility to have multiple compartments and multiple classes, flexible subscription, redemption and distribution features and the tax regime of the taxe d'abonnement at the 0.01% rate (or nil rate in certain circumstances).
If a RAIF restricts its investment policy in its constitutive documents to investments in risk capital, it is not required to operate under the principle of risk spreading and it will be subject to the same tax regime that currently applies to SICARs. (2)
As the RAIF is an AIF managed by an authorised AIFM, it will have the benefit of the European passport granted by the AIFM Directive for marketing to professional investors in the EU.
Assuming the legislative process will take approximately six months, it can be expected that this new type of AIF will be available over the course of Q2 in 2016.