On December 2, 2015 the CSSF adopted regulation 15-03 (the “Regulation”), which clarifies the scope of application of article 46 of the Luxembourg law of 12 July 2013 on alternative investment fund managers (“AIFM”), and therefore the marketing of foreign alternative investment funds (“AIF”) to retail investors in Luxembourg.
The objective of the Regulation is to outline the procedure and the requirements for the marketing of AIFs organized under foreign law to retail investors in Luxembourg, regardless of whether these funds are managed by an AIFM established in Luxembourg, in a member state of the European Union (a “Member State”) or in a third country. Basically, well-informed investors, who are considered under the provisions of the Luxembourg fund laws of February 13, 2007, of June 15, 2004 or the EU regulations No. 345/2013, no. 346/2013 or no. 2015/760, as such, can be excluded from the scope of the Regulation.
Pursuant to the Regulation, the marketing of AIFs organized under foreign law to retail investors in Luxembourg is subject to the prior approval of the CSSF. This approval may under no circumstances be granted before the completion of the notification procedure required for the marketing to “professional investors”. In order to obtain an approval or an authorisation from the CSSF the following documents, among others, are needed:
- certificate from the competent supervisory authority of the home state that states that the AIF is subject to on-going supervision;
- addendum to the prospectus which includes information on the marketing in Luxembourg and other relevant information for investors;
- latest annual report of the foreign AIF;
- résumés of the management of the foreign AIF;
- copy of the agency agreement:
- for feeder structures, information on the master fund;
- information on the risk profile of the investment strategy;
- information on fees that may be charged to investors;
- information on the “paying agent” whom investors should contact in order to subscribe for-, redeem-, or convert units or shares;
- place where the prospectus, the articles of association and the most recent annual reports - / reports can be consulted;
- information on the publication of the net asset value; as well as
- the name of the Luxembourg newspaper which publishes the notifications to the investors.
The CSSF also clarifies that an authorisation for marketing to retail investors can, in addition to fulfilling the requirements of article 46 of the AIFM Law, only be granted to AIFMs who have the necessary permits in Luxembourg, in a Member State or in a third country.
If the authorization for marketing is granted, the respective AIF alternative investment fund will be entered into a register specially kept for this purpose by the CSSF.
In addition to the requirements of article 46 of the AIFM Law, the CSSF also provides for requirements for AIFs in respect of the timing of price determination, risk diversification and risk marketing, the level of borrowing, the use of financial derivative instruments, the investment diversification and the appointment of a financial institution to make payments to investors.
Besides, important information regarding the AIFs is in principle to be provided in French, English, German or Luxembourgish. Moreover, it has to be noted that the Luxembourg law of April 8, 2011 on the consumer protection, as amended, also applies to marketing to retail investors.
Finally, it should be noted that the termination of the marketing should be notified to the CSSF so that a deletion of the AIF from the relevant CSSF list can follow.