Luxembourg Transposition of the UCITS V Directive

On 12 May 2016,  the Luxembourg Law of 10 May 2016 transposing the Directive 2014/91/EU  of the European Parliament and of the Council of 23 July 2014 amending Directive  2009/65/EC on the coordination of laws, regulations and adminstrative provisions relatting to undertakings for collective investment in transferable securites (“UCITS”) as regards depositary functions, remuneration policies and sanctions (the “UCITS V Directive”) has been published on the Luxembourg Memorial A (Mémorial A 88 of 12 MAY 2016).

The new rules on depositaries of UCITS aim at clarifying their functions and improve the provisions governing their liability.

As far as remuneration policies are concerned, UCITS management companies should mainly be remunerated on a long-term basis, in order to avoid a decision-making process entailing undue risks for investors, and in proportion with the specific consistency and type of the fund; the remuneration system shall be mentioned in the annual report for each UCITS.
With respect to the system of violations and punishment, detailed provisions regard the sanctioning powers and duties of the Commission de Surveillance du Secteur Financier (“CSSF”) to be harmonised with those of other European financial authorities.

The UCITS V Directive is now implemented into the Luxembourg framework through the introduction of relevant amendments in

  • The Luxembourg Law of 17 December 2010 on undertakings of collective investment, as amended (“UCI Law”), and 
  • The Luxembourg Law of 12 July 2013 on alternative investment fund managers, as amended (“AIFM Law”).

The new legal provisions will be effective as from 1 June 2016.