The Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), issued on 6 July 2017 the fourth version of its frequently asked questions on the laws and regulations governing undertakings for collective investment in transferable securities (UCITS) (UCITS FAQ) and the eleventh version of its frequently asked questions on Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (AIFMD FAQ).
The only update to the AIFMD FAQ relates to the impact on Luxembourg alternative investment funds (AIFs) of Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs Regulation). As per the PRIIPs Regulation, all PRIIPs manufacturers must issue a PRIIPs KID before retail investors may invest in the relevant PRIIP (including investment funds).
The CSSF confirmed that Luxembourg AIFs that are offered or sold to retail investors must issue a PRIIPs KID as of 1 January 2018 unless they publish a UCITS key investor information-like document (UCITS KIID-like document). Such an exemption would apply to undertakings for collective investment subject to Part II of the Luxembourg Law of 17 December 2010 on undertakings for collective investment, as amended (Part II Funds), specialized investment funds (SIFs), investment funds in risk capital (SICARs) and reserved alternative investment funds (RAIFs).
Per the updated AIFMD FAQ, additional sub-funds and classes launched after 1 January 2018 may also benefit from the exemption if the Luxembourg AIF in question has issued a UCITS KIID-like document prior to that date.
The CSSF also confirmed that Luxembourg AIFs that are offered or sold only to professional investors need not issue a PRIIPs KID. In that respect, the CSSF strongly recommends that Luxembourg AIFs that fall into this category amend their offering documents to note expressly that they are offered or sold only to professional investors and that they will not issue a PRIIPs KID. As an alternative to such an amendment to the offering document, the Luxembourg AIF may complete, sign and send to the CSSF the self-assessment form which is available on the CSSF’s website. This form serves as an assessment of the status of the AIF on whether it is only offered or sold to professional investors.
The CSSF also confirmed that the PRIIPs KID does not need to be provided to investors outside the European Economic Area (EEA), unless the non-EEA country requires it.
Furthermore, a PRIIPs KID must be provided each time an investor makes a subscription in the same class, except in the case of an investment through a savings plan with a regular subscription.
The CSSF also advised that it does not require receipt of drafts of the PRIIPs KID but only the final version thereof (or, if applicable, of the UCITS KIID-like document), as well as any updates. The CSSF took the same approach that it took for the UCITS KIID and confirmed that the PRIIPs KID will not be visa-stamped by the CSSF.
Finally, it should be noted that these provisions on the PRIIPs KID are consistent with the guidelines included in the Q&A issued by the Association of the Luxembourg Fund Industry (ALFI) on the PRIIPs KID (ALFI Q&A). Please see our articles ALFI Issues Q&A on PRIIPS KIDs and ALFI issues second version of Q&A on PRIIPs KIDs on the ALFI Q&A.
The updated UCITS FAQ includes the following new topics:
Independence requirements set forth in Chapter 4 of the Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 (UCITS V)
Impact of the PRIIPs Regulation
ESMA Opinion on UCITS share classes