Luxembourg regulatory measures relevant for investment funds

1. COVID-19: The CSSF allows swing pricing/dilution levy factors to be applied beyond the maximum percentage set forth in prospectuses

In an FAQ update published on 20 March 2020, the CSSF stated that, in light of the current exceptional market conditions, they will allow for swing pricing/dilution levy factors to be applied at a percentage exceeding the maximum percentage set forth in the prospectus of UCITS, Part II funds and SIFs on a temporary basis. No prior CSSF authorization or notification is required.
In case the prospectus does not specifically provide for the possibility for the indicated maximum percentage to be exceeded in exceptional market circumstances, the prospectus should be updated to that effect as soon as possible.
A decision to apply a higher percentage must be (i) adequately justified (ii) based on a robust internal process and methodology that provides for an accurate NAV representative of prevailing market conditions and (iii) take into account the best interest of the investors.
The decision to exceed the indicated maximum percentage must be notified to new and existing investors through the usual communication channels, such as a notice to shareholders, the fund’s website or through any other means as referred to in the prospectus.
The CSSF must be provided with a detailed notification of the decision to apply a higher percentage, including a specific explanation of the reasons for such decision.
The CSSF may request, on an ex-post basis, a justification of the level of the swing factor applied and documentary evidence that it was at all times representative of the prevailing market conditions.

2. COVID-19: New measures to permit holding meetings of shareholders and management bodies exclusively in digital form.

On 18 March 2020, the Luxembourg Government declared a state of emergency for a period of three months based on article 32(4) of the Luxembourg Constitution. Under the emergency powers granted by the Constitution, the Government has enacted by way of decree a number of temporary measures. These comprise new rules allowing all Luxembourg companies, private or listed, thus including investment funds in corporate form, to hold their shareholder meetings (including the annual general meeting) exclusively in digital form, without any participant attending in person. The same rules apply to meetings of management bodies such as boards of directors, boards of managers and supervisory boards. For more details, please refer to our website.

3. COVID-19: The CSSF extends the deadline for the submission of the 2019 Survey related to the fight against money laundering and terrorist financing

In its Circular Letter of 31 January 2020 the CSSF announced the annual online survey (“Survey”) for the year 2019 collecting standardised key information concerning money laundering and terrorist financing (ML/FT) risks. The Survey was launched on 3 February 2020 and answers had to be mandatorily submitted through the CSSF eDesk portal by 15 March 2020.
On the grounds that the requirement to file the Survey through the new eDesk portal has caused delays, and on an exceptional basis due to COVID-19, the CSSF announced in a Circular Letter of 17 March 2020 that they will grant an extension of four additional weeks for the submission of the Survey so that the new deadline for the submission of the Survey is now close of business on 10 April 2020.
The CSSF warns that, in case of failure to submit the Survey by close of business on 10 April 2020, the CSSF will consider that the relevant professional is in breach of the applicable legal provisions, which could result in the application of the sanctions foreseen in the AML/CFT Law.

4. COVID-19: CSSF press release on Short Sales: ESMA requires net short position holders to report positions of 0.1% and above

By means of a press release dated 16 March 2020, the CSSF announced that the European Securities and Markets Authority (ESMA) has issued a decision temporarily requiring the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant national competent authority if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.
The ESMA Decision, which entered into force on 16 March 2020, is available under the following link.
Still on the subject of short selling, it is to be noted that several national competent authorities (including the Belgian FSMA, the French AMF, the Hellenic HCMC, the Italian CONSOB, the Spanish CNMV and the UK FCA) have decided to prohibit short selling of issuers whose shares are admitted to trading on their local trading venues and such decisions have been validated by ESMA.


Since the onset of COVID-19, the CSSF has published a series of FAQ on their website with the latest update being made on 20 March 2020.
The FAQ provide clarifications on the minimum IT security conditions that are recommended for remote access, which is implemented in order to meet the exceptional situation created by Covid-19. The CSSF recalls, amongst other things, that each supervised entity is responsible to define the conditions, including the IT security conditions, under which it authorises remote access to its IT environment to the employees of external service providers in proportion to the risks to which it is exposed. The FAQ comprises a number of recommendations on the identification of high privileged accesses, the securing of communications through encryption and on connection monitoring.
The FAQ also confirm that the recommendation made to financial institutions subject to the CSSF’s prudential supervision to favour work from home in the framework of their business continuity plan also applies to support PFS, subject to satisfactory IT security conditions. Prior authorization by the CSSF is not required. As regards the services provided to clients, a support PFS must however receive authorization from its client for any service provided from home by the employees of the PFS, which involves access to the IT environment of the client, including for the implemented security measures. 

6. COVID-19: CSSF Operational aspects

On 17 March 2020, the CSSF issued a press release confirming that the CSSF remains operational but that their offices are closed for external visits. They request that all submissions be made by electronic means instead of or in addition to regular mail. They remain available for meetings by telephone or video conference. All their outgoing communications will be done exclusively by electronic means.

In case of any questions regarding this topic, please do not hesitate to address them to your usual contact at Elvinger Hoss Prussen or to :

Jacques Elvinger, Partner | Tel: +352 44 66 44 5410 | E-mail: jacqueselvinger@elvingerhoss.lu
Gast Juncker, Partner | Tel: +352 44 66 44 5240 | E-mail: gastjuncker@elvingerhoss.lu
Olivia Moessner, Partner | Tel: +352 44 66 44 5220 | E-mail: oliviamoessner@elvingerhoss.lu