LUXEMBOURG Law and Practice Contributed by: Claudia Hoffmann, Daniel Krauspenhaar, Stefanie Samosny and Sascha Wiemann, Luther
nership structures (such as common limited partner - ships (SCSs) or special limited partnerships (SCSps)), or FCPs is driven by various factors. Besides govern - ance preferences, factors such as the desired tax and liability regime, eligible investors, and flexibility and cost considerations are determinative in this respect. For illiquid asset classes such as private equity and private debt, vehicles are often structured as SCSps- AIFs due to the flexibility and alignment with interna - tional limited partner/general partner standards. For real estate and infrastructure investments, both cor - porate forms and partnerships are common. Unregu - lated, closed-ended reserved alternative investment fund (RAIF) structures remain particularly popular due to their time-to-market advantages in comparison to regulated vehicles such as specialised investment funds (SIFs) or investment companies in risk capital (SICARs). AIFs are more frequently structured as UCI Part II So-called UCI Part II funds are subject to Part II of the amended Luxembourg law of 17 December 2010 relating to undertakings for collective investment (the “2010 Law”). They are subject to prior CSSF authori - sation and ongoing supervision. Generally, no investor eligibility restrictions apply. However, strict risk diver - sification requirements apply. SIFs The SIF regime was introduced by the amended law of 13 February 2007 relating to specialised invest - ment funds. SIFs are subject to prior authorisation and ongoing supervision by the CSSF and are reserved for “well-informed investors” – including institutional investors, professional investors and any other inves - tors having been identified as well-informed investors and investing a minimum of EUR100,000, or whose knowledge to adequately appraise their investment has been certified (eg, by a bank or investment firm). SIFs offer broad flexibility regarding eligible assets but are subject to a mandatory risk-spreading, according to which, in principle, no more than 30% of the SIF’s funds with an additional ELTIF label. 2.2 Regulatory Regime for Funds Part II Funds
assets or commitments may be invested to subscribe securities of the same type issued by the same issuer (subject to certain exceptions). SICARs SICARs are subject to the amended Luxembourg law of 15 June 2004 relating to the investment company in risk capital (the “SICAR Law”) and were specifically established for investments in “risk capital”. Regard - ing the notion of risk capital, parliament has referred in its parliamentary works to venture capital and private equity financings. More generally, according to CSSF Circular 06/241, risk capital under the SICAR Law may be characterised by the concurrent gathering of two elements: a high risk and an intention to develop the target entities. SICARs are subject to prior CSSF authorisation and ongoing supervision, and are generally open for “well- informed investors” only. SICARs are not subject to risk diversification requirements and may invest in one single asset. RAIFs The RAIF regime was introduced by the amended Luxembourg law of 23 July 2016 on reserved alter - native investment funds to provide a flexible vehicle combining features of both SIFs and SICARs. RAIFs are not directly regulated by the CSSF, but must be managed by an authorised external alternative fund manager (AIFM) established in Luxembourg or another EU member state or having been authorised in accordance with Chapter II of the AIFMD, so that indirect supervision occurs via the prudential over - sight of the external AIFM. RAIFs are generally eligible for well-informed investors. They are not restricted in terms of eligible assets, unless they opt for the SICAR regime – in which case, they must invest solely in risk capital. Like SIFs, RAIFs are generally subject to a 30% risk-spreading requirement, unless they opt for the SICAR regime – in which case, no risk-spreading requirement applies. Unregulated AIFs Unregulated AIFs are organised under general com - pany law only – most commonly as SCSps or SCSs – and are not subject to any specific product law. These vehicles offer maximum contractual freedom. Unless
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