LUXEMBOURG Law and Practice Contributed by: Claudia Hoffmann, Daniel Krauspenhaar, Stefanie Samosny and Sascha Wiemann, Luther
required to be Luxembourg-incorporated, it is recommended for regulatory, tax and substance purposes that the general partner has a legal and operational presence in Luxembourg. • Business premises and employees: no explicit obligation exists, but the CSSF and tax authorities expect AIFs and managers to demonstrate ade - quate local substance via offices and staff propor - tionate to their activities. 2.9 Rules Concerning Service Providers Under Luxembourg law, the core service providers of regulated AIFs – such as the central administra - tion agent, depositary and auditor – must either be established and authorised in Luxembourg or operate through a Luxembourg branch. Unregulated partnerships are not subject to a require - ment to maintain their central administration in Lux - embourg. However, from a corporate law perspective, they must ensure that their principal place of manage - ment and decision-making is located in Luxembourg in order to preserve their Luxembourg nationality. In addition, according to the 2004 Law, each AIF must appoint, among the members of its management body, a person responsible for compliance with the professional obligations as regards AML/CTF ( respon- sable du respect des obligations ) and a compliance officer at appropriate hierarchical level in charge of monitoring compliance with the AML/CTF obligations ( responsable du contrôle du respect des obligations ). Both should have the professional experience and knowledge of the Luxembourg legal and regulatory framework relating to AML/CTF, the hierarchy and powers within the AIF (including the power to access, on a timely basis, the identification data of customers and other information and documentation required to fulfil their duties) as well as the availability necessary to effectively and autonomously exercise their func - tions. 2.10 Anticipated Changes for Funds AIFMD II introduced harmonised operating condi - tions for AIFs engaging in loan origination, whether directly or through SPVs, providing welcome clarity on the conditions under which AIFs may originate loans across the EEA. By setting clear parameters on mat -
ters such as leverage, risk retention, concentration limits and lending to related parties, AIFMD II creates a stable and predictable environment for private credit strategies, thereby paving the way for further growth of this asset class in Luxembourg and beyond. Based on the recently published Draft Bill No 8628, Luxem - bourg is expected to implement the rules without gold-plating, ensuring that AIFMs and investors can fully benefit from the new opportunities. In parallel, the European Commission continues its drive towards strengthening EU competitiveness through regulatory simplification. It adopted a sim - plification package covering several legislative areas, including sustainable finance. At its core lies the sus - tainability “Omnibus”, introducing targeted amend - ments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). While focused on the CSRD and CSDDD, the Omnibus is widely regarded as a stepping stone towards the anticipated revision of the SFDR, which is expected to streamline sus - tainability classifications and disclosure requirements, thereby reducing complexity, enhancing comparabil - ity and providing fund managers with a more coher - ent framework for integrating sustainability into their strategies. Reflecting Luxembourg’s status as a global fund dom - icile, sponsors and managers of Luxembourg AIFs come from all parts of the world, with the USA, UK and Germany as the leading jurisdictions based on the percentage of net assets under management. Other significant jurisdictions include Switzerland, France, Italy, Belgium, Luxembourg itself, the Netherlands and Denmark. 3.2 Legal Structures Used by Managers In Luxembourg, sponsors typically use private or public limited liability companies (SARLs/SAs) when serving as AIFMs, not least due to the limitation of liability. The general partners of partnership structures or SCAs – who typically manage the AIFs in addition 3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds
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