LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
may have distinct characteristics. Tracking shares are also possible under certain conditions. In addition, the compartment of a SIF structured as an umbrella fund could invest in another (or more) compartment(s) of the same SIF subject to certain conditions. This is called a “cross-compartment SIFs are subject the ongoing supervision of the CSSF. Nevertheless, given that SIFs are reserved for well- informed investors, they are afforded more flexibilities, in terms of approval procedure and regulatory require - ments, in comparison with UCIs. A SIF is not required to be established by a financial institution possessing substantial financial resources. The CSSF’s primary consideration lies in assessing the professional competence and experience of the individuals responsible for the management of the portfolio. investment”. Supervision A SIF must receive authorisation from the CSSF prior starting its activities. It is prohibited from initiating any operation until such authorisation has been formally granted. The CSSF’s approval process encompasses a thorough review of the fund’s constitutive and offer - ing documents, as well as the selection of directors or managers, the designated portfolio management personnel or entities, the administration agent, the depositary, and the appointed auditor. In this respect, the CSSF will assess whether the directors or managers of the SIF, as well as the indi - viduals or entities responsible for portfolio manage - ment, possess a sufficiently good repute, demonstrate the requisite professional experience and are able to dedicate adequate time to their function. This evalu - ation ensures that they are capable of effectively ful - filling their responsibilities in connection with the SIF. Any amendment to its constitutive or offering docu - ments, as well as any change of directors or manag - ers, or of the service providers, is subject to the prior approval of the CSSF. Furthermore, in the case of a SIF established as a FCP, authorisation by the CSSF
is contingent upon the CSSF’s approval of the man - agement company’s application to manage the FCP. The CSSF also keeps an official list of the authorised SIFs that are subject to its supervision. Moreover, one or more investment managers may be appointed by the SIF to perform investment man - agement functions. They are registered as such and supervised by their relevant supervisory authority, eventually with the co-operation of the CSSF in the case of a delegation to a third-country investment manager. Depositary requirements A SIF is required to appoint a depositary for the safe - keeping of its assets, having its registered office in Luxembourg, or, in the case of a registered office located abroad, be established in Luxembourg. The safekeeping function must be considered as a “supervisory function”, requiring the depositary to maintain ongoing oversight of the assets invested, their location and availability. This supervision does not preclude the depositary from entrusting the physi - cal safekeeping of the assets to local sub-depositaries where appropriate. However, the depositary remains liable towards investors for any losses arising from a wrongful failure to properly discharge its duties. The depositary must be either a credit institution or an investment firm as defined under the Law of 5 April 1993 on the financial sector, as amended. However, investment firms may only assume the function of depositary provided they satisfy specific requirements A SIF must comply with the Luxembourg laws and regulations on the fight against money laundering and terrorist financing (AML/CFT) and, in particular, with the AML/CFT Law, along with related regulations, cir - culars and guidelines issued by the CSSF in relation to AML/CFT issues. In this context, the SIF must set an appropriate AML/ CFT framework including an AML/CFT risk appetite and risk assessment, as well as policies, controls, pro - set forth in the AIFM Law. AML/CFT requirements
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