LUXEMBOURG Law and Practice Contributed by: Vassiliyan Zanev and Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l.
such persons having to apply for an authorisa - tion under the legislation on the financial sector. Luxembourg credit servicers of non-performing loans that fall within the scope of the NPL Law (implementing the NPL Directive) need to obtain a licence from the Luxembourg Supervisory Commission of the Financial Sector (CSSF). 2.6 Investors Investors acquire the financial instruments issued by the SPE. The largest investors are usually foreign pension funds, insurance compa - nies, investment funds and commercial banks. 2.7 Bond/Note Trustees The trustees usually act on behalf of the inves - tors under the securitisation documentation and are responsible for monitoring cashflows, the compliance by the SPE and the other obligors with the contractual obligations and facilitate the communication between the parties. The form of the trustee appointment (trust or agency) and the scope of its rights and obligations are deter - mined in the securitisation documentation, com - monly subject to foreign law. The Securitisation Law also allows the appoint - ment of a Luxembourg fiduciary representative entrusted with the management of the SPE’s investors’ interests. The fiduciary representative may also be granted a power to act in the inves - tors’ interest in a fiduciary capacity, in which case the assets it acquires for the benefit of investors form a fiduciary estate separate from its own assets and liabilities. 2.8 Security Trustees/Agents A security trustee/agent holds the collateral securing the SPE’s obligations on behalf of the investors and, in the default scenario, is respon - sible for its enforcement.
The form of the security trustee appointment (trust or agency) and the scope of its rights and obligations are determined in the securitisation documentation, commonly subject to foreign law. The Collateral Law allows the collateral to be provided in favour of a person acting for the account of the beneficiaries of the collateral, a fiduciary or a trustee, without a need for a paral - lel debt or similar structures. 3. Documentation 3.1 Bankruptcy-Remote Transfer of Financial Assets The form of documentation, as well as its prin - ciple subject matters are generally determined in accordance with the law applicable to the transfer instrument. This law would normally be chosen depending on the jurisdiction where the securitised assets and, where applicable, the underlying debtors are located. Most securiti - sations in Luxembourg involve assets located abroad, and hence their content would be deter - mined by the chosen law and the market prac - tice of the relevant jurisdiction. Where Luxembourg assets are involved, Luxem - bourg law requirements with regard to the trans - fer of the title and the perfection of such transfer (depending on the types of the assets) would normally be included, as well as the customary representations and covenants with regard to the status of the securitised assets, the under - lying debtors, etc. 3.2 Principal Warranties In practice, securitisation documents are rarely governed by Luxembourg law and the scope of the principal warranties would thus be deter -
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