LUXEMBOURG Law and Practice Contributed by: Vassiliyan Zanev and Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l.
Please see 4.8 Investor Protection concern - ing the restrictions on the sale of securitisation positions to retail clients under the Securitisation Regulation. Institutional investors investing in securitisation positions under the Securitisation Regulation are subject to the mandatory due diligence require - ments. Please see 4.8 Investor Protection for more details. 4.14 Other Principal Laws and Regulations There are no further details to add on any princi - pal laws and regulations mentioned in 1.3 Appli- cable Laws and Regulations . 5. Synthetic Securitisation 5.1 Synthetic Securitisation Regulation and Structure Synthetic securitisation (where only the risk but not the title to the assets is transferred) is permit - ted in Luxembourg and is governed by the same legal framework as traditional securitisation; that is, mainly the Securitisation Law and the Secu - ritisation Regulation. The Securitisation Regula - tion generally recognises synthetic securitisa - tions, and such securitisations can, in principle, benefit from the STS label, provided they meet certain criteria (including relating to simplicity, transparency, standardisation etc). Synthetic securitisations involving the use of derivatives may be subject to EMIR (see 4.7 Use of Derivatives ). The Securitisation Law provides expressly that securitisation transactions falling within its scope do not constitute activities subject to the Luxem - bourg Law of 7 December 2015 on the insurance
sector, as amended. For this reason, there is no risk in Luxembourg that certain synthetic secu - ritisation structures would trigger the licensing requirements under the insurance legislation. Synthetic securitisation structures in Luxem - bourg are usually set up with the involvement of an SPE, which would enter into a derivative contract or a guarantee with the counterparty. Similarly to a traditional securitisation, the secu - ritisation undertaking would then issue financial instruments to the investors and use the pro - ceeds of the issuance to fund its obligations under such derivative contract or a guarantee and to collateralise such obligations. 6. Structurally Embedded Laws of General Application 6.1 Insolvency Laws Luxembourg SPEs are subject to the general insolvency regime set out in the Luxembourg Commercial Code. The main risk associated with insolvency proceedings initiated in Luxem - bourg is the claw-back of the assets transferred to the SPE in the course of the securitisation. Regarding the qualification (and, consequently, potential recharacterisation) of the legal nature of the transfer of the securitised assets as a “true sale” or a secured loan, this is, in principle, determined in accordance with the laws applica - ble to the transfer instrument and the underlying assets. As, in practice, transfer documents and underlying assets are typically not governed by Luxembourg law, the qualification of the transfer as a true sale or a secured loan is most often a matter of foreign law. Irrespective of the law applicable to the transfer, the Securitisation Law provides expressly that
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