LUXEMBOURG Trends and Developments Contributed by: Andreas Heinzmann, Manuel Fernandez, Valerio Scollo and Katharina Schramm, GSK Stockmann SA
In addition to broadening the means by which a securitisation transaction may be financed, the Securitisation Law also provides for rules gov - erning the legal ranking of different instruments. By way of example, shares/fund units rank junior to beneficiary shares, which in turn rank junior to debt securities issued by the securitisation vehi - cle. Such subordination rules are aligned with general rules applicable to commercial compa - nies and mutual funds and incorporate the sub - ordination principles in accordance with current market practice. Depending on the structure, and in accordance with the rules of the Securiti - sation Law, the subordination may fall outside the scope of the EU Securitisation Regulation, even though the structure might constitute eco - nomic tranching. The Securitisation Law distinguishes between securitisation companies and securitisation funds, which qualify as securitisation vehicles and are eligible to carry out securitisation trans - actions within the meaning of the Securitisation Law. Under the Securitisation Law, it is possible to set up securitisation companies as a public limited company ( société anonyme ), a corporate partnership limited by shares ( société en com - mandite par actions ), a private limited liability company ( société à responsabilité limitée ), a co- operative company organised as a public limited company ( société cooperative organisée comme une société anonyme ) and, following the amend - ment in February 2022, an unlimited company ( société en nom collectif ), a common limited partnership ( société en commandite simple ), a special limited partnership ( société en comman - dite spéciale ), and a simplified joint stock com - pany ( société par actions simplifiée ). Securitisation funds are not within the scope of the AIFMD and consist of one or several co-
ownerships, or one or several fiduciary estates. Securitisation funds do not have legal personali - ty and are managed by a management company. In accordance with the Securitisation Law, while previously only the management companies of securitisation funds needed to be registered with the Luxembourg Trade and Companies Register, securitisation funds will also need to be regis - tered. Conclusion The Securitisation Law, together with the EU Securitisation Regulation, provides a compre - hensive toolkit for the European securitisation market and ensures that the regulatory frame - work enables securitisation to play its part in the European Capital Markets Union. Securitisation vehicles can effectively assume the risks pertain - ing to synthetic securitisation transactions and help to free up regulatory capital of institutional lenders, resulting in additional lending capaci - ties of these entities to the real economy. The Professional Guarantee is perfectly fit to support sophisticated structuring of these transactions and to allocate the senior and/or junior risk per - taining to the underlying loan portfolios. Under certain circumstances, securitisation vehicles may, via the private placement of securities to institutional investors, be used as funding vehi - cles for small and medium-sized enterprises in distress. The possibility to digitalise securi - ties under Luxembourg law may be useful for the diversification of the investor base using securitisation structures and the broadening of funding capacities. In particular, with the latest amendments to the Securitisation Law in 2022, Luxembourg has increased the flexibility and legal certainty of the securitisation framework by updating the national legal regime to match the needs of the securitisation market, while at the same time focusing on investor protection.
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