LUXEMBOURG Law and Practice Contributed by: Evelyn Maher, Gaston Aguirre Draghi and Djelloul Mansour, BSP
2. Alternative Investment Funds 2.1 Fund Formation 2.1.1 Fund Structures The principal legal vehicles used to set up alter - native funds in Luxembourg are the following. • Undertakings for collective investment (Part II UCI), governed by Part II of the Law of 17 December 2010 (the “UCI Law”), which may be constituted in the form of a common fund ( fonds commun de placement ) (FCP), an investment company with variable capital ( société d’investissement à capital variable (SICAV)) or an investment company with fixed capital ( société d’investissement à capital fixe (SICAF)). An amendment to the UCI Law in 2023 has broadened the corporate forms available for a Part II UCI. They may now be established as SICAVs in the form of a part - nership limited by shares ( société en com- mandite par action (SCA)), a common limited partnership ( société en commandite simple (SCS)), a special limited partnership (SLP; société en commandite spéciale (SCSp)) or a co-operative society ( société coopérative ) organised as a public limited liability company ( société anonyme (SA)) or a private limited liability company ( société à responsabilité limitée (Sàrl)), as opposed to just an SA. Part II UCIs are supervised by the Commission de Surveillance du Secteur Financier (CSSF) which is the supervisory authority in Luxem - bourg. The main advantage of these funds is that they are open to all types of investors, including retail investors. • Specialised investment funds (SIFs; fonds d’investissement spécialisé ), governed by the Law of 13 February 2007 (the “SIF Law”), which may be constituted as an FCP, SICAV or SICAF. While SIFs have the advantage of having almost no restrictions in terms of what
they can invest in, they are only open to well- informed investors. As with Part II UCIs, they are supervised by the CSSF. • Investment companies in risk capital ( sociétés d’investissement en capital à risque ) (SIC - ARs), governed by the Law of 15 June 2004 (the “SICAR Law”), which may only be con - stituted as a corporate or partnership entity (ie, they cannot be FCPs). SICARs have the advantage of having no investment diver - sification rules, but they must invest in risk capital. As such, this vehicle is generally used for investments in venture capital and private equity. SICARs are supervised by the CSSF and are only open to well-informed investors. • Reserved alternative investment funds ( fonds d’investissement alternatif réservé ) (RAIFs), governed by the Law of 23 July 2016 (the “RAIF Law”), which may be constituted as an FCP, SICAV or SICAF (in the case of a SICAV or SICAF, any of the available corpo - rate or partnership forms can be chosen). RAIFs can choose to follow the SIF or SICAR regime in terms of the type of assets invested in. The particular advantage of this vehicle is that it is not subject to the supervision of the CSSF and, as such, a RAIF can poten - tially be brought to the market more quickly than supervised entities. Unlike Part II UCIs, SIFs and SICARs, a RAIF is always obliged to appoint an authorised external alternative investment fund manager (AIFM). • The Luxembourg SLP, which is an unregu - lated and unsupervised entity. The SLP is characterised by its contractual freedom and is not subject to any investment or diversifica - tion constraints. RAIFs, Part II UCIs, SIFs, SICARs and SLPs that have designated an AIFM established in the European Economic Area (EEA) can market their shares, units or limited partnership interests
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