LUXEMBOURG Law and Practice Contributed by: Evelyn Maher, Gaston Aguirre Draghi and Djelloul Mansour, BSP
• invest more than 10% of its assets in securi - ties that are not listed on a stock exchange and are not traded on another regulated mar - ket that operates regularly and is recognised and open to the public; • acquire more than 10% of the same type of securities issued by the same issuing body; and • invest more than 20% of its net assets in securities issued by the same issuing body. These general investment restrictions do not apply to Part II UCIs that are fund-of-fund struc - tures, if the investment funds in which the Part II UCI shall invest are open-ended and themselves subject to similar general investment restrictions. In addition, these general investment restrictions do not apply to Part II UCIs that are either mainly investing in venture capital or real estate or are pursuing alternative investment strategies. Part II UCIs may in principle borrow the equiv - alent of up to 25% of their net assets without restriction as to the intended use thereof. Part II UCIs that are mainly investing in real estate may borrow the equivalent of up to an average of 50% of the valuation of all their properties. Borrowings of Part II UCIs that are mainly pur - suing alternative investment strategies (hedge funds) may be up to 400%. 3.3.2 Requirements for Non-Local Service Providers The depositary, administrative agent, registrar and transfer agent, and approved statutory auditor of a retail fund must be established in Luxembourg and are all subject to regulation in Luxembourg.
The management company of a UCITS fund can be established in the EEA unless the fund is an FCP, in which case the management company must be established in Luxembourg. The AIFM of a Part II UCI can be established in the EEA unless the Part II UCI is an FCP, in which case the AIFM must be established in Luxembourg. Portfolio managers and investment advisers located in third countries can provide advisory or portfolio management services, but this is sub - ject to the CSSF’s authorisation of any delegated portfolio management function. 3.3.3 Local Regulatory Requirements for Non- Local Managers UCITS funds in the form of an FCP must have their management company established in Luxembourg. The same applies to Part II UCIs established in the form of an FCP. UCITS funds that are SICAVs and are not self- managed may have their management company established elsewhere in the EEA. An AIFM from any jurisdiction in the EEA can be appointed to manage a Part II UCI unless the Part II UCI is an FCP. Those AIFMs estab - lished elsewhere than in Luxembourg need to notify their home supervisory authorities of their intention to manage a Luxembourg fund. Those authorities will in turn notify the CSSF. The portfolio management of Luxembourg retail funds can be delegated to managers situated in third countries provided that such delegation is subject to the prior approval of the CSSF. 3.3.4 Regulatory Approval Process For retail funds, the process for obtaining regula - tory approval depends on the complexity of the investment policy, the completeness of the file
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