The Luxembourg Reserved Alternative Investment Funds Law Has Arrived!

July 14, 2016

Background

The entry into force of AIFMD in Europe has resulted in a double layer of regulation, as we now have regulation and supervision at the level of the product (regulated investment funds) and supervision at the level of the manager (AIFM).

The New Product

Reflecting the need for greater efficiency, Luxembourg has now adopted the reserved alternative investment funds (“RAIF”) regime. This offers greater flexibility on the product side by avoiding this double layer of regulation. The RAIF product will be regulated only through its manager which will significantly reduce the time to market in Luxembourg.

It offers the advantages of specialized investment funds (fonds d’investissement spécialisé or “SIF”) or investment companies in risk capital (sociétés d’investissement d'investissement en capital à risque or “SICAR”) in terms of structuring (e.g., the ability to adopt a variable capital structure and to establish sub-funds) but is not required to seek the prior authorization of the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (“CSSF”). The Law is consequently largely inspired by the existing Luxembourg SIF Law and the Luxembourg SICAR Law.

A comparison with a selection of other European regimes can be seen at the end of this article. The RAIF is available in a variety of legal forms.

Read "The Luxembourg Reserved Alternative Investment Funds Law Has Arrived!"