Fund Distribution Alert 2021-02

Fund Distribution Alert 2021-02

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Said Fihri

Partner, ADV – Investment Services

KPMG in Luxembourg

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CSSF published CSSF Regulation N° 20-10 of 21 December 2020 in the Official Journal

On 23 December 2020, CSSF published in the Memorial A the CSSF Regulation N° 20-10 laying down the modalities of the Law of 17 December 2010 on UCIs with regard to the marketing of “Foreign UCIs other than the closed-end type” to retail investors in Luxembourg.

Scope of application

The regulation is applicable to the “Foreign UCIs other than the closed-end type” wishing to market their units/shares to retail investors in Luxembourg. For the purpose of this regulation, “Foreign UCIs other than the closed-end type” (herein after “Foreign UCIs”) means UCIs other than UCITS and other than UCIs for which there is no redemption right for investors.

Foreign UCIs which comply with the following rules are eligible for marketing to retail investors in Luxembourg:

  • Issue/Redemption prices must be determined regularly and at least once a month;
  • Sufficient risk allocation (more details are available in Art.7 b) of the present Regulation.

Marketing authorization by the CSSF and notification procedure

Before Foreign UCIs can be considered for eligibility to market to Luxembourgish retail investors, the UCIs must be managed by a manager who is subjected to prudential regulation and supervision in its home state. Foreign UCIs must also get the authorization from the CSSF and be listed on the CSSF’s website.

Specificities for AIF under the AIFMD 2011/61/UE: these funds should first complete the notification procedure for professional investors, as defined in the Law of 12 July 2013 (art. 45).

The Notification File to be submitted to the CSSF must combine a certain number of documentation and information, such as:

  • An attestation issued by the Foreign UCI’s home member state’s authority certifying that the Foreign UCI is authorized and subject to permanent supervision in its home state and that the Foreign UCI and its managers have not been subject to any sanctions or disciplinary measures;
  • The prospectus/issue document including the specific addendum for Luxembourg (this document must contain at least the elements listed in Art. 5 of the present Regulation);
  • A PRIIPS Key Information Document (KID);
  • The latest annual report;
  • Information on the managers of the Foreign UCI (recent curriculum vitae, copy of passport/ID card, recent criminal record extract, if available, or any other comparable document);
  • Depositary’s name and address;
  • Information on the measures taken in accordance with Article 59 of the Law of 17 December 2010 on UCIs (i.e. appointment of a credit institution in charge of payments/redemptions to unitholders/shareholders in Luxembourg);
  • In case the Foreign UCI is a feeder fund, information and documentation of the master fund should be provided. In this case, the CSSF marketing authorization is possible, provided that the master fund is subject in its home state to permanent supervision by a competent authority.

Once the marketing approval is obtained, Foreign UCIs must inform the CSSF about any material change made to the above listed documents/information.

The documentation, NAV and subscription/redemption prices must be made available to the investors in French, German, English or Luxembourgish (website publication is allowed).

Termination procedure

The CSSF must be informed as soon as a Foreign UCI wishes to terminate the marketing of its units/shares to retail investors in Luxembourg, so that the Foreign UCI can be removed from the CSSF list of authorized funds.

Retail investors must be informed accordingly (in an official media in Luxembourg or through a website) and the Foreign UCI should retain facilities in Luxembourg for the purpose of payments/redemptions as long as there are retail investors.

The CSSF Regulation N° 20-10 of 21 December 2020 came into effect on 1st January 2021.

The Regulation is available here (only available in French).

Please feel free to contact us should you require any additional information.

Please note that any information provided is general in nature, is based on the latest publicly available information as analyzed on a best endeavor basis and does not constitute any specific legal opinion or advice.

Contact

Said Fihri
Partner
+352 22 51 51 7892
said.fihri@kpmg.lu


Stephanie Zedda
Director
+352 22 51 51 7271
stephanie.zedda@kpmg.lu

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