3. Investors
Depending on the vehicle concerned, different investors are entitled to invest in the vehicle. The distinction is generally made between UCITS and Part II funds, on one side, which are open to all types of investors and the SIF and the SICAR, on the other side.
Categories of
investors UCITSPart I Part II UCI SIF SICAR
Retail investors Yes Yes No* No* High Net Worth
Individuals Yes Yes No* No* Institutional
investors Yes Yes Yes Yes Professional
investors Yes Yes Yes Yes
* Unless:
• he adheres in writing to the status of “well-informed” investor; and • (1) he invests a minimum of
EUR 125,000 in the SIF/SICAR; or (2) - for SIFs: he has been the subject of an assessment made by a credit institution within the meaning of Directive 2006/48/EC, by an investment firm within the meaning of Directive 2004/39/EC or by a Management Company within the meaning of Directive 2001/107/EC certifying his expertise, his experience and his knowledge in adequately appraising an investment in the SIF;
- for SICARs: he has been subject to an assessment made by a credit institution within the meaning of Directive 2006/48/EC, by an investment firm within the meaning of Directive 2004/39/EC or by a Management Company within the meaning of Directive 2001/107/EC certifying his expertise, his experience and his knowledge in adequately appraising an investment in risk capital.
The above conditions do not apply to directors and other persons intervening/ taking part in the management of a SIF/ SICAR.
When looking at the investor angle another important regulatory requirement is compliance with anti-money laundering and counter terrorist financing requirements (AML/CTF) being mainly governed by the law of 12 November 2004 (as amended) and CSSF Regulation 12-02 With the upcoming 4th European Directive on AML/ CTF and the global importance of AML/ CTF in general, regulatory requirements will increase. Luxembourg however is well positioned to meet this trend, since the AML/CTF regime is already very strong and will not require major changes to the regulatory framework unlike other jurisdictions. AML/CTF regulations have been in focus for years, are well developed and also consider investment fund specifics like distribution networks.
4. Type of securities that may be
issued to investors
UCITS and Part II funds can only issue shares and units to investors whereas SIFs and SICARs may also issue beneficiary units and debt securities.
Furthermore, the issue and redemption of securities of the above mentioned vehicles has a real meaning when their capital is variable. When the capital of an investment company is fixed (SICAF), any issue and redemption of shares are subject to the rules of the Law of 10 August 1915 on commercial companies and impacts the share capital of the company, the articles of which must be amended accordingly.
For a regulated investment vehicle which qualifies as an AIF, the type of securities that may be issued depends on the law to which the investment vehicle is subject (e.g. Part II of the 2010 Law, SIF Law, SICAR Law).
5. Ongoing subscription and
redemption of shares/units
For UCITS and Part II funds, units and shares shall be issued at a price defined by dividing the net asset value of the investment vehicle by the number of units/ shares outstanding; such price may be increased by expenses and commissions. The units/shares shall be redeemed at a price defined by dividing the net asset value of the investment vehicle by the
number of units/shares outstanding; such price may be decreased by expenses and commissions. For SIFs, units and shares shall be issued and, as the case may be, redeemed in accordance with the conditions and procedures set forth in the constitutive documents of the vehicle.
The constitutive documents of the vehicle shall specify the conditions in which issues and redemptions may be suspended, without prejudice to legal causes. In the event of suspension of issues or redemptions, the investment vehicle must without delay inform the CSSF and, if it markets its units/shares in other Member States of the European Union, the competent authorities of such States. Where the interest of the investors so requires, redemptions may be suspended by the CSSF if the provisions of laws, regulations or the constitutive documents concerning the activity and operation of the vehicle are not observed. The issue and redemption of the units/shares shall be prohibited:
• during any period where there is no Management Company (in case the investment vehicle is not self-managed) or depositary;
• where the Management Company (in case the investment vehicle is not self-managed) or the depositary is put into liquidation or declared bankrupt or seeks a composition with creditors, a suspension of payment or a court controlled management or is the subject of similar proceedings.
The constitutive documents of the investment vehicle shall determine the frequency of the calculation of the issue and redemption price. Repayments to investors following a reduction of capital shall not be subject to any restriction other than the respect of the required minimum capital. Distributions (interim or final) of dividends can be made irrespective of the realised results within the period to the extent the minimum share capital is maintained.
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6. Structuring of capital calls
Capital calls are not relevant for UCITS funds, but may be of interest in the framework of Part II funds, SIFs, SICARs and Luxembourg AIFs which may be used for private equity or real estate purposes. In Part II funds under the form of a SICAV, capital calls shall be organised by way of capital commitments (i.e. contractual undertaking of an investor to subscribe shares of the company upon request and to fully pay them up). In Part II funds under the form a SICAF, capital calls in an SA/SCA may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to 25% at least). An S.à r.l. cannot issue partly paid shares. In case the Part II fund is a FCP, capital calls
may be organised either by way of capital commitments or through the issue of partly paid units.
For SIFs, capital calls may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to 5% at least) or units. For SICARs, capital calls may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to 5% at least).
For a regulated investment vehicle which qualifies as an AIF, capital calls are organised depending on the law to which the investment vehicle is subject (e.g. Part II of the 2010 Law, SIF Law, SICAR Law). As regards the SICAR, it can issue new
shares in accordance with the conditions and procedures set forth in the articles of incorporation. Repayments and distribution of dividends to shareholders are not subject to any restrictions other than those set forth in the articles of incorporation.
For a regulated investment vehicle which qualifies as an AIF, subscriptions and redemptions of shares are organised depending on the law to which the investment vehicle is subject (e.g. Part II of the 2010 Law, SIF Law, SICAR Law).