Forms - RAIF - #390

A reserved alternative investment fund (“RAIF”) may take the following forms: 

• a fonds commun de placement (“FCP”), a common fund; an FCP is an open or closed ended contractual fund. The FCP has no legal personality and must be managed by a management company;

• an open or closed ended investment company with variable capital (société d'investissement à capital variable - “SICAV”).

It is also interesting to note that the law of 23 July 2016 on reserved alternative investment funds (the “RAIF Law”) does not seem to be restrictive as to the forms that a RAIF may take. Other forms are therefore possible. It can take the form of an investment company with a fixed capital (société d’investissement à capital fixe - “SICAF”). A SICAF or SICAV requires instruments of incorporation. A fiduciary contract could also be envisaged. 

An FCP or a SICAV / SICAF could be set up as an umbrella fund with unlimited number of compartments or as a single fund. The single fund or the umbrella fund may have an unlimited number of share / unit classes - depending on the needs of the investor to whom it is distributed.

References: Article 1(2) of the amended law of 23 July 2016 on reserved alternative investment funds (the “RAIF Law”); #384-373* The Reserved Alternative Investment Fund - RAIF, July 9, 2021, Bertrand Mariaux.

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.): Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor : Cédric Buisine, avocat

Depositary: Voluntary Withdrawal, Removal, Non-Compliance, Insolvency - RAIF XXIII - #389

What if the depositary of the reserved alternative investment fund (RAIF): 

• has voluntarily withdrawn;

• is removed by the RAIF or by its management company;

• is no longer compliant with the law; or 

• is insolvent?

The directors or managers of the RAIF or its management company must take all necessary measures in order to replace the depositary by another depositary complying with the law.

What if the depositary has not been replaced within 2 months as from its withdrawal?

The directors or managers of the RAIF or of its management company shall, within 3 months following the withdrawal of the depositary, request the District Court dealing with commercial matters (Tribunal d’arrondissement siégeant en matière commerciale) to pronounce the dissolution and liquidation of the reserved alternative investment fund pursuant to the law.

References: Article 5(5) of the Law of 23 July 2016 on reserved alternative investment funds as amended (the RAIF Law); Safekeeping - RAIF XXI, July 18, 2021, #387-376*, Bertrand Mariaux.

* Podcast #389

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

AIFM: Voluntary Withdrawal, Removal, Missing Authorisation, Insolvency - RAIF XXII - #388

What if the alternative investment fund manager (AIFM) of the reserved alternative investment fund (RAIF): 

• has voluntarily withdrawn;

• is removed by the RAIF;

• is no longer authorised; or 

• is insolvent.

The directors or managers of the RAIF or its management company must take all necessary measures in order to replace the AIFM by another compliant AIFM.

What if the AIFM has not been replaced within 2 months as from the withdrawal of the AIFM? 

The directors or managers of the RAIF or of its management company shall, within 3 months following the withdrawal of the AIFM, request the District Court dealing with commercial matters (Tribunal d’arrondissement siégeant en matière commerciale) to pronounce the dissolution and liquidation.

References: Article 4(3) of the Law of 23 July 2016 on reserved alternative investment funds as amended; AIFM, RAIF & European Passport - RAIF XX, July 13, 2021, #386-375*, Bertrand Mariaux.

* Podcast #388

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.): Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor : Cédric Buisine, avocat. 

Safekeeping - RAIF XXI - #387-376*

The assets of a reserved alternative investment fund (RAIF) must be entrusted to a depositary for safekeeping of assets. The depositary must either have its registered office in Luxembourg or have a branch there if its registered office is in another Member State of the European Union. The depositary must be a credit institution or an investment firm. The depositary may also be an entity governed by Luxembourg law which has the status of a professional depositary of assets other than financial instruments.

References: Articles 5(1), (2), (3) §1 & §2 of the Law of 23 July 2016 on reserved alternative investment funds as amended and Article 26-1 of the amended Law of 5 April 1993 on the financial sector as amended; The Reserved Alternative Investment Fund - RAIF xviii, July 9, 2021, #384-373*, Bertrand Mariaux.

* Podcast #387

*YouTube Video 376|

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.): Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor : Cédric Buisine, avocat 

AIFM, RAIF & European Passport - RAIF XX - #386-375*

Under applicable provisions of the law of 12 July 2013 on alternative investment fund managers (the AIFM Law), every reserved alternative investment fund (RAIF) must be managed by an alternative investment fund manager (AIFM). The AIFM must either be: 

1. established in Luxembourg and authorised under the AIFM Law (Chapter 2); or

2. established in another European Member State - in accordance with Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers (The AIFM Directive); or

3. established in a third country, authorised under Chapter II of the AIFM Directive.

A RAIF may then benefit from the European passport. The RAIF’s AIFM may market the RAIF’s securities or partnership interests to professional investors within the EU through a regulator-to-regulator notification regime.

References: Articles 1(1)a and 4(1) of the Law of 23 July 2016 on reserved alternative investment funds as amended; Articles 2(2)(c) & (d) of the law of 12 July 2013 on alternative investment fund managers as amended; the Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers; The Reserved Alternative Investment Fund - RAIF xviii, July 9, 2021, #384-373*, Bertrand Mariaux.

* Podcast #386

*YouTube Video 375|

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.): Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor : Cédric Buisine, avocat

What Is a Well-Informed Investor? RAIF XIX - #385-374*

The reserved alternative investment fund (RAIF) is reserved to well informed investors. The well-informed investor is an eligible investor to the RAIF. The well informed investor is defined by the law of 23 July 2016 on reserved alternative investment funds as amended, the RAIF Law).

As mentioned in previous publications, the well informed investor must have stated in writing that it/she/he adheres to the definition of well informed investors (as defined by the RAIF Law). The status of well informed investors includes: 

(i) institutional investor(s) or professional investor(s); or

(ii) any other investor(s) investing a minimum of 125,000 euros in the RAIF who have been assessed by a: 

• credit institution,

• investment firm, or 

• management company;

certifying the investor’s: 

• expertise, 

• experience, and 

• knowledge; 

in adequately appraising an investment in the RAIF.

It is worth noting as well that the RAIF must have the necessary means to ensure compliance with the conditions laid down above. And finally, these conditions are not applicable to the directors and other persons involved in the management of the RAIF.

References: Articles 2(1), (2) & (3) of the law of 23 July 2016 on reserved alternative investment funds as amended; Who Are the Eligible Investors (RAIF)?, #248-237*, August 24, 2020, Bertrand Mariaux; The Reserved Alternative Investment Fund - RAIF xviii, #384-373*, July 9, 2021, Bertrand Mariaux.

* Podcast #385

*YouTube Video 374|

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.): Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor : Cédric Buisine, avocat

The Reserved Alternative Investment Fund - RAIF XVIII - #384-373*

Under Luxembourg law, a reserved alternative investment fund (RAIF) is an undertaking for collective investment. The RAIF must be domiciled in Luxembourg. The RAIF always qualifies as an alternative investment fund (AIF) under the Law of 12 July 2013 on alternative investment fund managers (the AIFM Law). The sole object of the RAIF shall be the collective investment of its funds in assets with the aim of spreading the investment risks and providing to investors the benefits of the results of the management of their assets. Management shall be understood as comprising at least the service of portfolio management. 

Also the securities of partnership interests of the RAIF shall be reserved to one or more well-informed investors. 

The well informed investor must have stated in writing that it/she/he adheres to the definition of well informed investors (as defined by the law of 23 July 2016 on reserved alternative investment funds as amended, the RAIF Law). The status of well informed investors includes: 

(i) institutional investor(s) or professional investor(s) investing a minimum of 125,000 euros in the RAIF; or

(ii) any other investor(s) who have been assessed by a: 

• credit institution,

• investment firm, or 

• management company;

certifying the investor’s: 

• expertise, 

• experience, and 

• knowledge; 

in adequately appraising an investment in the RAIF.

Finally the constitutive documents of the RAIF shall expressly mention that it is subject to the law of 23 July 2016 on reserved alternative investment funds as amended.

References: Articles 1(1)a), 2(1)a), 2(1)b)i) & ii) of the law of 23 July 2016 on reserved alternative investment funds as amended; What is a RAIF? - #180-169*, June 17, 2020, Bertrand Mariaux; What Are the Legal Forms of a RAIF? #253-242*, August 29, 2020, Bertrand Mariaux

* Podcast #384

*YouTube Video 373|

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributors : Cédric Buisine, avocat ; Susanna Shepherd, juriste

Décharge de la responsabilité - SIS/ASBL XVIII - #382-371*

Dans le cadre de notre comparatif entre les associations sans but lucratif (ASBLs) et les sociétés d’impact sociétal (SISs), évoquons quelques mots quant à la décharge de la responsabilité des dirigeants : gérants, administrateurs, membres du directoire et conseil de surveillance. 

De quelle manière les dirigeants peuvent-ils être déchargés de leur responsabilité ?

Les dirigeants seront déchargés de leur responsabilité : 

• s’ils n’ont pris part à aucune infraction ; et 

• si aucune faute ne leur est imputable et, enfin ; 

• s’ils ont dénoncé ces infractions à la prochaine assemblée générale des associés (pour la société à responsabilité limitée) ou des actionnaires (pour la société anonyme) ou des coopérants (pour la société coopérative).

Références : loi du 12 décembre 2016 portant création des sociétés d’impact sociétal telle que modifiée ; loi du 21 avril 1928 sur les associations et les fondations sans but lucratif telle que modifiée ; loi du 10 août 1915 sur les sociétés commerciales telle que modifiée ; Livret comparatif sur les sociétés d’impact sociétal et les associations sans but lucratif (Union Luxembourgeoise de l’Économie Sociale et Solidaire et Ministère du Travail, de l’Emploi et de l’Économie sociale et solidaire), Bertrand Mariaux.

* Podcast #382

*YouTube Video 371|

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributeurs : Susanna Shepherd, juriste; Ibtissem Elbedri, paralégale

Redemption or Reduction of Partnership Interests - CLP/SCS XX - #363-352*

The law provides that the partnership agreement of the common limited partnership (CLP - société en commandite simple) may authorise the redemption or reduction of the partnership interests of one or more partners under the following conditions.

1- Who Can Redeem or Reduce the Partnership Interests of One or More Partners?

• the management; or 

• the partners.

2- To What Extent Is this Redemption or Reduction of the Partnership Interests of One or More Partners Possible?

• in whole; or

• in part.

3- In What Manner the Redemption or Reduction of the Partnership Interests of One or More Partners Occur?

The redemption or reduction of partner's partnership interests may be carried out at the request of one or more partners.

4- In Addition to the Above Conditions, How Are the Terms of a Redemption or Reduction of the Partnership Interests Determined? 

The terms of a redemption or reduction are contractually determined.

References : Article 310-6, § 4 of the law of 10 August 1915 on commercial companies as amended; #362-351* Enforceability of Transfers and Dismemberments (démembrements) of Partnership Interests - CLP/SCS, June 1, 2021, Bertrand Mariaux..

* Podcast #363

*YouTube Video 352* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

Enforceability of Transfers and Dismemberments (démembrements) of Partnership Interests - CLP/SCS XIX - #362-351*

The law provides that transfers and dismemberments (démembrements) of partnership interests are only valid against the common limited partnership (CLP - société en commandite simple) and third parties if they have been notified to or accepted by the partnership.

Similarly, the law further states that transfers and dismemberments (démembrements) of partnership interests cannot have any effect vis-à-vis third parties with regard to corporate commitments made prior to their publication, except where the third party was aware of them, or could not have been unaware of them.

References: Article 310-6, § 3 of the law of 10 August 1915 on commercial companies as amended; #361-350* Partnership Interests: Transfer, Pledge and Dismemberment (Démembrement) - CLP/SCS.

* Podcast #362

*YouTube Video 351* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat