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• has voluntarily withdrawn;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

Partnership Interests: Transfer, Pledge and Dismemberment - SLP XVIII - #338-327*

Let us consider the question of transfer, dismemberment (démembrement), and pledge of partnership interests in a special limited partnership (SLP - société en commandite spéciale).

This question is governed by almost identical rules for limited and general partners (GPs) (i). The only exception is that the rules of general law (droit commun) are more restrictive for GPs' partnership interests (ii). We may also notice that there is still a great deal of room for contractual freedom.

I - Partnership Interests: Transfer, Pledge and Dismemberment (démembrement) - Similar Rules for GPs and Limited Partners (LPs)’ Partnership Interests

Whether they are partnership interests of LPs or GPs, they may only be transferred, dismembered or pledged in accordance with the terms & conditions and in the form provided for in the partnership agreement, failing which the operation shall be null and void.

If the partnership agreement is silent on the above, and except in the case of a transfer other than by reason of death, the dismemberment (démembrement) and pledging of an LP's partnership interests require the approval of the GP(s).

In the same case (as in the previous paragraph), but this time for the GP's partnership interest(s), additional steps are required. 

II - GP’s Partnership Interest(s): Transfer, Pledge and Dismemberment (démembrement) - Restrictions

As mentioned above, in the absence of provisions to the contrary in the SLP's partnership agreement, and for a transfer other than a transfer by reason of death, a dismemberment (démembrement) and pledging of GPs' partnership interests requires this time:

1. the approval of all the partners; and

2. that the latter decide in the same manner as when amending the partnership agreement.

References: Article 320-7 §1 & 2 of the Law of 10 August 1915 on commercial companies as amended ; #336-325* Partners' Decisions and Partnership Agreement (SLP), April 19, 2021, Bertrand Mariaux; #337-326* What About Partners' Decisions in the Absence of Statutory Provisions in an SLP? April 20, 2021, Bertrand Mariaux.

*Podcast #338

338-327* Partnership Interests: Transfer, Pledge and Dismemberment (SLP) *Article #338-327* *Podcast #338 *YouTube Video 327* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 327* 

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 About the Partners' Decisions in the Absence of Statutory Provisions in an SLP? - SLP XVII - #337-326*

Earlier we mentioned the decisions that specifically have to be taken by the partners in a special limited partnership (SLP - société en commandite spéciale). The partnership agreement should therefore indicate which decisions are not taken by the partners. The form and conditions of these decisions should also be stated. 

However, if the partnership agreement of the SLP is silent:

1- the decisions of the partners are taken: 

• in a general meeting; or 

• through a written consultation;

the written consultation takes place as follows:

• each partner has to receive the text of the resolutions or decisions to be taken expressly stated and shall cast his vote in writing;

2- the decisions are validly taken by a majority of the votes cast (regardless of the portion of interest shares represented);

however, for decisions regarding:

• changes to the company's purpose;

• the change of nationality of the company;

• the conversion or liquidation of the company;

the latter are adopted only by the approval of:

• the partners’ quorum representing 3/4 of the partnership interests; and

• of all general partners;

3- such meetings or written consultations may be convened or initiated by:

• the manager or managers; or by

• partners representing more than half of the partnership interests.

References: Article 320-6 §2 of the law of 10 August 1915 on commercial companies as amended; Partners' Decisions and Partnership Agreement (SLP), April 19, 2021, Bertrand Mariaux, #336-325*.

*Podcast #337

What About Partners' Decisions in the Absence of Statutory Provisions (SLP)? *Article #337-326* *Podcast #337 *YouTube Video 326* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 326* 

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

Partners' Decisions & Partnership Agreement - SLP XVI - #336-325*

First, it is important to mention that, with regard to the proportion of voting rights and unless the partnership agreement provides otherwise, the voting rights of each partner are proportional to the partnership interest that each partner holds in the special limited partnership (SLP - société en commandite spéciale). Let us consider the decisions that must be taken by the partners (i) before mentioning certain elements that must be indicated in the partnership agreement (ii). 

I - Decisions to Be Taken By the Partners

The law expressly provides a series of decisions that must be taken by the partners. There are as follows:

1. changes in the company's object;

2. change of nationality of the company; or

3. conversion; or 

4. the liquidation of the company.

II - Decisions Not Taken By the Partners, Forms and Conditions of Adoption 

The partnership agreement shall determine which decisions the partners do not take. The partnership agreement shall also determine in what forms and under what conditions these decisions are to be taken. If there are no stipulations in the partnership agreement in this respect, the law will govern some of these elements, which we will discuss later.

References: Article 320-6 §1 & 2 of the law of 10 August 1915 on commercial companies as amended; Acts Expressly Authorised for the Limited Partner (SLP/SCSp) - SLP XIII, April 8, 2021, #333-322*, Bertrand Mariaux.

*Podcast #336

Partners' Decisions & Partnership Agreement (SLP) *Article #336-325* *Podcast #336 *YouTube Video 325* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 325* 

Partners' Decisions & Partnership Agreement (SLP)*Article #336-325**Podcast #336*YouTube Video 325* To see this publication, go to our blog The VADE-MECUM - ...

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