Administration & Services (SICAR) - #277-266*

We discussed safekeeping lodged into an investment company in risk capital (société d’investissement en capital à risque - “SICAR”). Let’s now continue to the other important administrative and professional services aspects that must be kept in mind when setting-up a SICAR. The directors of the SICAR must be of sufficiently good repute and have sufficient experience for performing their functions (the so-called “Fit and Proper Test” conducted by the CSSF). The SICARs must have the accounting information provided in their annual report audited by an approved statutory auditor (réviseur d’entreprises agréé). Other typical service providers include lawyers, domiciliation agents, management company (portfolio and risk management…), investment advisers, distributors and paying agents. 

References: Article 12(3) and 27(1) §1 of the amended law of 15 June 2004 on SICAR ; Safekeeping (SICAR), September 23, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat à la Cour

*Podcast #277:

Administration & Services (SICAR) #277-266* *Article #277-266 *YouTube Video 266| . . . . . . . . #ImpactInvesting , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVenture , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #AIF , #AIFM , #AIFMD , #ResponsibleFinance , #domiciliation , #SICAR Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 266|: 

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)

Safekeeping (SICAR) - #276-265*

The custody of the assets of an investment company in risk capital (société d’investissement en capital à risque - “SICAR”) must be entrusted to a Luxembourg depositary. 

Under the scope of the amended law of 1993 on the financial sector, the depositary shall be:

• a credit institution; or 

• an investment firm.

It is important to note that the investment firm must fulfill the attributes of an eligible depositary pursuant to the law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”).

Under certain conditions, the depositary may also be a depositary of assets other than financial instruments.

References: Articles 8(1), (2), (3) of the SICAR law; Management (SICAR), September 21, 2020, Bertrand Mariaux.

*Podcast #276:

Safekeeping (SICAR) #276-265* *Article #276-265 *YouTube Video 265| . . . . . . . .

*YouTube Video 265|: 

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)

Management (SICAR) - #275-264*

An investment company in risk capital (société d’investissement en capital à risque - “SICAR”) may qualify as an alternative investment fund (“AIF”). It can be managed by a management company or be self-managed. A SICAR qualifying as an AIF is generally required to appoint an alternative investment fund manager (“AIFM”). A self-managed SICAR may only manage assets of their own portfolios and may not manage assets on behalf of a third party. A SICAR shall have its central administration in Luxembourg.

References: Article 47, 12(1) & (5) of the amended law of 15 June 2004 relating to SICAR; Article 4(1) of the law of 12 July 2013 on AIFM; SICAR and AIFM (i), September 16, 2020, Bertrand Mariaux.

*Podcast #275:

Management (SICAR) #275-264* *Article #275-264 *YouTube Video 264| . . . . . . . .

*YouTube Video 264|: 

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)

European Social Entrepreneurship & European Venture Capital Funds (SICAR) - #274-263*

Investment companies in risk capital (sociétés d’investissement en capital à risque - “SICARs”) qualifying as European Social Entrepreneurship Funds (“EuSEF”) or European Venture Capital (“EuVECA”) funds have the option of being subject to the EuSEF and EuVECA legislation. Both regimes benefit from the European passport which permits the marketing of the fund to EU-based eligible investors. 

References: Loi du 16 juillet 2019 portant mise en oeuvre des règlements EuVECA, EuSEFs, fonds monétaires (Money Market Fund - MMF), fonds européens d’investissement à long terme (European Long Term Investment Fund - ELTIF) et titrisations simples, transparentes et standardisées (Titrisation STS); Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds; Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (Text with EEA relevance); Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (Text with EEA relevance); European Investment Funds Initiatives - Impact Finance, August 22, 2020, Bertrand Mariaux; Which Structures Are Mainly Used in Impact Finance?, August 21, 2020, Bertrand Mariaux.

*Podcast #274:

European Social Entrepreneurship & European Venture Capital Funds - SICAR - #274-263* *Article #274-263 *Podcast #274 *YouTube Video 263| . . . . . . . .

*YouTube Video 263|: 

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)

What Is the Capital Base for a SICAR? - #273-262*

The subscribed capital of an investment company in risk capital (société d’investissement en capital à risque - “SICAR”) with the share premium (primes d’émission) or the value of the amount constituting partnership interests shall not be less than EUR 1,000,000.

This minimum must be reached within a period of 12 months following the licensing of the company.

Under the law on SICAR, the share capital of a partnership limited by shares (société en commandite par actions), a public limited company (société anonyme), a limited liability company (société à responsabilité limitée) and a cooperative company in the form of a public limited company (société coopérative organisée comme une société anonyme) must be entirely subscribed, and a least 5% of each share must paid-up in cash or by means of a contribution other than in cash.

References: Article 4(1) and 5(2) of the amended law of 15 June 2004 relating to SICAR; Authorisation and Supervision (SICAR), September 13, 2020, Bertrand Mariaux.

*Podcast #273:

What Is the Capital Base for a SICAR? #273 *Article #273-262 *YouTube Video 262| . . . . . . . .

*YouTube Video 262|: 

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)

European Passport - SICAR and AIFM (ii) - #272-261*

Investment companies in risk capital (sociétés d’investissement en capital à risque - “SICARs”) qualifying as alternative investment funds (“AIFs”) and which are managed by an authorised European alternative investment fund manager (“AIFM”) benefit from a passport allowing AIFMs to market the SICARs’ shares and partnership interests to professional investors within the European Union through a regulator-to-regulator notification regime. 

References: Article 47(1) of the amended law of 15 June 2004 relating to SICAR; SICAR and AIFM (i), September 16, 2020, Bertrand Mariaux

*Podcast #272:

European Passport - SICAR and AIFM (ii) - #272-261* *Article #272-261 *YouTube Video 261| . . . . . . . .

*YouTube Video 261|: 

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)

SICAR and AIFM (i) - #270-259*

An investment company in risk capital (société d’investissement en capital à risque - “SICAR”) that qualifies as alternative investment fund (“AIF”) is generally required to appoint an alternative investment fund manager (“AIFM”). 

The AIFM must either be:

• an AIFM established in Luxembourg authorised pursuant to the law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”) ; or, 

• an AIFM established in another EU Member State; or in,

• a third country authorised under Directive 2011/61/EU on Alternative Investment Fund Managers (The “AIFM Directive”).

References: Article 47(1) of the amended law of 15 June 2004 relating to SICAR; the AIFM Directive and Chapter 2 of the AIFM Law; What Is an Alternative Investment Fund?, September 15, Bertrand Mariaux.

*Podcast #270:

SICAR & AIFM (i) #270-259* *Article #270-259 *YouTube Video 259| . . . . . . . . #ImpactInvesting , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVenture , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #AIF , #AIFM , #AIFMD , #ResponsibleFinance , #domiciliation , #SICAR Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 259|: 

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)

Financial Reports & Disclosure Obligations (SICAR) - #268-257*

An investment company in risk capital (société d’investissement en capital à risque - “SICAR”) shall draw up a prospectus. An annual report (for each financial year) shall also be produced. But a semi-annual report is not necessary.

Key information documents (“KID”) for packaged retail and insurance-based investment products (“PRIIPs”) are also required if retail investors can make investments. 

References: Article 23(1) of the amended law of 15 June 2004 relating to SICAR; Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on KID for PRIIPs; Authorisation and Supervision (SICAR), September 14, 2020, Bertrand Mariaux.

*Podcast #268:

Financial Reports & Disclosure Obligations #268-257* *Article #268-257 *Podcast #268 *YouTube Video 257| #ImpactInvesting , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVenture , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #AIF , #AIFM , #AIFMD , #ResponsibleFinance , #domiciliation , #SICAR Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 257|: 

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)

Which Corporate Formations Are Commonly Used in Impact Investment Funds? - #246-235*

We mentioned earlier that the most commonly used forms of investment funds in impact finance are the undertaking for collective investment in transferable securities (UCITS), the specialised investment funds (SIF - fonds d’investissement spécialisés), the investment company in risk capital (société d’investissement en capital à risque - SICAR), the undertaking for collective investment (UCI) Part II fund and finally the reserved alternative investment fund (RAIF). These investment funds are generally structured and need traditional business formations to operate. Which corporate forms are mostly used? The most commonly used corporate formations for investment funds are: 

• the public limited liability company (société anonyme - SA) - on which we extensively wrote these past few weeks;

• the limited liability company (société à responsabilité limitée - SARL);

• the partnership limited by shares (société en commandite par actions - SCA);

• the limited partnership (société en commandite simple - SCS); we have also covered the main legal aspects of it in past publications; and

• the special limited partnership (société en commandite spéciale - SCSp); - likewise, we have dealt with the main legal aspects of it in past publications.

References: for UCITS and Part II Funds see: Law of 17 December 2010 relating to undertakings for collective investment as amended; for SIF see: Law of 13 February 2007 relating to specialised investment funds as amended; for SICAR see: Law of 15 June 2004 relating to the investment company in risk capital as amended; for RAIF see: Law of 23 July 2016 on reserved alternative investment funds, as amended; What is a RAIF?, 17 June 2020, Bertrand Mariaux; and the following publications deal with the main and general corporate law questions on the some of the aforementioned corporate formations in French: 

• for SA see publications: Qu’est-ce qu’une société anonyme ? 29 July 2020 (from this date), Bertrand Mariaux; to: L’acquisition d’actif des fondateurs (1/10ème du capital) par la SA, 20 August 2020 (to this date), Bertrand Mariaux; 

• for SCS see publications: Qu’est-ce qu’une société en commandite simple (SCS) ? 18 June 2020 (from this date), Bertrand Mariaux; to: Le rachat ou la réduction des parts d’intérêts d’un associé (SCS), 6 juillet 2020 (to this date), Bertrand Mariaux; and finally, 

• for SCSp, please see publications: Qu’est-ce qu’une société en commandite spéciale ?, 7 juillet 2020 (from this date), Bertrand Mariaux; to: La transformation d’une SCSp et la personnalité juridique, 28 juillet 2020 (to this date), Bertrand Mariaux.

*Podcast #246:

Which Corporate Formations Are Commonly Used in Impact Investment Funds? #246-235* *Article #246 *Podcast #246 *YouTube Video 235| . . . . . . . .

*YouTube Video 235|:

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

Prestation de serment: 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 en droit européen et international - mention économique, 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)

Which Structures Are Mainly Used in Impact Finance? - #245-234*

All Luxembourg investment funds vehicles can be used in responsible finance, whether they are regulated retail funds or professional investment funds, with a European marketing passport, multiple compartments umbrella funds (with different investment strategies in each compartment and separate profit and loss accounts). The defining basic factors include: (i) the nature of the investment and (ii) the target investors.

The most popular investment funds vehicles are: 

• the undertaking for collective investment in transferable securities (UCITS - organismes de placement collectif en valeurs mobilières (OPCVM), the standardised EU retail fund - UCITS are highly regulated;

• the specialised investment funds (fonds d’investissement spécialisés) (SIF) - which provides flexibility and fiscal efficiency. The SIF is a multipurpose vehicle which can be used for all asset classes;

• the investment company in risk capital (société d’investissement en capital à risque - SICAR). The SICAR is specifically designed for private equity investment and venture capital;

• the undertaking for collective investment (UCI) Part II. The UCI Part II fund is flexible but more regulated;

• the reserved alternative investment funds (RAIF) - fonds d’investissement alternatifs réservés - fast-time-to-market, it is regulated through the fund manager.

Funds with ESG features usually take the form of a UCITS or a SIF.

References: for UCITS / OPCVM and Part II Funds see: Law of 17 December 2010 relating to undertakings for collective investment as amended; for SIF see: Law of 13 February 2007 relating to specialised investment funds as amended; for SICAR see: Law of 15 June 2004 relating to the investment company in risk capital as amended; for RAIF see: Law of 23 July 2016 on reserved alternative investment funds, as amended; What is a RAIF?, 17 June 2020, Bertrand Mariaux.

*Podcast #245:

Which Structures Are Mainly Used in Responsible Finance? #245-234* *Article #245 *YouTube Video 234| . . . . . . . .

*YouTube Video 234|:

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

Prestation de serment: 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 en droit européen et international - mention économique, 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)