European Investment Funds Initiatives - Impact Finance - #247-236*

We have touched on some of the main Impact Finance structures available in Luxembourg. There are also a few European initiatives:

• the European Social Entrepreneurship Fund (“EuSEF”) Regulation; it provides a framework for European social entrepreneurship projects at EU level. EuSEF is a label. It aims at positive social impacts;

• the European Long Term Investment Fund (“ELTIF”) Regulation; this is generally a closed-ended fund designed to channel capital into companies and encourage long-term saving. EU alternative investment funds can apply for the ELTIF label; and

• the European Venture Capital Fund Regulation (“EuVECA”) which is specifically designed for European venture capital projects.

References: 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); Which Structures Are Mainly Used in Impact Finance?, 21 August 2020, Bertrand Mariaux.

*Podcast #247:

European Investment Funds Structures - Impact Finance #247-236* *Article #247 *Podcast #247 *YouTube Video 236| . . . . . . . .

*YouTube Video 236|:

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 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)