Eligible Investors (SICAR) - #263-252*

Investment in an investment company in risk capital (société d'investissement en capital à risque - “SICAR”) is reserved to “well-informed” investors. 

The amended law of 15 June 2004 relating to SICAR (the “SICAR Law”) defines well informed investors as: 

• institutional investors;

• professional investors; or

• any investor who meets the following conditions:

1. the investor has confirmed in writing that he adheres to the status of well-informed investor; and

2. the investor invests a minimum of 125,000€ in the SICAR, or

3. the investor has been assessed by: 

   • a credit institution;

   • an investment firm; or

   • a management company, which certifies his expertise, his experience and his knowledge in adequately appraising an investment in risk capital.

References: Article 2 §1 of the SICAR Law; Investment Company in Risk Capital (SICAR) - Introduction, September 7, 2020, Bertrand Mariaux.

*Podcast #263:

Eligible Investors (SICAR) - #263-252* *Article #263-252 *YouTube Video 252| . . . . . . . .

*YouTube Video 252|: 

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)

Investment Company in Risk Capital (SICAR) - Introduction - #262-251*

An investment company in risk capital (société d'investissement en capital à risque - “SICAR”) is a financial vehicle tailored for private equity and venture capital investments. It may qualify as an alternative investment fund (“AIF”). Securities or partnership interests of the SICAR are reserved to well-informed investors. SICARs that have appointed a European alternative investment fund manager (“AIFM”) can market their securities or partnership interests to investors across Europe via a specific passport. 

References: Articles 1(1) & (2) of the amended law of 15 June 2004 relating to SICAR (the “SICAR Law”); for specific provisions applicable to SICARs managed by an alternative investment fund manager, see: Part II – Specific provisions applicable to SICARs managed by an AIFM authorised under Chapter 2 of the law of 12 July 2013 on alternative investment fund managers or under Chapter II of Directive 2011/61/EU of the SICAR Law; for the definition of well informed investors, see Article 2 §1 of the SICAR Law.

*Podcast #262:

Investment Company in Risk Capital (SICAR) - Introduction - #262-251* *Article #262-251 *YouTube Video 251| . . . . . . . .

*YouTube Video 251|: 

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)

Administration, Safekeeping & Servicing (RAIF) - #261-250*

The central administration of a reserved alternative investment fund (“RAIF”) must be located in Luxembourg. A central administration agent may be appointed to act as a domiciliary agent, registrar and transfer agent. This agent may then keep the accounts and calculate the net asset value. A RAIF is then not required to have employees in its own premises. Other typical service providers include lawyers, portfolio managers, investment advisers, distributors, paying agents. 

Safekeeping

The assets of a RAIF must be entrusted to a depositary for safe-keeping 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. 

Auditing

RAIFs must have the accounting information given in their annual report audited by a licenced independent auditor (réviseur d’entreprises agréé).

References: Articles 1(1)§1, 5(1), 5(2), 5(3)§1, §2 and 43(1) §1 of the amended law of 23 July 2016 on RAIFs;  Financial Reporting & Disclosure Obligations (RAIF), September 4, 2020, Bertrand Mariaux.

*Podcast #261:

Administration, Safekeeping & Servicing (RAIF) #261-250* *Article #261-250 *Podcast #261 *YouTube Video 250| . . . . . . . .

*YouTube Video 250|: 

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 (RAIF) - #259-248*

Reserved alternative investment funds (“RAIF”) must qualify as alternative investment funds (“AIF”) under the Law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”). 

Under applicable provisions every RAIF must be managed by an alternative investment fund manager (“AIFM”).

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, 4(1) and 50 of the amended law of 23 July 2016 on RAIFs; Directive 2011/61/EU of 8 June 2011 on AIFM; AIFM and RAIF - i, August 25, 2020, Bertrand Mariaux.

*Podcast #259:

*YouTube Video 248|: 

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 Reporting & Disclosure Obligations (RAIF) - #258-247*

A reserved alternative investment fund (“RAIF”) and its management company must establish an offering document or a prospectus. An annual report (for each financial year) must also be produced. A semi-annual report is not necessary.

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

References: Article 38(1) and (3) of the amended law of 23 July 2016 on RAIFs; Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on KID for PRIIPs; Creation & Indirect Supervision - (RAIF), September 3, Bertrand Mariaux.

*Podcast #258:

*YouTube Video 247|: 

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)

Creation & Indirect Supervision - (RAIF) - #257-246*

A reserved alternative investment fund (“RAIF”) shall be recorded in a notarial deed (within 5 working days of its constitution). 

As the RAIF is managed by an alternative investment fund manager (an “AIFM”), it is sufficient to produce a notice that the AIFM manages the RAIF. 

This notice shall be deposited with the register of commerce and companies in order to be published at the recueil électronique des sociétés et associations. But the RAIF’s constitutional documents do not have to be notarized. 

The RAIF must be registered on a list held by the register of commerce and companies within 20 days following the recording of its constitution by notarial deed. 

As the AIFM of the RAIF is supervised by the CSSF - but not the RAIF itself, the offering documents must include, on the cover page, that the RAIF is not subject to the supervision by a Luxembourg supervisory authority.

References: Articles 34(1), (2) & (3) and 39 § 2 of the amended law of 23 July 2016 on RAIFs; Indirect Supervision - RAIF, September 2, 2020, Bertrand Mariaux.

*Podcast #257:

Creation and Indirect Supervision - (RAIF) - #257-246* Article #257-246 YouTube Video : 246| . . . . . . . .

*YouTube Video 246|: 

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)

Indirect Supervision - RAIF - #256-245*

As you may know if you followed us, a reserved alternative investment fund (“RAIF”) is not directly supervised by the financial regulator, the Commission de Surveillance du Secteur Financier (the “CSSF”). However, the RAIF must be managed by an alternative investment fund manager (an “AIFM”), the CSSF is advised about the activities of the RAIF via the AIFM. The AIFM is subject to reporting requirements vis-à-vis the CSSF.

References: AIFM and RAIF - i, August 25, 2020, Bertrand Mariaux.

*Podcast #256:

Article #256-245 YouTube Video : 245| . . . . . . . .

*YouTube Video 245|: 

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)

Minimum Net Assets (RAIF)(ii) - #255-244*

Another aspect to bear in mind for the capital base of a reserved alternative investment fund (“RAIF”) is the timing to reach the minimum net assets. 

For a common fund (fonds commun de placement - “FCP”), the 1,250,000 euros minimum net assets must be reached within a period of 12 months following the entry into force of the management regulations of the FCP.

For an investment company with variable capital (“SICAV” - société d’investissement à capital variable), this minimum of 1,250,000 euros must be reached within 12 months following the incorporation of the SICAV.

And finally, for RAIFs which do not have the legal form of a SICAV / FCP, this amount must also be reached within 12 months.

What is the percentage to be paid up at subscription?

The capital of a SICAV must be entirely subscribed, and at least 5 per cent of the subscription amount per share or unit must be paid up in cash or by means of a contribution other than cash.

If the reserved alternative investment fund is constituted in the form of a public limited company, a corporate partnership limited by shares or a private limited company, its capital must be entirely subscribed and at least 5 per cent of each share or unit must be paid up in cash or by means of a contribution in kind.

References: Articles 20, 25, 26(3), 32(1), 32(6) of the amended law of 23 July 2016 on RAIFs; Minimum Net Assets (RAIF), August 31, 2020, Bertrand Mariaux.

*Podcast #255:

*YouTube Video 244|: 

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)

Minimum Net Assets (RAIF) - #254-243*

Let us consider the reserved alternative investment fund (“RAIF”) as (i) a common fund (fonds commun de placement - “FCP”), (ii) an investment company with variable capital (“SICAV” - société d’investissement à capital variable) and (iii) the RAIF which does not have the legal form of a SICAV / FCP:

1. the net assets of an FCP shall not be less than 1,250,000 euros. 

2. the subscribed capital of the SICAV, increased by the share premiums or the value of the amount constituting partnership interests, may not be less than 1,250,000 euros; 

3. the subscribed capital, increased by share premiums, or the value of the amount constituting partnership interests of RAIFs which do not have the legal form of a SICAV or FCP, may also not be less than 1,250,000 euros.

References: Articles 20, 25 and 32 of the amended law of 23 July 2016 on RAIFs; What Are the Legal Forms of a RAIF? August 29, 2020, Bertrand Mariaux.

*Podcast #254:

What Are the Minimum Net Assets of a RAIF? #254-243* Article #254-243 YouTube Video : 243| . . . . . . . .

*YouTube Video 243|: 

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 Are the Legal Forms of a RAIF? - #253-242*

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 limit 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”); What Is the Legal Framework of a RAIF? August 28, 2020, Bertrand Mariaux.

*Podcast #253:

Article #253-242 YouTube Video : 242| . . . . . . . .

*YouTube Video 242|: 

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)