What Is the Legal Framework for a UCI Part II Fund? - #292-281*

We examined together some foundational structures used for impact finance funds: the specialised investment fund (“SIF”), the investment company in risk capital (société d’investissement en capital à risque - “SICAR”) and the reserved alternative investment fund (“RAIF”). A fund set up under Part II of the amended law of 17 December 2010 relating to undertakings for collective investment (a “UCI Part II Fund”) is also used for impact finance. 

A UCI Part II Fund is primarily governed by the amended law of 17 December 2010 relating to undertakings for collective investment. 

The law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”) is also applicable to UCI Part II Funds.

If UCI Part II Funds invest in short-term assets and have distinct objectives offering returns in accordance with money market rates, or where UCI Part II Funds intend to preserve the value of the investment, they must comply with the EU Regulation 2017/1131 on money market funds.

UCI Part II Funds shall also comply with applicable national regulation(s), as well as EU regulations (on anti-money laundering, the amended markets in financial instruments Directive (“MIFID II”), derivatives, securities and general corporate law).

References: the amended law of 17 December 2010 relating to undertakings for collective investment; Which Structures Are Mainly Used in Impact Finance? August 21, 2020, Bertrand Mariaux; How to set up a UCI Part II Fund, Luxembourg for Finance, January 2019.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #292:

Go to: https://mariauxavocats.com/vademecum Subscribe to our YouTube channel: Bertrand Mariaux Avocats and to our podcast: The Law & Impact Podcast | Le Podcast du droit et de l'impact Follow us on LinkedIn & Facebook: @BertrandMariauxAvocats ; @MariauxAvocats Instagram: @ThriveAndAccomplishYourMission Twitter: @BertrandMariaux What Is the Legal Framework for a UCI Part II Fund?

*YouTube Video 281|: 

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)

UCI PART II FUND - #291-280*

There are three main characteristics of a fund set up under Part II of the amended law of 17 December 2010 relating to undertakings for collective investment (“UCI Part II Fund”): 

1. it may invest in all types of assets; 

2. it qualifies as an alternative investment fund (“AIF”); and finally,

3. if the UCI Part II Fund is managed by a European alternative investment fund manager, it can market its securities or partnership interests across the European Union.

References: Article 88-1§1 of the amended law of 17 December 2010 relating to undertakings for collective investment; Which Structures Are Mainly Used in Impact Finance? August 21, 2020, Bertrand Mariaux; How to set up a UCI Part II Fund, Luxembourg for Finance, January 2019.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung

*Podcast #291:

Go to: https://mariauxavocats.com/vademecum Subscribe to our YouTube channel: Bertrand Mariaux Avocats and to our podcast: The Law & Impact Podcast | Le Podcast du droit et de l'impact Follow us on LinkedIn & Facebook: Bertrand Mariaux Avocats Instagram: @ThriveAndAccomplishYourMission Administration & Services (SIF) #290-278* *Article #291-279* *Podcast #291 *YouTube Video 280* .

*YouTube Video 280|: 

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 & Services (SIF) - #290-279*

We discussed safekeeping and the depositary when it comes to a specialised investment fund (“SIF”). Let’s now continue to the other important administrative and professional services aspects that must be kept in mind when setting up a SIF. The law states that the directors of the SIF must be of sufficiently good repute and have sufficient experience for performing their functions (the so-called: “Fit and Proper Test” as conducted by the CSSF). The law also says that SIFs must have the accounting information provided in their annual report audited by an approved statutory auditor (réviseur d’entreprises agréé). Service providers also include lawyers, domiciliation agents, management companies (portfolio and risk management...), investment advisers, distributors and paying agents. 

Finally, SIFs shall be deemed to be situated in Luxembourg if: 

• the registered office of the management company of the common fund is situated in Luxembourg; or if, 

• the registered office of the investment company is situated in Luxembourg (and the registered office of the general partner of the investment company if applicable). 

References: 55(1), 42(3)§1 and 3 of the amended law on SIF of 13 February 2007; Safekeeping (SIF) October 6, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung

*Podcast #290:

Subscribe to our YouTube channel: Bertrand Mariaux Avocats Follow us on LinkedIn & Facebook: Bertrand Mariaux Avocats Instagram: @ThriveAndAccomplishYourMission Administration & Services (SIF) #290-278* *Article #290-278* *Podcast #290 *YouTube Video 278* . . . . . . . .

*YouTube Video 278|: 

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 (SIF) - #289-278*

The custody of the assets of a specialised investment fund (“SIF”) must be entrusted to a Luxembourg depositary, as stated by the legislator.

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

• 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, other institutions may also act as depositary of assets other than financial instruments.

References: Article 16(1), (3)§1 and §2 of the amended law on SIF of 13 February 2007; Management (SIF), October 5, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #289:

Safekeeping (SIF) #289-278* *Article #289-278* *Podcast #289 *YouTube Video 278| . . . . . . . . #ImpactFinance , #ServeAndThrive , #lawyer , #ThriveAndAccomplishYourMission , #MariauxAvocats , #ImpactInvesting , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVentureCapital , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #ResponsibleFinance , #domiciliation , #SIF Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 278|: 

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 (SIF) - #288-277*

As previously described, a specialised investment fund (“SIF”) may take the form of either:

• an open or closed ended common contractual fund (fonds commun de placement - “FCP”); or

• an open or closed ended investment company with variable capital (société d’investissement à capital variable - “SICAV”), or fixed capital (société d’investissement à capital fixe - “SICAF”).

An FCP must be managed by a management company. The management company shall draw up the management regulations for the common funds. 

The SICAV/SICAF has the choice to be self-managed or to have a management company. If the SICAV/SICAF is self-managed, whereby its board of directors or the general partner is entrusted with the functions usually devoted to a management company (risk management, portfolio management etc.…), it can only manage assets of its own portfolio. It is therefore not possible for a self-managed SICAV/SICAF to manage the assets of a third-party.

References: Which Legal Forms May take the SIF? September 28, 2020, Bertrand Mariaux; Article 12(1)§1 of the amended law on SIF of 13 February 2007.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #288:

Management (SIF) #288-277* *Article #288-277* *YouTube Video 277| . . . . . . . . #ImpactFinance , #ServeAndThrive , #lawyer , #ThriveAndAccomplishYourMission , #MariauxAvocats , #ImpactInvesting , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVentureCapital , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #ResponsibleFinance , #domiciliation , #SIF Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 277|: 

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 (SIF) - #287-276*

Specialised investment funds (“SIFs”) qualifying as European Social Entrepreneurship Funds (“EuSEF”) or European Venture Capital (“EuVECA”) funds have the option to be 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.

Contributor: Cédric Buisine, Avocat

*Podcast #287:

European Social Entrepreneurship & European Venture Capital Funds - SIF #287-276* *Article #287-276* *Podcast #287 *YouTube Video 276| . . . . . . . .

*YouTube Video 276|: 

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 - SIF and AIFM (ii) - #286-275*

A specialised investment fund (“SIF”) may qualify as an alternative investment fund (“AIF”). The AIF is managed by an authorised European alternative investment fund manager (“AIFM”). The SIF then benefits from a passport allowing AIFMs to market the SIF’s shares and partnership interests to professional investors within the European Union through a regulator-to-regulator notification regime. 

References: Article 80(1) of the amended law on SIF of 13 February 2007; SIF and AIFM (i), October 2, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #286:

European Passport - SIF and AIFM (ii) #286-275* *Article #286-275* *YouTube Video 275| . . . . . . . . #ImpactFinance , #ServeAndThrive , #lawyer , #ThriveAndAccomplishYourMission , #MariauxAvocats , #ImpactInvesting , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVentureCapital , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #ResponsibleFinance , #domiciliation , #SIF Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 275|: 

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)

SIF and AIFM (i) - #285-274*

A specialised investment fund (“SIF”) that qualifies as an 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 80(1) of the amended law on SIF of 13 February 2007; the AIFM Directive and Chapter 2 of the AIFM Law; What Is an Alternative Investment Fund?, September 15, 2020, Bertrand Mariaux. 

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #285:

SIF and AIFM (i) #285-274* *Article #285-274* *Podcast #285 *YouTube Video 274| . . . . . . . . #ImpactFinance , #ServeAndThrive , #lawyer , #ThriveAndAccomplishYourMission , #MariauxAvocats , #ImpactInvesting , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVentureCapital , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #ResponsibleFinance , #domiciliation , #SIF Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 274|: 

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 (SIF) - #284-273*

For a specialised investment fund (“SIF”), the investment company and the management company, for each of the common funds (“FCP”) it manages, must establish:

• an offering document or a prospectus, and

• an annual report for each financial year - the annual report must be available to investors within six months from the end of the period to which it relates. 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 (as defined under the MIFID legislation) can make investments. 

References: Article 52(1) & (2) of the amended law on SIF of 13 February 2007; Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on KID for PRIIPs; Authorisation and Supervision (SIF), September 30, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #284:

284-273* Financial Reports & Disclosure Obligations (SIF) *Article #284-273* *YouTube Video 273| . . . . . . . . #ImpactFinance , #ServeAndThrive , #lawyer , #ThriveAndAccomplishYourMission , #MariauxAvocats , #ImpactInvesting , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVentureCapital , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #ResponsibleFinance , #domiciliation , #SIF Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 273|: 

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)

Authorisation and Supervision (SIF) - #283-272*

Specialised investment funds (“SIFs”) must be authorised by the financial regulator (the Commission de Surveillance du Secteur Financier - the “CSSF”). A SIF shall be authorised only if the CSSF has approved its constitutive documents and the choice of the depositary. SIFs must submit their offering document and any amendments thereto, as well as their annual report, to the CSSF. 

The CSSF supervises a SIF on an ongoing basis, which is subject to regular reporting requirements.  

The CSSF levies a fee for the authorisation and supervision and keeps an official list of authorised SIFs. Lawyers or bankers are generally involved in the submission of the application to the CSSF.

References: Articles 42(1), (2) and 43(1) of the amended law on SIF of 13 February 2007; Grand-ducal Regulation of 21 December 2017 relating to the fees to be levied by the Commission de Surveillance du Secteur Financier; Which Legal Forms May take the SIF? September 28, 2020, Bertrand Mariaux.

Contributor: Cédric Buisine, Avocat

Editor: Hannah Seulgee Jung 

*Podcast #283:

Authorisation and Supervision (SIF) #283-272* *Article #283-272* *YouTube Video 272| . . . . . . . .

*YouTube Video 272|: 

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)