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)

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)