Which Legal Forms May Take a UCI Part II Fund? - #294-283*

As previously touched on, 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”) can take the form of either an open or closed ended: 

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

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

A SICAV or a SICAF would typically be set-up as a Public Limited Liability Company (société anonyme) or as a Corporate Partnership Limited by Shares (société en commandite par actions).

An FCP or a SICAV / SICAF could be set up as an umbrella fund with multiple compartments or as a single fund. The single fund or the umbrella fund may have an unlimited number of shares / unit classes (issued against the fund or a dedicated compartment of an umbrella fund) - depending on the needs of the investor to whom it is distributed.

References: the amended law of 17 December 2010 relating to undertakings for collective investment; What Is the Legal Framework for a UCI Part II Fund? October 9, 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 #294:

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 Which Legal Forms May Take a UCI Part II Fund?

*YouTube Video 283|: 

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 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)

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)

Management (RAIF) - #271-260*

As previously mentioned, a reserved alternative investment fund (a “RAIF”) may take the form of a common fund (“FCP” - fonds commun de placement). 

We also stated that a RAIF may take the form of an investment company with variable capital (société d'investissement à capital variable - “SICAV”). And finally the RAIF can take the form of an investment company with a fixed capital (société d’investissement à capital fixe - “SICAF”).

The FCP shall be managed by a management company as it has no legal personality. A SICAV or a SICAF may either be self-managed or appoint a management company. Self-managed SICAVs/SICAFs may only manage assets of their own portfolios and may not manage assets on behalf of a third party. The management company of an FCP must prepare the management regulations for the FCP.

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

*Podcast #271:

Management (RAIF) #271-260* *Article #271-260 *YouTube Video 260| . . . . . . . . #ImpactInvesting , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVenture , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #AIF , #AIFM , #AIFMD , #ResponsibleFinance Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 260|: 

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 (SICAR) - #267-256*

The investment company in risk capital (“SICAR”) must be authorised by the financial regulator (the Commission de Surveillance du Secteur Financier (“CSSF”)). A SICAR is supervised by the CSSF on an ongoing basis and is subject to regular reporting requirements. A SICAR shall be authorised only if the CSSF has approved its constitutional documents and the choice of the depositary. The amendments of the constitutional documents of the SICAR are subject to the approval by the CSSF. The CSSF levies a fee for the authorisation and supervision and keeps an official list of authorised SICARs. The list is published.

References: Articles 11(1), 12(1), (2), (4) & 13(1) of the amended law of 15 June 2004 relating to SICAR; Grand-ducal Regulation of 21 December 2017 relating to the fees to be levied by the Commission de Surveillance du Secteur Financier.

*Podcast #267:

Authorisation and Supervision (SICAR) #267-256* *Article #267-256 *YouTube Video 256| . . . . . . . . #ImpactInvesting , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #SocialImpact , #impact , #ImpactSocial , #SocEnt , #MissionDriven , #MissionDrivenVenture , #EU , #DFI , #SocialVenture , #AssetManagement , #sustainability , #AlternativeInvestment , #SustainableFinance , #ResponsibleInvestment , #AIF , #AIFM , #AIFMD , #ResponsibleFinance , #domiciliation Any content published on MariauxAvocats.com does not constitute legal advice.

*YouTube Video 256|: 

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 legal form of a SICAR? - #266-255*

The investment company in risk capital (“SICAR”) may not be created in the form of a contract. The SICAR must be set up in the form of a corporate entity. Instruments of incorporation are required. The SICAR could have a fixed or a variable capital. Single fund or umbrella set-up (with multiple compartments) is possible. 

In the case of an umbrella fund, each compartment represents a distinct part of the SICAR’s assets and liabilities. The fund and the compartments are not limited as regards the number of classes of shares. This can then be tailored on investors’ needs or based on to whom the fund is distributed.

References: Articles 1(1) §1 and 3(2) of the amended law of 15 June 2004 relating to SICAR; Legal Framework (SICAR), September 11, 2020, Bertrand Mariaux.

*Podcast #266:

What is the legal form of a SICAR? #266-255* *Article #266-255 *YouTube Video 255| Any content published on MariauxAvocats.com does not constitute legal advice. Its sole purpose is to provide general information at the date of publication. Whenever necessary, it is preferable to seek advice from a licensed lawyer.

*YouTube Video 255|: 

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)

Legal Framework (SICAR) - #265-254*

An investment company in risk capital (société d’investissement en capital à risque - “SICAR”) is primarily governed by the amended law of 15 June 2004 relating to SICAR (the “SICAR Law”). The SICAR Law was amended by the Law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”). 

Indeed, there are two parts in the SICAR Law: 

• Part I refers to the general provisions applicable to all SICARs;

• Part II concerns the specific provisions applicable to SICARs qualifying as alternative investment funds (“AIFs”). AIFs are defined by the AIFM Law. AIFs must be managed by an alternative fund manager (“AIFM”). Most SICARs qualify as AIFs.

Another piece of legislation must be applied especially if SICARs invest in short-term assets or have distinct objectives offering returns in accordance with money market rates or where SICARs intend to preserve the value of the investment. The SICAR must then comply with the EU Regulation 2017/1131 on money market funds.

SICARs shall also comply with other pieces of legislation, at national and EU level (on anti money laundering, the amended markets in financial instruments Directive (The “MIFID II”), market abuse, derivatives, securities and general corporate law...).

References: Articles 1(39) and 4(1) of the AIFM Law; the EU Regulation 2017/1131 on money market funds; Determination of the AIFM, August 27, 2020, Bertrand Mariaux.

*Podcast #265:

Legal Framework (SICAR) #265-254* *Article #265-254 *YouTube Video 254| Any content published on MariauxAvocats.com does not constitute legal advice. Its sole purpose is to provide general information at the date of publication. Whenever necessary, it is preferable to seek advice from a licensed lawyer.

*YouTube Video 254|: 

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)

Eligible Assets (SICAR) - #264-253*

An investment company in risk capital (société d’investissement en capital à risque - “SICAR”) must invest its assets in securities representing risk capital. 

The amended law of 15 June 2004 relating to SICAR (the “SICAR Law”) defines investment in risk capital.

Investment in risk capital is the (i) direct or indirect contribution of assets to (ii) entities; 

in view of their,

• launch;

• development; or 

• listing on a stock exchange.

References: Article 1(1) & (2) of the SICAR Law; Eligible Investors (SICAR), Septembre 8, 2020, Bertrand Mariaux.

*Podcast #264:

Eligible Assets (SICAR) #264-253* *Article #264-253 *YouTube Video 253| . . . . . . . .

*YouTube Video 253|: 

Eligible Assets (SICAR) #264-253* *Article #264-253 *Podcast #264 *YouTube Video 253|

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)