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)

What Is the Legal Framework of a RAIF? - #252-241*

As you know, if you followed our previous publications a reserved alternative investment fund (RAIF) is primarily governed by :

1. the amended Luxembourg law of 23 July 2016 on reserved alternative investment fund (the “RAIF Law”) ; as well as,

2. the amended law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”).

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

The RAIF shall also comply with other pieces of regulation, 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 etc.).

References: the RAIF Law (as defined above); the AIFM Law (as defined above); the EU Regulation 2017/1131 on money market funds; the amended markets in financial instruments European Directive, the MIFID II; the amended law of 10 August 1915 on commercial companies; What is a RAIF?, June 17, 2020, Bertrand Mariaux.

*Podcast #252:

What Is the Legal Framework of a RAIF? #252-241 Article #252-241 YouTube Video: 241| . . . . . . . .

*YouTube Video 241|: 

What Is the Legal Framework of a RAIF? #252-241 Article #252-241: Podcast #252: https://anchor.fm/bmapodcast/episodes/What-Is-the-Legal-Framework-of-a-RAIF--...

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)

Determination of the AIFM - #251-240*

The alternative investment fund manager (“AIFM”) must be determined in accordance with the amended law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”) or pursuant to Directive 2011/61/EU (the “AIFM Directive”).

Each alternative investment fund (“AIF”) established in Luxembourg and managed within the scope of the AIFM Law must have a single AIFM. This AIFM shall then be responsible for ensuring compliance with the provisions of the AIFM Law.

The AIFM shall either be:

1. an external AIFM - the external AIFM may be an AIFM established in:

   • Luxembourg;

   • another Member State; or in

   • a third country duly authorised pursuant to the AIFM Directive; or

2. where the legal form of the AIF permits an internal management and where the AIF’s governing body chooses not to appoint an external AIFM, the AIF itself, which shall then be authorised as AIFM.

References: Article 4(1) of AIFM Law, as defined above (correspondence in the Directive: Article 5(1) of the AIFM Directive - the AIFM Law transposes the AIFM Directive into Luxembourg law); AIFM & RAIF - ii, August 26, 2020, Bertrand Mariaux.

*Podcast #251:

Determination of the AIFM - #251-240* Article #251-240 YouTube Video : 240| . . . . . . . .

*YouTube Video 240|: 

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)