In part, the changes anticipate requirements due to be introduced by the Directive on Alternative Investment Funds (AIFM Directive) – specifically with regards to risk management, conflicts of interests and the delegation of third parties.
The most significant part of the new law, which was passed on 6 March, strengthens the regulatory framework for SIFs by requiring those launching the funds to receive approval prior to carrying out their activities. This new requirement will slow down the process through which SIFs have been brought to market in Luxembourg since their introduction under the Luxembourg law of 13 February 2007.
According to James Lasry, head of funds at international law firm Hassans, the change in the law may make other fund jurisdictions more attractive, including Gibraltar where his firm is based, which he believes is now the quickest.
“As a result of the new Luxembourg law that removes the possibility for fund to launch before receiving formal authorisation from the regulator (a process that often takes about 3 months), Gibraltar emerges as the fund jurisdiction within the European Union that has the quickest potential time to market for a fund.
“Under the Gibraltar Experienced Investor Fund (EIF) regime, a fund can launch on the basis of opinion from senior Gibraltar counsel stating that the fund has been set up in accordance with the EIF Regulations can launch provided that within 14 days of that launch it notifies the regulator with copies of all the documents.”
