The RAIF has similar features to the Luxembourg specialised investment funds (SIFs) and SICARs. However, unlike its counterparts, it does not need to be approved and is not supervised by Luxembourg’s financial regulator, the CSSF.
Complementary regime
Denise Voss, chairman of the Association of the Luxembourg Fund Industry (ALFI), welcomed the move: “The future Luxembourg RAIF Law will provide an additional – complementary – alternative investment fund regime which is similar to both the [SIF] and SICAR regimes.”
Fund managers will benefit from a reduced time-to-market, explained Jacques Elvinger, partner at Elvinger, Hoss & Prussen and Chairman of ALFI’s regulation advisory board.
“Going forward, managers will be able to choose whether to set up their Luxembourg AIF as Part II UCI, SIF or SICAR if they or their investors prefer for the AIF to be supervised by the CSSF; or to set up their AIF as a RAIF, which does not need to be approved and supervised by the CSSF, with consequent time-to-market benefits,” Elvinger said.
“The new structure will complement our attractive range of investment fund products in Luxembourg and we believe this demonstrates the understanding the Luxembourg lawmaker has of the needs of the fund industry to best serve the interests of investors.”
Flexible and innovative
Claude Niedner, partner at the law firm Arendt & Medernach and Chairman of ALFI’s alternative investments committee, said: “A regime of double authorisation and supervision is not required by the alternative investment fund managers directive (AIFMD).
“The AIFMD regulates the managers of AIFs, and ‘only’ asks them to ensure that the AIF complies with certain product rules and to report on its AIFs on a regular basis. The RAIF legislation will enable Luxembourg and foreign AIFMs to benefit from a flexible and innovative investment fund vehicle.”
AIFM required
In order to ensure sufficient protection and regulation via its manager, a RAIF must be managed by an authorised external alternative investment fund manager (AIFM). The latter can be domiciled in Luxembourg or in any other EU member state.
If it is authorised and fully in line with the requirements of the AIFMD, the AIFM can make use of the marketing passport to market shares or units of RAIFs on a cross-border basis. As is the case for Luxembourg SIFs and SICARs, shares or units of RAIFs can only be sold to well-informed investors.
“The new structure will complement our attractive range of investment fund products in Luxembourg and we believe this demonstrates the understanding the Luxembourg lawmaker has of the needs of the fund industry to best serve the interests of investors,” Voss concluded.
