Luxemburg Fund

1.Legal structure of a SICAV/SICAF Investment Fund in Luxembourg

Concept

The SICAV and SICAF are investment fund structures in Luxembourg which may be formed as UCITS (Collective Investment of Transferable Securities) Funds or as Specialised Investment Funds (SIF).  Their purpose is the investment of the share capital in securities or in other liquid financial investments in accordance with the principle of diversification to allow the shareholders to receive the earnings generated from the management of their assets.  The SICAV and SICAF Investment Funds are only permitted to manage the assets in their own portfolios.

A SICAV (Société d’Investissement à Capital Variable) in Luxembourg is an investment fund in the form of an Investment Company whose share capital is variable and the value of which at any time matches the value of the net assets of all the sub-funds, constituted as shares without a statement of their nominal value. In contrast thereto, a SICAF Investment Fund (Société d’Investissement à Capital Fixe) in Luxembourg exists in the form of an Investment Company whose share capital is fixed.

Due to both of the afore-mentioned Investment Funds not having their own legal personality, they are either self-managed or externally managed Investment Companies.

Investment policy

Due to it being possible to mix both the SICAV and SICAF Investment Funds with other investment assets, they may be formed as, among others, Security-; Real Estate-; Money market- as well as Holding- Funds.

Investors

If a SICAV and SICAF in Luxembourg are formed as UCITS funds, no restrictions apply as to who may be an investor. Only in respect of Specialised Investment Funds (SIF) is a „qualified investor“ required.

Formation

A SICAV in Luxembourg is formed as a Public Limited Company (PLC., Corp./SA), whereas a SICAF can be formed as any type of corporation in Luxembourg (e.g. Public Limited Company (PLC., Corp./SA); Limited Liability Company (LLC., Ltd./SARL); Partnership Limited by Shares (SCA) ). A SICAV and SICAF in Luxembourg can be formed as umbrella funds with several sub-funds, each of which being independent of the others.

The registered office and main place of control and management of a SICAV and SICAF under the articles of association must be located in Luxembourg.

Furthermore, the assets of a SICAV and SICAF must be transferred to a custodian (depositary bank) to ensure that the income or profits are used in accordance with its articles of association.  The custodian is liable to both Investment Funds in Luxembourg as well as the shareholders only for loss arising from the culpable non-performance or defective performance of its duties.

The subscribed capital of a SICAV/SICAF Investment Fund, amounting to at least 1.25 million EUR, requires to be reached within a period of 6 months following the obtaining of consent from Luxembourg’s Financial Market Authority (CSSF) if it is an UCITS Fund and within a period of 12 months in the case of a Specialised Investment Fund (SIF) respectively. The minimum share capital is dependent upon which legal form is chosen.

Investment and distribution policy

A SICAV and SICAF in Luxembourg can issue, and cancel, at any time new shares not exceeding its net asset value and may regulate the distribution of dividends or other repayments to its investors by way of formal conditions in its article of associations. Both Investment Funds in Luxembourg are not subject to a duty to create legal reserves.

Supervision

A SICAV and SICAF in Luxembourg are subject to the permanent supervision of Luxembourg’s Financial Market Authority (CSSF).  Both Investment Funds, as well as the investment managers and advisers of the said funds, require a licence prior to commencing business.

In addition, a SICAV and SICAF must produce annual accounts and half-yearly accounts which must  be audited by an independent auditor. The accounts are subsequently required to be published no later than 4 months (and no later than 6 months in the case of a Specialised Investment Fund (SIF) in Luxembourg) after the conclusion of the year.

Moreover, Investment Funds in Luxembourg are required to prepare, with the exception of those Investment Funds in the form of a closed UCITS Fund, a sale prospectus which must contain, among others, the founding documents in order to provide investors with the opportunity of carrying out an informed evaluation of the investment and the associated risks.

2. Tax structure of a SICAV/SICAF Investment Fund in Luxembourg

*Disclaimer: This information provided is purely as a courtesy and convenience. It is not intended to be constituted as legal advice.