Olivier Sciales Law Blog

On 3 August 2007, the CSSF (Luxembourg regulator) issued a circular letter 07/309 (the “Circular”) containing guidelines on the principle of risk spreading as laid out in article 1 of the Law of 13th February 2007 on specialized investment funds (the “SIF Law”).
Article 1 of the SIF law provides that:
“For the purpose of this Law, specialized investment funds shall be any undertakings for collective investment situated in Luxembourg: - the exclusive... Read More

 

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This article intends to provide general guidance as to the role of a depositary in a Luxembourg investment fund (and more particular in relation to a UCITS fund (part I of the Law of 2002) in the form of a SICAV ("hereafter referred to as the "fund"), and does not purport in any manner to give any opinion on any cases set out hereunder or other cases related to the Madoff case.

The effect of the alleged Ponzi scheme in which Bernard Madoff was implicated... Read More

The Luxembourg regulator (CSSF) has on 22 December 2008 issued a press release analysing the impact of the Madoff fraud case on the Luxembourg investment funds.

The CSSF noted that the impact on Luxembourg investment funds which are directly or indirectly exposed to the Madoff case amounts to 1.9 billion Euro which represents only 0.15% of the total net assets of undertakings of collective investment as at 30 November 2008. The CSSF furthermore noted that it does... Read More

On 16 December 2008, the Luxembourg Parliament has passed laws to enact the attractive measures already proposed by the bills number 5924 and 5913.

The main measures introduced by these laws are as follows:

1. Abolition of capital duty as of 2009

The law has abolished the current contribution duty of 0,5% on capital contributions to Luxembourg companies.

The new favourable regime will provide:

- For  a fixed registration duty of 75 Euro on (i)... Read More

Solidly established as a global leader in the investment funds world, the Grand Duchy of Luxembourg has in the beginning of the year 2008 been seeing an increasing number of hedge funds, and especially funds of real estate funds. Luxembourg hedge funds are subject to the same legal and regulatory requirements applicable to other funds and thereby benefit both from the high degree of flexibility available in the setting-up period as well as in day-to-day management, and from the strong... Read More

On 2 November 2007, Luxembourg signed a tax treaty with Hong Kong. The maximum withholding taxes that are set out are:

0% on dividends if the beneficial owner is a company that directly holds at least 10% in the capital of the distributing company or the participation has an acquisition cost of at least 1,200,000 Euro; 10% on dividends in all other cases; 0% on interests; and 3% on royalties paid from Hong Kong to Luxembourg. According to Luxembourg... Read More

On 1 October 2008, a draft bill (n¿5924) introducing new favourable tax rules was submitted to the Luxembourg Parliament. We set out hereunder a brief overview of the main changes that are proposed and that relate to companies:

The exemption of withholding tax on dividends paid to corporate shareholders located in countries with which Luxembourg has signed a double tax treaty. This expansion of the participation exemption regime would seriously enhance the attractiveness of... Read More

On 15 October 2008, the Luxembourg Parliament amended the existing SICAR law of 15 June 2004 with the aim to make the SICAR regime more attractive to private equity and venture capital investors.

The main amendments that have been voted are briefly set out hereunder:

Umbrella structure

The new SICAR law has introduced the possibility to create multiple compartments. The principle of compartment segregation already well known for SIFs, securitization... Read More

In a Circular issued on 5 September 2008, the CSSF clarified the interaction between the prime broker and the custodian of a SIF. In Luxembourg, the prime broker must be a financial institution subject to the control of a supervisory authority of a State with a supervisory regime recognised to be equivalent to that provided by EU legislation. Prime brokers are essential to SIFs that implement a hedge fund strategy or that make use of derivatives. By setting up four guidelines, the Circul... Read More