| aifmd

the alternative investment

fund managers directive
Luxembourg implementation
The alternative
investment
fund managers
directive :
Luxembourg implementation

ALFI thanks Arendt & Medernach, which produced the content of this brochure,
for its authorisation to reprint. Arendt & Medernach in Luxembourg is a member
of ALFI.
table of contents

Why regulate Alternative Investment Fund Managers? 4

When will the AIFM regime apply? 5

Who will be subject to the AIFM regime? 6

All-inclusive scope 6
Some players excluded 6
Smaller AIFs exempted 6
Grand-fathering 6
Determination of the AIFM 7
Interaction with other EU rules 7

What does the AIFM law regulate? 8

Authorisation of AIFMs 8
Operating conditions 10
Valuation 12
Delegation of AIFM functions 14
Depositary 15
Transparency 18
Marketing 20
Summary of marketing scenarios 22
AIFM and Taxes 23

Glossary of terms 26

About ALFI 28
why ... regulate alternative investment fund managers?

The AIFMD is the outcome of a G20 consensus requirements, specific operational procedures
for closer regulatory oversight of systemic risks and remuneration.
emanating from certain players and activities in
the alternative investment funds sector. The AIFM regime also provides for the
In particular, it aims at setting up robust risk appointment of additional service providers.
and liquidity management systems and at In exchange for increased regulatory oversight,
enhancing transparency for investors. a European passport for AIFMs has been
introduced for marketing of AIFs to professional
The initial proposal of the AIFMD gave investors, ultimately aiming at the phasing out
rise to vehement criticism from many industry of existing private placement rules.
participants and led to lengthy discussions
between the EU Commission, the EU Council Going forward, promoters or initiators of AIFs
of Ministers and the EU Parliament before will have to identify the jurisdiction(s) that will
these bodies were able to reach a compromise. allow them to accommodate their business
The AIFMD was finally approved by the EU model in the most efficient way.
Parliament on 11 November 2010 after nearly
one and a half years of intense negotiations. This publication provides a comprehensive
overview of the key implications of the AIFM
Luxembourg has now fully implemented the regime for players in the European alternative
AIFMD. The AIFM Law is an important step investment management industry.
for the ongoing development of the alternative
investment fund industry and moreover will Terms in capital letters have the meaning
reinforce Luxembourgs position as a global ascribed to them in the section Definitions
investment fund hub. at the end of the brochure.

Although some provisions of the AIFM Law

will require clarification from the Luxembourg
regulator Commission de Surveillance du 1 Please note that the CSSF has issued frequently asked
questions in this respect. This document will be updated from
Secteur Financier (CSSF1) more defined rules time to time and may be consulted on the CSSFs website at:
will apply with respect to, i.a., capital http://www.cssf.lu/fileadmin/files/AIFM/FAQ_AIFMD.pdf

Why?

More defined regulation of activities in the alternative investment sector and

closer oversight of systemic risks.
Creation of harmonised rules for management and marketing of AIFs in Europe.
Enhanced transparency for investors and more stringent operational rules.

4
when ... will the AIFM regime apply?

Implementation timeline

2011 2013 2014 2015 2017 2018

QQ Entry into QQ Commission QQ Existing QQ Passport QQ EU QQ Private

force of the delegated AIFMs must becomes Commission placement

AIFMD on regulation apply for available conducts regimes are
21 July 2011 231/2013 authorisation for all EU review of replaced by
(entry into by AIFMs application passport
force on 22 July 2014 marketing and scope regime
22 July 2013) non-EU of the
QQ by 1st April AIFs in the AIFMD
QQ Law of 2014, AIFs EU and for
12 July 2013 benefiting non-EU
implementing from transi- AIFMs
the AIFMD tional provi- marketing
(entry into sions and AIFs in
force on established the EU
15 July 2013) under one of
the Product
QQ Passport Laws must
becomes submit to the
available for CSSF, a file
EU AIFMs evidencing
marketing EU compliance
AIFs in the EU with the AIFM
Law product
rules as of
22 July 2014

Private placement regimes for:

QQ EU AIFMs marketing non-EU AIFs
QQ Non-EU AIFMs marketing AIFs

Passport for:
EU AIFMs marketing EU AIFs
QQ

Co-existence of EU passport and private

placement regimes for:
QQ EU AIFMs marketing non-EU AIFs
QQ Non-EU AIFMs marketing AIFs

5
who ... will be subject to the AIFM regime?

All-inclusive scope The AIFM regime applies to: SICARs governed by the SICAR Law if they
QQ EU AIFMs managing one or more EU AIFs/ fulfill the criteria under article 1(39) of the
non-EU AIFs; AIFM Law are therefore in principle subject to
QQ Non-EU AIFMs managing one or more EU AIFs; the AIFM regime. The AIFM regime also
QQ Non-EU AIFMs marketing AIFs in the EU. impacts non-regulated investment vehicles if
they are not regulated under the UCI Law, the
The only scenario which does not fall within SIF Law or the SICAR Law but also meet the
the scope of the AIFM regime is the situation criteria of article 1(39) of the AIFM Law.
of a non-EU AIFM managing and/or marketing
a non-EU AIF outside the EU given the absence Whereas the AIFM Law directly regulates
of any relationship with the EU. AIFMs, it indirectly also applies to EU and
non-EU AIFs and some of their service
The AIFM regime takes a one size fits all providers. In this context, one should keep in
approach by encompassing AIFMs of all AIFs mind that the AIFM Law defines an AIF as
which are not covered by the UCITS Directive. an entity raising capital from a number of
UCIs governed by Part II of the UCI Law, SIFs investors with a view to investing it in
governed by the SIF Law if they fulfill the accordance with a defined investment policy
criteria under article 1(39) of the AIFM Law or for the benefit of such investors.

Some players excluded Certain players are expressly excluded from the securitisation special purpose entities as well as
scope of the AIFM Law: holding companies, national, regional and local governments and
captive funds, management of pension funds, bodies. In addition, the AIFM Law does not apply
employee participation or savings schemes, to family office type arrangements, provided they
supranational institutions, national central banks, do not raise external capital.

Smaller AIFs exempted Exemptions from the AIFM Law have been through the use of leverage, do not exceed
expressly provided for AIFMs managing EUR 100 million.
smaller AIFs, i.e.:
QQ AIFMs managing AIFs which are not Such exempted AIFMs are subject to
leveraged and without redemption rights for registration requirements with the CSSF.
a period of 5 years, and with aggregate assets Exempted AIFMs can also decide to opt in to
under management below EUR 500 million; the application of the AIFM regime and
QQ AIFMs managing AIFs whose assets under thereby benefit from the marketing passport.
management, including any assets acquired

Grandfathering The AIFM Law foresees the following two and if their term expires at the latest in 2016,
grandfathering provisions for AIFMs managing they may continue to manage such AIFs without
closed-ended AIFs: authorisation under the AIFM Law but must
QQ If they do not make additional investments publish an annual report and, when applicable,
after 22 July 2013, they may continue to comply with the disclosure requirements on the
manage such AIFs without authorisation acquisition of portfolio companies.
under the AIFM Law;
QQ If their subscription period for investors closed

prior to the entry into force of the AIFM Law

6
Determination of the AIFM The AIFM Law regulates AIFMs. Under certain as the AIFM. This can be the case for AIFs whose
circumstances, as the AIF may be considered legal form permits internal management.
internally-managed and hence itself be considered

Interaction with other There is some interaction between the AIFM Law QQ MiFID compliant investment firms and credit
EU rules and other EU directives and regulations applicable institutions authorised under Directive
to investment funds and/or their managers, as a 2006/48/EC are not required to obtain an
result of which, for instance: authorisation under the AIFM Law in order
QQ Management companies authorised under to provide investment services to AIFs or
the UCITS Directive may apply for AIFMs. However, such investment firms can
authorisation as AIFMs under the AIFM only market shares or units of AIFs in the EU
Law (and vice versa) in order to manage if the relevant shares or units are marketed in
both UCITS and AIFs; accordance with the AIFMD.

Who?

One size fits all approach.

AIFM regime directly applies to EU and non-EU AIFMs marketing EU AIFs/
non-EU AIFs in the EU.
AIFM regime indirectly applies to all EU/non-EU AIFs.
Certain players are excluded from the AIFM Law.
Small AIFs are exempt.
Grandfathering provisions for closed-ended funds.
AIFM Law applies to internally managed AIFs (considered as AIFMs) and to AIFs
appointing an AIFM.

7
what ... does the AIFM law regulate?

This section summarises the principal (i.e. delegated acts or implementing acts, as
requirements defined by the AIFM Law well as regulatory or implementing technical
implementing the AIFMD, which has been standards adopted for the requirements of the
supplemented with more detailed rules AIFMD) by Level 2.

Authorisation of AIFMs The AIFM license requirements are substantially pricing including tax returns, maintenance
similar to those which apply to the authorisation of unitholders/shareholders register,
of UCITS management companies. distribution of income, unit/share issues
and redemptions, contract settlements;
More specifically, the AIFM Law expressly record keeping);
states that management companies which are - Marketing;
authorised under the UCITS regime should not - Activities related to the assets of the AIF
be required, when applying for authorisation (such as facilities management).
as AIFMs, to provide information or
documents already provided when applying The CSSF may authorise Luxembourg AIFMs
for authorisation under the UCITS regime, on (other than internally managed AIFs) to
condition that such information or documents provide the following services (only if the
are still up to date. Where Luxembourg is the investment management functions are
Home Member State of the AIFM or the provided):
Member State of reference for a non-EU AIFM, QQ Management of portfolios of investments,

authorisation as the AIFM is to be sought from including those owned by pension funds and
the CSSF. The head office and registered office institutions for the provision of occupational
of a Luxembourg AIFM shall be located retirement in accordance with mandates
in Luxembourg. given by investors on a discretionary,
client-by-client basis;
Authorisation is to be sought (i) by the AIF QQ Non-core services (i.e. investment advice,

itself, if it is internally-managed (and thus safe-keeping and administration in relation

qualifies as an AIFM), in which case it will to shares/units of UCIs, reception and
only be authorised to perform internal transmission of orders in relation to one or
management functions for that AIF, or (ii) by more financial instruments) (only if the
the externally appointed AIFM, which may management of portfolios of investments
also provide management functions to UCITS is provided).
and other services listed below.
MiFID provisions concerning the initial
Authorised AIFMs will be allowed to perform capital endowment and organisational
the following internal management functions: requirements apply to the above services of
QQ Investment management functions which management of portfolios of investments and
comprise at least: non-core services.
- Portfolio management;
- Risk management. The authorisation as a Luxembourg AIFM will
QQ Other functions which may additionally be be valid in all Member States provided that the
provided (only if the investment management conditions of the AIFM Law are complied with
functions are provided): on a continuous basis.
- Administration (i.e. legal and accounting
services, customer inquiries, valuation and

8
Application requirements for authorisation as AIFM

Information on the persons effectively Information on arrangements made

conducting the business of the AIFM: for the appointment of the depositary.
such persons who effectively conduct
the business of an AIFM shall be of Any additional information
sufficient good repute and sufficiently concerning disclosure to investors
experienced in relation to the for each AIF the AIFM manages or
investment strategies pursued by intends to manage.
the AIF they manage.
In addition, the AIFM will have to
Information on the identities of the demonstrate to the CSSF that it has
AIFMs shareholders or members, sufficient capital and own funds.
whether direct or indirect, natural or
legal persons, that have qualifying In addition, the AIFM will have to
holdings and information on the demonstrate to the CSSF that it has
amounts of those holdings. sufficient capital and own funds.

A programme of activities setting Internally managed AIFs will have

out the organisational structure of to maintain an initial capital of
the AIFM including information on EUR 300,000 while externally
how the AIFM intends to comply appointed AIFMs will have to maintain
with the authorisation requirements, an initial capital of EUR 125,000.
the operating conditions,
the transparency requirements, AIFMs will have to maintain appropriate
and where applicable, own funds (in liquid assets only) to cover
the requirements applying to potential liability risks arising from
leveraged AIFs, to AIFs acquiring professional negligence, or appropriate
control of non-listed companies and professional indemnity insurance.
issuers, passport conditions, third
country rules and conditions for Furthermore, externally appointed
marketing to retail investors. AIFMs will have to maintain additional
own funds equal to the higher of:
Information on the remuneration
policies and practices. One quarter of the AIFM overhead
costs; and
Information on arrangements made 0.02% of the AIF portfolio values
for the delegation and sub-delegation in excess of EUR 250 million
of functions to third parties. (capped at EUR 10 million which
can be reduced by 50% if such
Information about the investment amount is covered by a bank or an
strategies. insurance guarantee).

Information on where the master AIF is

established if the AIF is a feeder AIF.

The fund rules or incorporation

documents of each AIF the AIFM
intends to manage.

9
what ... does the AIFM law regulate?

Operating conditions While the AIFM Law has practical implications AIFM Law are not new and are generally UCITS
for certain AIFMs and to a certain extent, the AIFs or MiFID inspired.
they manage, many principles enshrined in the

General principles The AIFM Law contains several principle-based In addition, the AIFM Law requires that the
rules on general operating conditions. In short, AIFM shall treat all investors fairly.
the general operating principles that apply to Preferential arrangements may still be possible
AIFMs are similar to the rules of conduct laid as long as they are disclosed to all investors
down in the UCITS Directive for self-managed through the AIFs rules or incorporation
SICAVs and/or their designated management documents. This will impact the way side letter
companies. For example, the AIFM Law requires arrangements are currently drafted.
that an AIFM will act honestly, with due skill,
care and diligence and in the best interests of the
AIF or its investors and the integrity of the market.

Conflicts of interest The general requirement to identify and manage and monitor conflicts of interest be
manage conflicts of interest that arise in the put in place;
course of managing AIFs is not a new concept. QQ Where the above-mentioned arrangements

However, the AIFM Law requires specifically are not sufficient to ensure that the risk of
that: damage to investors interests will be
QQ Conflicts of interest are identified, notably prevented, the AIFM shall clearly disclose
between the AIFM, its managers/employees the general nature or sources of conflicts of
and the managed AIF or between the investors interest to the investors before undertaking
of the AIF and another client of the AIFM; business on their behalf and develop
QQ Organisational and administrative appropriate policies and procedures.
arrangements designed to identify, prevent,

Remuneration In order to address the potentially detrimental as part of the transparency requirements of the
effects of poorly designed remuneration AIFM Law. The AIFM Law allows AIFMs to
structures on the sound management of risks disapply certain provisions of the latter in light
and control of risk-taking behaviour by of proportionality considerations allowing the
individuals, AIFMs must establish and maintain adequate consideration of their size, their
remuneration policies and practices in line with internal organisation and the nature, scope and
the risk profiles of the AIFs they manage for complexity of their activities.
those categories of staff whose professional
activities have a material impact on the The principles laid down in the AIFM Law are
aforementioned risk profiles (i.e. at least senior consistent with the principles governing sound
management, risk takers, control functions and remuneration policies set out in the Commission
employees receiving a global remuneration that Recommendation of 30 April 2009 on
puts them in the same remuneration bracket as remuneration policies in the financial services
senior management and risk takers). In particular, sector, which served as a basis for the
AIFMs will need to include aggregate implementing guidelines on sound remuneration
information on remuneration (split into fixed policies prepared by ESMA to comply with the
and variable components and, where relevant, principles set out in Annex II of the AIFM Law,
amounts paid by the AIF) in the annual report listing the specific remuneration requirements.

10
Risk management AIFMs are required to functionally and QQ The risks associated with each investment
hierarchically separate the functions of risk position of the AIF and their overall effect on
management from the operating units, including the AIFs portfolio must be properly
portfolio management. identified, measured and monitored on an
ongoing basis including through the use of
There is a general requirement to implement appropriate stress testing procedures;
adequate risk management systems which shall QQ The risk profile of the AIF must be consistent

be reviewed and adapted as needed and on at with the size, portfolio structure and
least an annual basis. The following minimum investment strategies and objectives of the
requirements will thus apply: AIF, as laid down in the AIF rules or
QQ Due diligence must be conducted when incorporation documents, prospectus and
investing on behalf of the AIF, according to offering documents.
the investment strategy, the objectives and
risk profile of the AIF;

Leverage AIFMs will be required to set a maximum level leverage, the relationship with financial services
of leverage and a limit on the reuse of collateral institutions that could pose systemic risk,
or guarantees that could be granted under a counterparty exposure and the extent to which
leveraging arrangement taking into account, i.a., the leverage is collateralised.
the type of AIF, its strategy, the sources of

Liquidity management Except for AIFMs of unleveraged closed-ended and exceptional conditions. In addition, AIFMs
funds, AIFMs are required for each AIF they shall ensure that for each AIF they manage the
manage to apply appropriate liquidity manage- investment strategy, the liquidity profile and
ment systems and procedures, including the redemption policy are consistent.
regularly conducting stress tests under normal

Operating conditions

Principle-based rules of conduct.

Identification and management of conflicts of interest.
Remuneration policies and practices consistent with sound and effective
risk management.
Adequate liquidity and risk management systems.

11
what ... does the AIFM law regulate?

Valuation

Applicable rules for the AIFMs are responsible for the proper valuation Whilst the AIFM Law primarily focuses on the
valuation of assets and of AIF assets as well as the calculation and establishment and the consistent application of
NAV calculation publication of the NAV. the relevant valuation procedures, Level 2 lays
down in detail the main features of such
The AIFM Law sets forth the rules in relation valuation policies and procedures, including the
to the valuation function. As valuation use of models to value AIF assets, the values
standards differ across jurisdictions and asset generated for individual assets, the calculation
classes, Level 2 supplements the rules laid of the NAV per unit or share, the provision of
down in the AIFM Law and should be read in professional guarantees by external valuers and
conjunction with them. the frequency of valuations.

Frequency The valuation procedures used must ensure that must also be carried out at a frequency which
the assets are valued on the occasion of each issue is both appropriate to the assets held by the
or subscription or redemption or cancellation of AIF and its issuance and redemption frequency.
units or shares. Such valuation must occur at
least once a year. In addition, AIFMs should With respect to closed-ended AIFs, valuations
ensure that the number of units or shares in issue and calculations must be carried out in case of
is subject to regular verification, at least as often an increase or decrease in the capital of the
as the unit or share price is calculated. relevant AIF and whenever there is evidence
that the last determined value is no longer fair
In the event that the AIFM manages open- or proper.
ended AIFs, such valuations and calculations

Publication of the NAV AIFMs must make available for each of the for valuing assets, including the methods
EU AIFs they manage and for each of the AIFs used in valuing hard-to-value assets ;
they market in the EU: QQ The latest net asset value of the AIF or the

QQ A description of the AIFs valuation latest market price of the unit or share of
procedure and of the pricing methodology the AIF.

Who can perform valuation Valuation may be performed by either: its valuation, procedures and/or valuations
functions? QQ An independent (and suitably qualified) verified by an external valuer or an
external valuer; the AIFM must notify independent auditor.
the CSSF of the independent valuers
appointment; or An externally appointed valuer cannot delegate
QQ The AIFM itself, but the CSSF has the the valuation function to a third party.
authority to require any such AIFM to have

12
Independence of the The AIFs depositary cannot be appointed as is functionally independent from portfolio
valuation function its external valuer unless it has functionally management and from the remuneration policy.
and hierarchically segregated its depositary
function from its valuation function. Appropriate measures must be taken to mitigate
When performing the valuation functions itself, conflicts of interest.
the AIFM must ensure that the valuation task

Proper valuation of The valuation policies and procedures should and appropriately documented manner which
AIF assets describe the obligations, roles and covers all material aspects of the valuation
responsibilities pertaining to all parties process and valuation procedures and controls
involved in the valuation. This includes in respect of the relevant AIF. AIFMs must
external valuers, if applicable, and should be ensure a consistent application of their policies
done in a sound, transparent, comprehensive and procedures and a periodic review thereof.

Liability The AIFM is ultimately liable for the valuation where an external valuer is used, the valuer is
of the AIFs assets and for the calculation and liable to the AIFM for losses suffered as a
publication of the AIFs NAV and is, therefore, result of the valuers negligence or intentional
liable to the AIF and its investors. However, failure to perform its tasks.

Valuation

Proper and independent valuation.

At least once a year (valuation frequency depends on the type of assets).
Independent external valuation or by the AIFM (subject to conditions).
The AIFM remains liable for the valuation of the AIFs assets.

13
what ... does the AIFM law regulate?

Delegation of AIFM AIFMs may, subject to strict limitations and function. For example, where the delegation
functions requirements, delegate the two core functions concerns portfolio management or risk
(i.e. portfolio management and risk management, the delegatee must be authorised
management, except that both functions may or registered for the purpose of asset
not be delegated in full at the same time) so as management and subject to prudential
to increase the efficiency of their business. supervision in its home country. In addition, if
Subject to the same limitations and the delegatee is located in a non-EU jurisdiction,
requirements, including the approval of the a cooperation agreement must be in place
AIFM, sub-delegation may be allowed. Here between the EU competent authorities and the
again, the rules provided by the AIFM regime competent authorities of the non-EU country.
in this regard are to a large extent carried over This means that a Luxembourg AIFM will be
from the UCITS Directive. able to partly delegate portfolio and risk
management functions to an investment
AIFMs will have to be able to justify the entire manager who does not qualify as an AIFM2.
delegation structure with objective reasons to
the competent authorities of their Home AIFMs shall at all times remain responsible for
Member State and to demonstrate that the the proper performance of their functions and
delegatee is qualified and capable of compliance with the rules set out in the AIFM
undertaking the delegated functions. Law. Their liability towards the AIF and its
investors may in no case be affected by the fact
No delegation or sub-delegation of portfolio that the AIFM has delegated functions to a
management or risk management may be made to third party, or by any further subdelegation.
the depositary or a delegatee of the depositary, nor AIFMs will thus have to closely monitor at any
to any other entity which may give rise to potential time any delegatees activities, to give at any
conflicts of interest, unless a functional and time further instructions to the delegatee and
hierarchical segregation from other potentially to withdraw the delegation with immediate
conflicting tasks is ensured and the latter are effect when this is in the interest of the
properly identified, managed, monitored and AIFs investors.
disclosed to the investors of the AIF.

The rules regarding the delegation of portfolio 2 The delegation of portfolio and risk management functions
and risk management functions are similar to must not be confused with the designation by an internally
managed AIF of an external AIFM. Please refer to the section
the rules applicable to existing business models entitled Who will be subject to the AIFM regime? under
of UCITS outsourcing the portfolio management Determination of AIFM.

Delegation

Part of each management function may be delegated. No letter-box entity

is permitted.
Sub-delegation is possible.
Delegation rules similar to UCITS provisions.
AIFM remains liable in case of delegation.

14
Depositary

Single depositary rule The AIFM Law introduces the appointment of

a single depositary for each AIF managed by an
AIFM.

Who may not act as Due to the need to separate the safekeeping the AIFM, an AIFM is not allowed to act as
depositary? functions from the management functions and a depositary.
to segregate the investors assets from those of

Who may act as The depositary of an EU AIF shall either be (i) a are complied with) or (ii) in the Home Member
depositary? credit institution or (ii) a MiFID investment firm State of the AIFM managing the AIF or (iii) in
which also provides ancillary services of the Member State of reference of the non-EU
safekeeping and administration of financial AIFM managing the AIF.
instruments (which satisfies minimum capital
adequacy requirements), or (iii) other categories In addition, Luxembourg permits the depositary
of institutions subject to prudential regulation to be an entity which carries out depositary
and ongoing supervision and which are eligible functions as part of its professional or business
to act as a depositary under the UCITS activities in the case of certain AIFs which (i)
Directive). The depositary of an EU AIF must have no redemption rights exercisable during a
have its registered office or a branch in the same period of five years from the date of the initial
country as the AIF. However, the competent investment; and (ii), in accordance with their
authorities of the Home Member State of the core investment policy, generally do not invest
AIF or the AIFM may, during a period of four in assets that must be held in custody or
years from the implementation of the AIFMD generally invest in issuers or non-listed
(i.e. until 2017), allow the depositary (which companies in order to potentially acquire
must be an EU credit institution) to be control over such companies, such as private
established in another Member State. equity funds, venture capital funds and real
estate funds. The law of 5 April 1993 on the
The depositary of a non-EU AIF can also be a financial sector has been amended to create a
credit institution or any other entity (of the new category of professional of the financial
same nature as the entities under (i) and (ii) sector (PFS), i.e., the professional depositary of
above for an EU AIF) which is subject to assets other than financial instruments. Such
effective prudential regulation and supervision entity is subject to the prior authorisation of the
of the same effect as the provisions laid down CSSF, which is conditional on the production of
in EU law and which are effectively enforced. evidence of a subscribed and fully paid-up share
The depositary of a non-EU AIF must be capital amounting to not less than EUR 500,000.
established (i) in the third country where the This PFS status is reserved to legal entities and
AIF is established (provided certain conditions cannot be granted to individuals.

Prime brokers A prime broker may be appointed as a depositary When a prime broker has been appointed, it is
if i.a. it has functionally and hierarchically subject to reporting obligations towards the
separated its tasks as prime broker from its depositary which shall enable the latter to have
depositary functions, and potential conflicts of a comprehensive overview of all assets and
interest are properly identified, managed and cash held by the prime broker for the AIF.
disclosed to the investors of the AIF.

15
what ... does the AIFM law regulate?

Core duties of Most of the requirements of the AIFM Law are Oversight duties: in addition to the above
the depositary UCITS inspired and thus familiar to initiators tasks, the depositary must perform oversight
and promoters of regulated investment funds. duties which are similar to those performed by
However, some of the core functions have been UCITS depositaries, except that they all apply
adapted and/ or clarified. irrespective of the corporate or contractual
form of the AIF. The depositary must (i) ensure
Monitoring of cash flows: the depositary shall that the sale, issue, repurchase, redemption and
be responsible for the proper monitoring of the cancellation of shares or units of the AIF are
AIFs cash flows and for ensuring that investor carried out in accordance with applicable
money and cash belonging to the AIF is national law and the AIF rules or incorporation
booked correctly on accounts opened in the documents, (ii) ensure that the value of the
name of the AIF, the AIFM acting on behalf of shares or units of the AIF is calculated in
the AIF, or the depositary acting on behalf of accordance with the applicable law of the AIF
the AIFM. and its rules or incorporation documents, (iii)
carry out the instructions of the AIFM, unless
Safekeeping of assets: the AIFM Law clarifies they conflict with applicable national law or
the concept of safekeeping. The depositary is the AIF rules or incorporation documents, and
responsible for the safekeeping of assets of the (iv) ensure that, in transactions involving the
AIF, including (i) the holding in custody of all AIFs assets, any consideration is remitted to
financial instruments that can be registered in the AIF within the usual time limits. Depositary
a financial instruments account opened in the agreements of existing SIFs and SICARs falling
depositarys books and that can be physically within the scope of the AIFM Law will have to
delivered to the depositary and registered in its be reviewed. Existing corporate UCIs subject to
books within segregated accounts, and (ii) the Part II of the UCI Law will also need to amend
verification of ownership of all other assets of the their depositary agreements in order to provide
AIF (which cannot be held in custody) for which for the oversight functions mentioned under
the depositary shall maintain up-to-date records. (iii) and (iv).

Delegation The depositary may only delegate the safekeeping However, where the law of a third country
duty as defined above to a third party which in requires that certain financial instruments are
turn and under the same conditions may held in custody by a local entity that does not
sub-delegate this function. Delegation of the satisfy the delegation requirements, the AIFM
safekeeping functions is strictly circumscribed by Law exceptionally authorises the depositary to
the AIFM Law. Both delegation and sub- delegate its safekeeping functions to such local
delegation must be objectively justified and are entity provided certain conditions are met and
subject to stringent requirements in relation to the notably that the investors of the relevant AIF
suitability of the third party entrusted with this have been duly informed of this delegation
function as well as to the due skill, care and and that the AIF or the AIFM on behalf of the
diligence that the depositary must employ to select, AIF instructed the depositary to appoint such
appoint and review the third party to whom the local entity.
depositary wishes to delegate part of its functions.

16
Liability of the depositary The AIFM Law states that the depositary is QQ For any other losses, the depositary shall be
liable for the losses incurred in the perfor- liable to the AIF or the investors of the AIF,
mance of its obligations, suffered by the AIFM, as the case may be, as a result of its negligent
the AIF and its investors. It distinguishes or intentional failure to properly perform
between the loss of financial instruments held its obligations.
in custody (strict liability), and any other losses
(liability for fault): The depositarys liability shall not be affected
by any delegation to a third party. Where the
QQ In the case where the depositary holds the financial instruments held in custody by such
assets in custody and those assets are lost, third party are lost, the depositary would
the depositary has an obligation to return a therefore remain liable. However, provided
financial instrument of the identical type or that the depositary can show that the
the corresponding amount to the AIF or, as delegation was made in accordance with the
the case may be, the AIFM acting on behalf AIFM Law and where (i) a written contract
of the AIF, without undue delay, unless it can between the depositary and the AIF or the
prove that the loss arose as a result of an AIFM acting on behalf of the AIF expressly
external event beyond its reasonable control, allows such a discharge, and (ii) a written
the consequences of which would have been contract with the third party delegate
unavoidable despite all reasonable efforts to expressly transfers such liability and permits
the contrary. the AIF or the AIFM to make a claim directly
against the delegatee, the depositary can
The circumstances under which a financial discharge itself in such case of its liability.
instrument is deemed to be lost have been Such contractual discharge shall be justified
further clarified in Level 2 and shall be by an objective reason, whose application is
ascertained irrespective of whether it results framed by strict conditions.
from fraud, negligence or other intentional
or non-intentional behavior. The exemption
from liability enabling the depositary to
escape from the duty to return lost financial
instruments is subject to a narrow definition
of the force majeure event.

Depositary

Single depositary per AIF.

AIFMs cannot act as depositaries.
Only limited eligible entities may act as depositaries.
Core functions:
- Monitoring of cash flow;
- Safekeeping of assets;
- Oversight duties.
Delegation possible, but strictly circumscribed.
Two-pronged liability regime:
- Strict liability;
- Liability for fault.

17
what ... does the AIFM law regulate?

Transparency The AIFM Law ensures increased transparency management functions as applicable and the
in 3 different ways: valuation procedure;

QQ The AIFM established in Luxembourg must QQ Disclosure to the CSSF: AIFMs must report,
prepare an annual report for each of the AIFs for each AIF, i.a., the markets in which they
it manages or markets in the EU. This report trade, the risk profile of the AIF, the risk
must be completed within 6 months following management systems in place, the level of
the end of the financial year of the relevant AIF; leverage and the liquidity management tools.
The CSSF will further clarify the reporting
QQ Disclosure to investors: certain information obligations. The CSSF has confirmed that the
must be disclosed to investors before they annual report requirement of the AIFM Law
invest in the AIF. The content thereof must only applies to authorised AIFMs, however
include, i.a., the investment strategy of the the specific rules under Luxembourg
AIF, a description of the delegation of Products Laws will continue to apply.

Leveraged AIF AIFMs are required to set a leverage ratio for Disclosure on leverage must also be made to
each AIF they manage and this ratio must be the regulator which shall be informed about
complied with at all times. AIFMs that use the leverage conditions of each AIF, including
leverage for investment purposes are subject to the overall amount of leverage used by each
additional disclosure requirements. Indeed, AIF and its five principal lenders of cash/
AIFMs shall periodically disclose to their securities (with the corresponding amounts).
investors the amount of leverage used for each The CSSF has a controlling power over these
AIF they manage as well as any changes to the leverage limits and may request such ratio to
maximum level of leverage which may be used be adjusted if it deems it unreasonable or likely
on behalf of each AIF. to contribute to the risk of market disorder.

Portfolio company The AIFM Law imposes reporting obligations be disclosed must contain the identity of the AIFM
disclosures when an AIF acquires, individually or jointly, which manages the AIF acquiring control, the policy
a substantial stake in a non-listed company, set-up with respect to preventing and managing
other than an SME or a real estate SPV. conflicts of interest and the policy with respect to
The acquisition thresholds are set at 10%, communications to employees. In addition, the
20%, 30%, 50% and 75% of the voting rights AIFM shall disclose its intentions with respect to
of the portfolio company. In other words, if an the future business of the portfolio company as
AIF reaches any of these thresholds when well as any implications this may have on
acquiring a non-listed company, the AIFM employment. Again, the notification must be made
shall, as soon as possible, notify such as soon as possible to the portfolio company itself,
information to the portfolio company itself, to its shareholders, the representative of its employees
its shareholders as well as to the CSSF. Similar or where there is none, to the employees
disclosure shall be made to the representative(s) themselves as well as to the CSSF (the latter, along
of the employees, or where there is none, the with the investors of the AIF, shall also receive
employees themselves of the portfolio company. information on the financing of the acquisition).

Similar notification obligations are imposed on Finally, asset stripping is limited by the
AIFMs when the relevant AIF acquires, provisions of the AIFM Law which require
individually or jointly, control of a non-listed the AIFM to use its best efforts to prevent
company, other than an SME or a real estate SPV redemptions, capital reductions and certain
(control being understood as the holding of distributions during a period of 2 years
more than 50% of the voting rights of the non- following the acquisition of control of the
listed company). In such case, the information to portfolio company.

18
Transparency

Enhanced transparency through annual reports, disclosure to investors and

the CSSF.
Additional disclosure requirements for leveraged AIFs.
Specific reporting obligations applicable to portfolio companies.

19
what ... does the AIFM law regulate?

Marketing Marketing is to be understood as any direct or is subject to permanent supervision by either the
indirect offering or placement, at the initiative CSSF or the supervisory authority of the Home
of the AIFM or on behalf of the AIFM, of units Member State or a third country considered to
or shares of an AIF it manages, to or with provide an equivalent standard of supervision as
investors domiciled or with a registered office that applied by the CSSF. For non-regulated
in the EU. Investments made at the initiative of Luxembourg AIFs, the marketing in Luxembourg
professional investors are therefore not covered is limited to professional investors.
by the AIFM Law (so-called reverse solicitation).
They may thus continue to invest on their own The various scenarios outlined below explain
initiative in AIFs. the functioning of the passport regime intro-
duced by the AIFM Law and the Luxembourg
Subject to compliance with domestic private private placement rules, which will continue to
placement rules, marketing to retail investors in apply or co-exist, as well as the timing in
Luxembourg is permitted provided that the AIF relation thereto.

Scenario 1: Passport for Authorised EU AIFMs may benefit from a As a result, authorised EU AIFMs will no longer
EU AIFMs marketing passport for marketing EU AIFs to professional be able to market EU AIFs to professional
EU AIFs in the EU as investors in the EU as of 22 July 2013. Such investors in the EU via a private placement
from 2013 marketing across the EU will be subject to a regime, although AIFMs existing at the date of
notification procedure between the regulator implementation into national law may benefit
of the EU Member State of establishment of from transitional relief and continue marketing
the AIFM and the EU Member State being under the existing private placement regime of
marketed into. the relevant Member State until 22 July 2014.

Scenario 2: EU AIFMs Passport regime as from 2015 During the transitional period of 3 years (i.e. from
marketing non-EU AIFs The passport regime will be available to 2015-2018), the passport regime will co-exist with
in the EU authorised EU AIFMs marketing non-EU AIFs the private placement regime. Thereafter, the
to professional investors in the EU as of 2015. private placement regime is expected to be
Authorised EU AIFMs intending to market a replaced entirely by the passport regime.
non-EU AIF in the EU via the passport will have
to fully comply with the AIFM regime and a EU AIFMs marketing non-EU AIFs in the EU
notification procedure. In addition, appropriate under private placement rules must comply with
cooperation agreements for the efficient exchange the AIFM regime except for the provisions on
of information, including in tax matters, will need depositaries. However, in this respect, one or
to exist between the EU and non-EU competent more entities must be appointed to perform some
authorities and between the third country of the of the depository functions and the identity of
non-EU AIF and the Member State of the AIFM. such entities must be communicated to the
Furthermore, the third country of the non-EU AIF supervisory authority of the AIFM. Furthermore,
must not be placed on the FATF blacklist. a cooperation agreement for the purpose of
systemic risk oversight must exist between the
Private placement regime between 2013 relevant Home Member State and the non-EU
and 2018 AIFs competent authorities. Finally, the relevant
Between 2013 and 2015, non-EU AIFs which are third country must not be placed on the FATF
managed by EU AIFMs may continue to be blacklist.
marketed under the national private placement
regimes (on a country-by-country basis), as the
passport will become available from 2015 only.

20
Scenario 3: Non-EU AIFMs Authorisation requirements and passport also be in place, and effective supervision must
marketing AIFs in the EU regime for marketing EU AIFs/non-EU not be prevented by the national laws or
AIFs in the EU as from 2015 regulations of the non-EU AIFM.
Non-EU AIFMs intending to market EU or
non-EU AIFs in the EU via the passport regime The passport in these cases will be available as
must be authorised under the AIFMD by their from 2015 subject to a notification procedure.
Member State of reference, which is deter-
mined in accordance with criteria such as the In the event that the non-EU AIFM wishes to
Home Member State of the AIF managed by market non-EU AIFs in the EU via the passport
the non-EU AIFM, or the Member State where regime, cooperation agreements must be in
most of the AIFs managed by the AIFM are place between the competent authorities of the
established or the Member State where the Member State of reference and the competent
largest amount of assets is being managed. authorities of the non-EU AIF, the country of
the non-EU AIF must not be placed on the
The non-EU AIFM managing a Luxembourg FATF blacklist and there must be cooperation
AIF or marketing a non-EU AIF into Luxem- arrangements for effective exchange of infor-
bourg will have to comply with the AIFM Law, mation in tax matters between the country of
except if a provision of the latter is incompatible the non-EU AIF, the Member State of reference
with the law to which the non-EU AIFM and/ and the Member States in which the non-EU
or the non-EU AIF marketed in the EU is AIF will be marketed.
submitted. In this case, the non-EU AIFM will
however need to prove that i.a. the regulatory Private placement regime between 2013
purpose of the local law to which the non-EU and 2018
AIFM and/or non-EU AIF is subject to offers Between 2013 and 2015, according to article
the same level of protection. 45 of the AIFM Law non-EU AIFMs may
continue to market AIFs under the private
A non-EU AIFM will also have to appoint a placement regimes (on a country-by-country
legal representative in the Member State of basis). For a transitional period of 3 years
reference (i.e. the contact point of the non-EU (i.e. from 2015-2018), the private placement
AIFM in the EU who will perform the compli- regime for non-EU AIFMs will co-exist with
ance function in relation to management and the passport regime. Thereafter, it is intended
marketing activities conducted in the EU). to replace the private placement regime entirely
with the passport regime.
Non-EU AIFMs intending to manage EU AIFs
without marketing them in the EU shall also Non-EU AIFMs marketing AIFs in the EU under
need to obtain an authorisation from their private placement rules must comply with the
Member State of reference. transparency requirements and the reporting
obligations under the AIFM regime, as well as,
The authorisation by the Member State of if applicable, the requirements regarding AIFMs
reference shall be subject to a number of managing AIFs which acquire control of
additional conditions, such as the country of non-listed companies and issuers. Additionally,
establishment of the non-EU AIFM not being cooperation agreements for the purpose of
listed on the FATF blacklist, appropriate systemic risk oversight must be agreed between
cooperation agreements being in place between the relevant EU and non-EU competent authori-
the competent authorities of the Member State ties. The country of the non-EU AIFM must not
of reference, the competent authorities of the be placed on the FATF blacklist.
EU AIF and of the non-EU AIFM. Further-
more, cooperation arrangements for the
effective exchange of information in tax
matters between the country of the non-EU
AIFM with the Member State of reference must

21
what ... does the AIFM law regulate?

Summary of marketing scenarios

Scenario 1 2013
EU AIFM EU AIF Passport for marketing
in the EU to professional
investors

Scenario 2 2013 - 2015

EU AIFM Non-EU AIF Private placement per
EU Member State rules

2015
EU AIFM passport for
marketing in the EU to
professional investors

2015 - 2018
Private placement as per
EU Member State rules and
EU marketing passport will
co-exist

Scenario 3 2013 - 2015

Non-EU AIFM EU AIF/ Private placement as per
Non-EU AIF EU Member State rules

2015
Non-EU AIFM passport for
marketing in the EU to
professional investors

2015 - 2018
Private placement as per
EU Member State rules and
EU marketing passport will
co-exist3

3 From 2015, non-EU AIFMs intending

to manage EU AIFs shall require CSSF
authorisation when Luxembourg is
the Member State of reference.

22
AIFM and Taxes

General overview Although the AIFMD is silent on tax aspects, investment funds (AIFs) managed in Luxembourg,
the AIFM Law introduces specific provisions the carried interest paid to certain Luxembourg
addressing the tax status of foreign alternative managers and VAT.

No Luxembourg income As a general rule in international tax law, a The AIFM Law expressly states that AIFs
tax for foreign AIFs company is tax resident (and thus subject to established outside Luxembourg but having their
managed in Luxembourg tax) in the country where it has its statutory place of effective management or central adminis-
seat or where it is effectively managed, the tration in Luxembourg are expressly exempt
latter criterion prevailing in case of dual from Luxembourg taxation (i.e. corporate
residency. The management of an alternative income tax, municipal business tax and net
investment fund by an AIFM resident in worth tax). This statutory rule ensures the
another State may thus trigger adverse tax absence of Luxembourg tax exposure for
consequences for the AIF or its investors. foreign AIFs managed by Luxembourg resident
alternative investment fund managers.

Attractive taxation of A specific tax regime is introduced under certain QQ He or she was not previously taxable in
carried interest received conditions for carried interest received by Luxembourg during the five tax years
by Luxembourg managers Luxembourg individuals who are employed by preceding 2013;
managers or a management company of an AIF. QQ No advance of carried interest has been paid

Such carried interest, granted in accordance to the employee;

with the AIFM Law, is taxed as miscellaneous QQ Initial capital contributions have been fully

income at 1/4 of the standard progressive repaid to investors prior to carried interest
income tax rates (i.e. a maximum tax rate of payment.
10.90% in 2013).
According to the AIFM Law, this tax treatment
This favourable tax rate is subject to the is currently applicable for a period of 11 years
following conditions: (i.e. until the end of 10th tax year following
QQ The employee moved his or her tax residency the year in which the employee took up in
to Luxembourg in the course of 2013 or in Luxembourg the position entitling him or her
any of the five following years; to the carried interest).

VAT aspects As regards VAT, the AIFM Law impacts many adapted. New service flows characterise the
market players of the non-UCITS industry in environment post-AIFMD and new VAT issues
Luxembourg and their existing business have to be managed so as to limit or avoid
models, which may need to be reviewed and VAT costs.

VAT exemption SIFs and SICARs benefit from the VAT As regards unregulated investment vehicles,
exemption applicable to any fund management a provision has been introduced into the
services supplied to them, irrespective of Luxembourg VAT law explicitly extending the
whether they qualify as AIF and irrespective scope of VAT exemption to the management
of whether they are established in Luxembourg of AIFs as they are defined in the AIFM Law.
or any other EU jurisdiction.

23
what ... does the AIFM law regulate?

No EU harmonisation of In theory, VAT is subject to EU harmonisation. exemption, and (ii) of the notion of fund
the notion of fund There are however many differences, not only in management services. The impacts of these
management services VAT rates, but also in the interpretation (i) of VAT distortions also merit consideration.
the list of vehicles benefiting from the VAT

Increasing cross-border The AIFM Law provides AIFMs with a equity, real estate and hedge fund industries.
marketing and management marketing passport for EU and non-EU AIFs. The VAT treatment applicable to these cross-
It also provides AIFMs with a management border management activities may be subject to
passport allowing these AIFMs to provide their various and conflicting interpretations, possibly
services cross-border to EU and non-EU AIFs. resulting in unexpected taxation within the EU
Both passports increase cross-border if not properly managed.
management activities mainly in the private

New service providers The AIFM Law introduces new requirements in a circular (No 723ter) clarifying that risk
respect of valuation, liquidity and risk management functions are forming part of
management as well as reporting to investors VAT exempt fund management services.
and regulators. These functions can be delegated This exemption remains applicable in case risk
under certain conditions by the AIFM to third management functions are outsourced to third
parties. In this respect, new types of services parties to the extent some specific conditions
circulate within the AIFs and the AIFMs and are fulfilled. It will not apply in case the role of
new VAT problematics are emerging. the external supplier would be limited to
purely technical functions (e.g. provision of the
In that regard, the Luxembourg VAT required computer software or supply of
authorities issued, on 7 November 2013, computerised calculations).

Impacts on the VAT Depending on the VAT status and the form may or may not be recovered (at least partially).
deduction adopted by the investment schemes as well as These VAT costs have to be managed specifically
the domicile countries involved, VAT on costs during the lifecycle of the structure.

VAT optimisation and VAT is usually considered a show stopper if charged subject to VAT and the question of the recovery
reduction of costs on recurring expenses (e.g. on management fees of that VAT is often material. Designing an
payable by unregulated investment schemes). investment scheme maximising VAT recovery is
The invoicing of set-up costs is also mainly a key step in the set-up phase.

Ever growing importance of The increasing management activities of identification number, incorrect reporting of
VAT compliance investment vehicles on a cross-border basis foreign transactions, unclear explanations
require the fulfilment of VAT compliance provided to the tax authorities, etc.) will
obligations. Any mismanagement of these necessarily lead to unexpected VAT costs or
obligations (e.g. incorrect invoices, lack of VAT even to double taxation.

24
glossary of terms

AIF(s) Alternative Investment Fund(s)

AIFM(s) Alternative Investment Fund Manager(s)

AIFM Law Law of 12 July 2013 on Alternative Investment Fund Managers

AIFMD Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative
investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC

CSSF Commission de Surveillance du Secteur Financier

Directive 2006/48/EC Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to
the taking up and pursuit of the business of credit institutions (recast)

Directive 2006/73/EC Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European
Parliament and of the Council as regards organisational requirements and operating conditions for
investment firms and defined terms for the purposes of that Directive

ESMA European Securities and Markets Authority

EU European Union

EU AIFM Means any AIFM which has its registered office in a Member State of the European Union

FATF Financial Action Task Force

Home Member State Means (i) the Member State in which the AIF is authorised or registered under applicable national
of an AIF law, or in case of multiple authorisations or registrations, the Member State in which the AIF has
been authorised or registered for the first time; or (ii) if the AIF is not authorised or registered in a
Member State, the Member State in which the AIF has its registered office and/or head office

Home Member State Means the Member State in which the AIFM has its registered office
of an AIFM

Level 2 Delegated Regulation (EU) 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of
the European Parliament and of the Council with regard to exemptions, general operating conditions,
depositaries, leverage, transparency and supervision and any further delegated regulations

Member State Member State of the European Union

Member State of Means the Member State of reference for a Non-EU AIFM
reference

MiFID Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in
financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC
of the European Parliament and of the Council and repealing Council Directive 93/22/EEC

26
NAV Net Asset Value

Product(s) Law(s) Means the Luxembourg investment fund laws under which regulated AIFs can be established in
Luxembourg (Part II of the UCI Law; SICAR Law and SIF Law)

Professional investor An investor who is considered to be a professional client or may, on request, be treated as a
professional client within the meaning of Annex II to Directive 2004/39/EC

Prospectus Directive Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on
the prospectus to be published when securities are offered to the public or admitted to trading
and amending Directive 2001/34/EC

Retail investor An investor who is not a professional investor

SICAR Socit dInvestissement en Capital Risque (investment company in risk capital)

SICAR Law Law of 15 June 2004 on investment companies in risk capital (SICAR), as amended

SIF Specialised investment fund

SIF Law Law of 13 February 2007 on specialised investment funds (SIF), as amended

SME Small and medium sized enterprise

SPV Special Purpose Vehicle

UCI Undertaking for collective investment

UCI Law Law of 17 December 2010 on undertakings for collective investment (UCI) as amended

UCITS Means an undertaking for collective investment in transferable securities authorised in accordance
with Article 5 of Directive 2009/65/EC of the European Parliament and of the Council of
13 July 2009 on the coordination of laws, regulations and administrative provisions relating to
undertakings for collective investment in transferable securities (UCITS)

UCITS Directive Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the
coordination of laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) which shall repeal Directive 85/611/EEC,
as amended, with effect from 1 July 2011

VAT Value Added Tax

27
about alfi

The Association of the Luxembourg Fund Foster dedication to professional

Industry (ALFI), the representative body for standards, integrity and quality
the Luxembourg investment fund community,
was founded in 1988. Investor trust is essential for success in
Today it represents more than 1,300 Luxembourg- collective investment services and ALFI thus
domiciled investment funds, asset management does all it can to promote high professional
companies and a wide variety of service standards, quality products and services,
providers including depositary banks, fund and integrity. Action in this area includes
administrators, transfer agents, distributors, organizing training at all levels, defining
law firms, consultants, tax advisers, auditors codes of conduct, transparency and good
and accountants, specialist IT providers and corporate governance, and supporting
communications agencies. initiatives to combat money laundering.

Luxembourg is the largest fund domicile in Promote the Luxembourg investment

Europe and its investment fund industry is fund industry
a worldwide leader in cross-border fund
distribution. Luxembourg-domiciled ALFI actively promotes the Luxembourg
investment structures are distributed in investment fund industry, its products and
more than 70 countries around the globe, its services. It represents the sector in
with a particular focus on Europe, Asia, financial and economic missions organised
Latin America and the Middle East. by the Luxembourg government around the
world and takes an active part in meetings
ALFI defines its mission as to Lead industry of the global fund industry.
efforts to make Luxembourg the most
attractive international centre. ALFI is an active member of the European
Fund and Asset Management Association,
Its main objectives are to: of the European Federation for Retirement,
of the International Investment Funds
Help members capitalise on Association and of the Global Impact
industry trends Investing Network.

ALFIs many technical committees and For more information,
working groups constantly review and visit our website at www.alfi.lu
analyse developments worldwide, and follow ALFI on
as well as legal and regulatory changes
in Luxembourg, the EU and beyond,
to identify threats and opportunities for the
Luxembourg fund industry.

Shape regulation

An up-to-date, innovative legal and fiscal
environment is critical to defend and
improve Luxembourgs competitive position
as a centre for the domiciliation, administration
and distribution of investment funds. Strong
relationships with regulatory authorities, the
government and the legislative body enable
ALFI to make an effective contribution to
decision-making through relevant input for
changes to the regulatory framework,
implementation of European directives and
regulation of new products or services.

28
Disclaimer: this brochure does not constitute legal advice and is merely intended to raise awareness of
issues relating to the AIFMD and/or the AIFM Law. A&M shall not incur liability of any kind should this
document be used as a basis for responding to legal questions.
 February 2014
2014 ALFI. All rights reserved.

the alternative investment fund managers

directive : Luxembourg implementation