AIFM passporting in Luxembourg

AIFMs authorised in their EEA home State may exercise passport rights for management and marketing of EEA AIFs to professional investors in Luxembourg.

Regardless of whether an existing management and / or marketing passport under the UCITS directive is held, EEA AIFMs are required to make a separate notification to their home State competent authority when they intend to manage or market an EEA AIF on a passported basis in Luxembourg.

The home State competent authority will send the passport notification and the certificate set out under Article 32.3 of the AIFM Directive to the CSSF if the EEA AIFM intends to distribute EEA AIFs to professional investors in Luxembourg. The EEA AIFM can commence its distribution activities in Luxembourg from the date of notification by the home State competent authority to the CSSF.

The passport is valid only for the marketing of EEA AIFs to professional investors in Luxembourg. Currently no EU passport exists for the marketing of AIFs to retail investors. In its Regulation no. 15 / 03 of 26 November 2015, the CSSF has set forth the conditions pursuant to which non-Luxembourg AIFs can be marketed to retail investors in Luxembourg. Any such marketing is subject to the prior authorisation of the CSSF. To be eligible for authorisation, the AIF must comply with a specific risk spreading policy and determine at least once per month the issue and redemption price of its units or shares. The AIF must further appoint a credit institution in Luxembourg to act as paying agent. Additional marketing rules, including compliance with the consumer code, apply.

Non-EEA AIFMs must notify the CSSF prior to any marketing activities in Luxembourg. Currently, AIFMs based in Non-EEA (third country) jurisdictions wishing to market EEA AIFs to professional investors in Luxembourg are required to conduct distribution on a private placement basis and to comply with the following requirements:

• the Non-EEA AIFM must comply (i) with the relevant requirements on the annual report of AIF (Article 22 of the AIFM Directive), disclosure to investors (Article 23 of the AIFM Directive) and reporting obligations to competent authorities (Article 24 of the AIFM Directive), as well as, where relevant, the provisions on the acquisition of control  of non-listed companies and issuers (Articles 26 to 30 of the AIFM Directive) and (ii) with Section XIII (Guidelines on disclosure) of ESMA’s guidelines on sound remuneration policies under the AIFM Directive and (iii) the Luxembourg consumer code;
• there are appropriate cooperation arrangements to ensure efficient exchange of information for systemic risk oversight between the competent authorities of the Member States where the AIFs are marketed, the EEA AIF Member State and the supervisory authority of the Non-EEA AIFM and
•  the third country where the Non-EEA AIFM or the Non-EEA AIF is established is not listed as a non-cooperative country and territory by the FATF.

Both EEA AIFMs and Non-EEA AIFMs may commence pre-marketing AIFs which are not yet established, or established but not yet compliant with the applicable marketing procedures, to potential professional investors in Luxembourg, provided that the CSSF receives a pre-marketing notification letter within two weeks of starting such pre-marketing activity. EEA AIFMs need to send this pre-marketing notification letter to their home State competent authority within two weeks of starting such pre-marketing activity, which in turn is directly transmitted to the CSSF. Non-EEA AIFMs need to submit such letter directly to the CSSF within the same time period. 

The information provided to potential professional investors within the context of the pre-marketing activity should not enable such investors to commit to acquiring units or shares of the pre-marketed AIF or amount to a subscription form or similar document, whether in draft or final form.

For a period of 18 months after the start of the pre-marketing of the AIF, the AIFM may not rely on reverse solicitation in the jurisdiction where the pre-marketing has been notified.

The CSSF will charge a lump sum fee for the marketing of  foreign AIFs in Luxembourg of EUR 3,000 for a standalone foreign AIF and of EUR 5,500 for a foreign AIF with compartments. The same fee will thereafter be charged on an annual basis. The CSSF does not charge an application fee for an AIFM passport notification. No fees apply for the purpose of premarketing AIFs.