On 3 October 2025, the long-anticipated Draft Bill No. 8628 — implementing Directive (EU) 2024/927 on delegation arrangements, liquidity risk management, supervisory reporting, depositary and custody services, and loan origination by alternative investment funds (AIFMD II), which modifies both the law of 17 December 2010 relating to undertakings for collective investment (the UCI Law), as amended, and the law of 12 July 2013 on alternative investment fund managers, as amended (the AIFM Law) — was submitted to the Luxembourg Parliament.
True to expectations, Luxembourg’s draft bill largely mirrors AIFMD II, while still offering practical clarifications and added flexibility on several important aspects.
Key takeaways
Ancillary services
The list of permitted ancillary services to be performed respectively by alternative investment fund managers (AIFMs) and management companies has been extended to include functions and activities that they already perform in relation to the funds they manage, on the condition that any potential conflict of interest arising from the performance of this function or activity on behalf of other parties is appropriately managed.
The explanatory comments provide further useful clarifications on the activities covered, which should notably include services to businesses, such as human resources and information technology services, in addition to IT services for portfolio and risk management. This could also include, without limitation, the provision of services related to anti-money laundering, corporate services such as preparing shareholder and/or board meetings, domiciliation services for companies belonging to the same group as the manager (for example, companies established by investors in the funds managed by the manager), and, more generally, administrative, risk management, and marketing services for funds.
The explanatory comments also confirm the interpretation of the term “third party”, which should be interpreted broadly and may therefore also include, for example, not only other funds but also, without limitation, structures such as intermediate vehicles, co-investment vehicles, or carried interest vehicles, whether they are linked to funds managed by the manager, to funds initiated, managed, or advised by an entity within the same group as the manager, or to other legal entities, such as pension funds, securitisation vehicles, or insurance vehicles.
Substance
With respect to substance requirements, the explanatory comments reassure that the requirement for the conduct of the manager’s activities to be vested in at least two full-time natural persons is not expected to have any impact in Luxembourg, insofar as such a requirement is already generally observed in Luxembourg administrative practice.
Consumer loans
AIFMD II leaves it to the discretion of Member States to determine whether, for reasons of public interest, alternative investment funds (AIFs) should be prohibited from granting loans to consumers. The draft bill prohibits both Luxembourg and foreign AIFs from granting consumer loans to consumers located in Luxembourg. However, this prohibition does not prevent Luxembourg AIFs from granting loans to consumers located in other jurisdictions where such activity is permitted.
Depositary (AIFs)
The draft bill does not allow Luxembourg AIFs to appoint a depositary established outside Luxembourg. However, it clarifies that a Luxembourg depositary may act for a non-domestic AIF where the AIF’s home Member State has exercised the option to permit the appointment of a depositary established in another Member State, and where such appointment has been approved by the competent authority of that Member State.
Liquidity management
With respect to both AIFs and undertakings for collective investment in transferable securities (UCITS), the draft bill goes beyond the requirement to select at least two liquidity management tools from the predetermined list under AIFMD II by expressly permitting the use of additional liquidity management tools on a complementary basis, thereby granting AIFMs and management companies greater operational flexibility.
Auditor exemption
The draft bill introduces in Article 26 of the UCI Law a new exemption for SICAV UCITS from the requirement to obtain an independent auditor’s report for any issue of units in exchange for contributions in kind, provided that unitholders are treated fairly. The explanatory comment further clarifies that this exemption should also apply to UCITS established as common funds (fonds commun de placement – FCP) and to redemptions in kind.
Next step
The draft bill is now set to advance through the parliamentary legislative process and may undergo further amendments. Upon adoption, the law is expected to come into force on 16 April 2026, aligning with the AIFMD II transposition deadline, while reporting obligations will apply from 16 April 2027, one year after the law’s entry into force.
Should you have any questions, please feel free to reach out to our experts Julia Bruzzese, Benjamin Bada or Aurélien Hollard.
