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Type media
Expertise
23/07/2024
CMS International Disputes Digest – 2024 Summer Edition
Welcome to the Summer 2024 edition of the International Disputes Digest, our bi-annual publication exploring the latest trends and solutions to the challenges facing global business. Those challenges include the continuing war against Ukraine and in the Middle East, in addition to others such as climate change and Artificial Intelligence. In this edition, our experts in Brazil explain the impact of AI on resolving disputes and why robots will not replace arbitrators anytime soon. Separately, our colleagues in the Netherlands describe how Dutch litigation is leading the way in making both governments and companies accountable for policies resulting in climate damage, and how this litigious trend is defending biodiversity. The case of the Sultan of Sulu and how the passage of time in arbitration agreements might affect the integrity of an arbitration clause is the topic of analysis by our experts in Paris. We also consider the envisaged changes to the 7th edition of the SIAC Rules, a hot off the press analysis of the recently published 2024 IBA Guidelines on Conflict of Interest in International Arbitration, and our 2024 UK Banking Disputes Report, amongst other topics. We hope that you will enjoy reading these articles and please do contact the authors if you have queries in relation to them.
22/07/2024
AFM en DNB publiceren rapport over de impact van AI
De Autoriteit Financiële Markten (‘AFM’) en De Nederlandsche Bank (‘DNB’) hebben recent het rapport “De impact van AI op de financiële sector en het toezicht” (‘het Rapport’) gepubliceerd met uitgangs- en aandachtspunten voor het vormgeven van het toezicht op artificiële intelligentie (‘AI’). De AFM en DNB willen met de publicatie van het Rapport graag een dialoog aangaan met de sector, mede gelet op de snelle ontwikkelingen van AI. Volgens het Rapport kan AI enerzijds leiden tot betere dienstverlening voor klanten en meer ge­per­so­na­li­seer­de producten, en biedt het instellingen de kans om inkomsten te verhogen en kosten te verlagen. Anderzijds zijn er volgens het Rapport risico’s, onder andere op het gebied van datakwaliteit, ge­ge­vens­be­scher­ming, uitlegbaarheid, incorrecte resultaten, discriminatie en uitsluiting, en een hogere mate van afhankelijkheid van derde partijen. Als de risico's van AI zich verwezenlijken, kan dat volgens het Rapport impact hebben op het klantbelang, de integriteit en soliditeit van financiële instellingen en de verhouding tussen markpartijen op de financiële markt. In het Rapport wordt een enquête van EIOPA – de Europese autoriteit voor verzekeringen en be­drijfs­pen­si­oe­nen – aangehaald waaruit volgt dat AI door verzekeraars op dit moment voornamelijk wordt ingezet voor klantenservice, fraudedetectie en clai­maf­han­de­ling. Chatbots zijn hierbij de meest gebruikte AI-toepassing. Volgens het Rapport mag van financiële instellingen – waaronder verzekeraars – worden verwacht dat ze AI op een verantwoorde manier inzetten. Zo dienen financiële instellingen te voldoen aan de vereisten van een integere en beheerste bedrijfsvoering en dienen zij een adequaat risicomanagement in te richten dat ook het gebruik van AI omvat. Normen ten behoeve van het klantbelang zoals de zorgplicht en normen wat betreft pro­duct­ont­wik­ke­ling en -distributie zijn ook van toepassing bij het gebruik van AI. Daarnaast geldt dat op 12 juli 2024 de Europese Artificiële Intelligentie verordening (de ‘AI-Ver­or­de­ning’) is gepubliceerd. De AI-Verordening treedt op 1 augustus 2024 in werking. De AI-Verordening kent een over­gangs­pe­ri­o­de, waarbij geldt dat de verplichtingen op verschillende momenten van kracht worden. De toepasselijkheid van de AI-Verordening is gebaseerd op de definitie van AI en het onderscheid tussen verschillende risiconiveaus. De AFM en DNB zijn via de AI-Verordening toegewezen als toezichthouder voor AI-toepassingen met een hoog risico die worden gebruikt voor financiële diensten. AI-toepassingen bedoeld voor premiebepaling en ri­si­co­be­oor­de­ling voor levens- en ziek­te­kos­ten­ver­ze­ke­rin­gen worden in de AI-Verordening aangewezen als 'hoog risico'. Ten aanzien van AI-toepassingen die niet als hoog risico zijn gekwalificeerd, maar waarbij wel menselijke interactie plaatsvindt - zoals bijvoorbeeld chatbots - benadrukken de AFM en DNB in het Rapport dat alsnog zoveel mogelijk moet worden aangesloten bij de vereisten onder de AI-Verordening voor AI-toepassingen met een hoog risico. Zoals hiervoor aangegeven mag volgens het Rapport van financiële instellingen verwacht worden dat zij verantwoord met AI omgaan. Toezichthouders zullen deze inzet toetsen aan de al geldende wet- en regelgeving, maar zij zullen ook anticiperen op toekomstige wet- en regelgeving, specifiek toegespitst op AI. In het Rapport doen de AFM en DNB een oproep aan de financiële instellingen om mee te denken over AI in de financiële sector. Contact Heeft u vragen over het bovenstaande of andere vragen over het Rapport? Neem dan contact met ons op, wij gaan graag met u in gesprek.
18/07/2024
Life Sciences & Healthcare update: mei en juni 2024
De continue ontwikkeling van nieuwe medische hulpmiddelen en geneesmiddelen gaat gepaard met een toenemende rol van technologie en veranderende regelgeving. In de enerverende life sciences branche neemt de behoefte aan specialistische juridische kennis zodoende steeds meer toe. Om u te helpen voorop te blijven lopen, brengen wij daarom een maandelijkse newsflash met de laatste gerechtelijke uitspraken, informatie afkomstig van de autoriteiten en relevante ach­ter­grond­ar­ti­ke­len. Om navigeren zo eenvoudig mogelijk te maken, hebben we de informatie opgesplitst in twee overzichten, één overzicht specifiek over geneesmiddelen en één overzicht specifiek over medische hulpmiddelen. Klik hieronder op het voor u relevante overzicht en blijf op de hoogte van deze cruciale ontwikkelingen.
12/07/2024
Specialised investment fund (“SIF”) in Luxembourg
Published on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a SIF? The SIF is an investment fund that can invest in all types of assets as permitted under the law of 13 February 2007 (the SIF Law). Following the law of 12 July 2013 on alternative investment fund managers (the AIFM Law), the SIF Law was divided in two parts, with provisions concerning general provisions applicable to all SIFs (Part I of the SIF Law) and specific provisions for SIFs that qualify as alternative investment funds (AIFs) (Part II of the SIF Law). SIFs are funds that are regulated and subject to the prudential supervision of the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg supervisory authority. SIFs must be authorised by the CSSF before commencing their activity and are supervised by the CSSF on an ongoing basis. Key features Eligible investors:SIFs are reserved for “well informed investors”, who are:In­sti­tu­ti­o­nal and professional investors (within the meaning Annex II to Directive 2014/65/EU); or Other investors which have stated in writing that they adhere to the status of well-informed investor and, either (i) invest a minimum of 100,000 Euros in the SIF or (ii) have been the subject of an assessment made by a credit institution, an investment firm or a UCITS management company or an authorised alternative investment fund manager (AIFM) certifying their expertise, experience and knowledge to adequately appraise the contemplated investment in the SIF. Eligible assets:There is no restriction on eligible assets for SIFs. Corporate form and structuration of a SIF:SIFs are open or closed entities which take the form of:Fonds commun de placement (FCP) or common contractual fund, which is a fund without legal personality managed by a Luxembourg management company. Société d’In­ves­tis­se­ment à Capital Variable (SICAV) or investment company with variable capital, in the form of a corporate entity (e.g. SA, SCA, Sàrl) or of a partnership with or without legal personality (SCS or SCSp). SIFs can be formed as single funds or as umbrella structures with an unlimited number of ring-fenced sub-funds. Each sub-fund can have its own investment policy, specific features, governing rules or investment manager. Set up:The SIF may be set up as a partnership, a corporate company or an FCP further to the establishment or incorporation process of such entity (e.g. execution of a LPA, management regulations or incorporation of the company in front of a Luxembourg notary). The SIF must establish an offering document which includes the information necessary for investors to be able to make an informed assessment of the investment and related risks. The service agreements of the mandatory SIF’s service providers (as set out below) must be effective as of the date of its establishment / incorporation.A SIF must be approved by the CSSF and is under its permanent supervision through monthly and annual reporting. The approval triggers the entry of the SIF on the official list of SIFs held by the CSSF. Capital requirements:The net assets of a SIF may not be less than EUR 1,250,000, which must be reached within a period of twenty-four months following the authorisation of the SIF. Only 5% of the capital must be paid up on sub­scrip­ti­on. Di­ver­si­fi­ca­ti­on:A SIF cannot invest more than 30 % of its assets in securities of the same nature issued by the same issuer. Diversification rules do not apply to:Investments in securities issued or guaranteed by an OECD Member State or its regional or local authorities or by EU, regional or global supranational institutions and bodies; andInvestments in target UCIs that are subject to risk-spreading requirements at least comparable to those applicable to SIFs. SIFs may benefit from an initial ramp-up period to comply with the above risk-spreading rules. Marketing:A SIF only benefits from the European marketing passport to the extent that it falls under the scope of the full regime of the alternative investment fund managers directive (AIFMD). Service providers:SIFs must appoint several service providers, the main ones being as follows:a SIF qualifying as an AIF that is not self-managed and above the AIFMD threshold is required to appoint an authorised AIFM;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union) to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience must audit the annual report; anda central administrator which is located in Luxembourg;a portfolio manager in case of delegation by the AIFM. Tax regime:SIFs are not subject to Luxembourg corporate income tax, municipal business tax and net wealth tax but are subject to an annual subscription tax of 0.01 % on their net assets (calculated and payable on a quarterly basis). Some exemptions from subscription tax apply depending on the investment assets (e.g., assets invested in other Luxembourg UCIs subject to this subscription tax, investment in microfinance institutions and pension fund pooling vehicles). SIFs under the form of a corporate entity are subject to 20% real estate tax on rental income and capital gains realized upon disposal of Luxembourg real estate assets and disposal of interests or units in Luxembourg tax transparent entities or mutual funds holding Luxembourg real estate assets. Distributions made by SIFs are not subject to withholding tax. SIFs established under the form of a corporate entity may benefit from some tax treaties concluded by Luxembourg. Management services rendered to SIFs are exempt from VAT. In brief
12/07/2024
The reserved alternative investment fund (“RAIF”) in Luxembourg - UPDATED
Updated on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a RAIF? Luxembourg introduced the RAIF by a law of 23 July 2016 (the RAIF Law). RAIFs are also subject to the law of 12 July 2013 on Alternative Investment Fund Managers (the AIFM Law). RAIFs are considered as semi-regulated funds because they are not subject to the supervision of the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg supervisory authority but still involve the nomination of a duly authorised alternative investment fund manager (AIFM) subject to the AIFM Law. The RAIF regime aims at introducing a model with a less sophisticated process than regulated funds, without a double supervision by the CSSF, which make it more attractive for investment funds and asset management. The Luxembourg regime aligns with the European Union (EU)’s approach, through the Directive on AIFMs (the AIFMD), to focus on management supervision rather than product supervision. Key features Eligible investors:RAIFs are reserved for “well-informed investors”, who are:In­sti­tu­ti­o­nal and professional investors (within the meaning Annex II to Directive 2014/65/EU); or Other investors who have stated in writing that they adhere to the status of well-informed investor and, either (i) invest a minimum of 100,000 Euros in the RAIF or (ii) have been the subject of an assessment made by a credit institution, an investment firm or a UCITS management company or an authorised AIFM certifying their expertise, experience and knowledge to adequately appraise the contemplated investment in the RAIF. Eligible assets:There is no restriction on the eligible assets. A RAIF may state in its constitutive documents that its exclusive purpose is to invest in risk capital, in which case the portfolio is limited to investments in risk ca­pi­tal. Cor­po­ra­te form and struc­tu­ra­ti­on:RAIFs are open or closed entities which take the form of:Fonds commun de placement (FCP) or common contractual fund, which is a fund without legal personality managed by a Luxembourg management company; orSociété d’In­ves­tis­se­ment à Capital Variable (SICAV) or investment company with variable capital, in the form of a corporate entity (e.g. SA, SCA, Sàrl) or of a partnership with or without legal personality (SCS or SCSp). RAIF can be formed as a single fund or as an umbrella structure with an unlimited number of ring-fenced sub-funds. Each sub-fund can have its own investment policy, specific features, governing rules or investment manager. Set up:The RAIF may be set up as a partnership, a corporate company or an FCP further to the establishment or incorporation process of such entity (e.g. execution of a LPA, management regulations or incorporation of the company in front of a Luxembourg notary). The RAIF must establish an offering document which includes the information necessary for investors to be able to make an informed assessment of the investment and related risks. The service agreements of the mandatory RAIF’s service providers (as set out below) must be effective as of the date of its establishment / incorporation. The RAIF must be registered on the official list of RAIFs held with the Luxembourg trade and companies register. Capital requirements:The net assets of a RAIF may not be less than EUR 1,250,000, which must be reached within a period of twenty-four months following the entry into force of the management regulations of the FCP or from the incorporation of the SICAV. Only 5% of the capital must be paid up on subscription. Di­ver­si­fi­ca­ti­on:RAIFs are subject to an obligation of diversification. The RAIF Law does not impose diversification rules. In practice, a limitation of 30% of the RAIF gross assets in any single investment is generally applied. RAIFs may benefit from an initial ramp-up period to comply with the above risk-spreading rules. These above diversification requirements do not apply to RAIFs investing solely in “risk capital” investments. Marketing:RAIFs benefit from the European marketing passport provided by the AIFMD to market shares, units or partnership interests across the European Economic Area. Service providers:RAIFs must appoint several service providers, the main ones being as follows:an authorised AIFM. RAIFs cannot be internally managed;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union), to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience which must audit the annual report; a central administrator whose head office must be located in Luxembourg; and a portfolio manager in case of delegation by the AIFM. Tax regime: Default RegimeRAIFs are not subject to corporate income tax, municipal business tax or net wealth tax but are subject to an annual subscription tax of 0.01% on their net assets (calculated and payable on a quarterly basis). Some exemptions from subscription tax apply depending on the investment assets (e.g., assets invested in other Luxembourg UCIs subject to this subscription tax, investment in microfinance institutions and pension fund pooling vehicles). Distributions made by RAIFs are not subject to withholding tax. RAIFs established under a corporate form may benefit from some tax treaties concluded by Luxembourg. RAIF investing in risk capitalThis regime is similar to the SICAR regime. RAIF under a corporate form will be subject to corporate income tax and municipal business tax at the aggregate rate of 24,94% (for Luxembourg-city in 2023) with an exemption available for income and gains derived from (i) transferable securities representing investments in risk capital and (ii) income arising from funds held pending their investment in risk capital (only applicable for a maximum period of twelve months preceding their investment in risk capital and where it can be established that the funds have effectively been invested in risk capital). RAIFs will be exempt from Luxembourg net wealth tax except for the minimum net wealth tax. Dis­tri­bu­ti­ons made by RAIFs are not subject to withholding tax in Luxem­bourg. RAIFs should have access to the double tax treaties concluded by Luxem­bourg.  RAIFs under a partnership form are tax transparent and are not subject to corporate income tax, municipal business tax and net wealth tax. Distributions made by RAIFs are not subject to withholding tax. RAIFs should not be entitled to the double tax treaties concluded by Luxem­bourg. RAIFs under a corporate form are subject to 20% real estate tax on rental income and capital gains realized upon disposal of Luxembourg real estate assets and disposal of interests or units in Luxembourg tax transparent entities or mutual funds holding Luxembourg real estate as­sets. Ma­na­ge­ment services rendered to RAIFs are exempt from VAT. Investment management services provided to RAIFs are exempt from VAT.   In Brief:
12/07/2024
Specialised investment fund (“SIF”) in Luxembourg
Published on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a SIF? The SIF is an investment fund that can invest in all types of assets as permitted under the law of 13 February 2007 (the SIF Law). Following the law of 12 July 2013 on alternative investment fund managers (the AIFM Law), the SIF Law was divided in two parts, with provisions concerning general provisions applicable to all SIFs (Part I of the SIF Law) and specific provisions for SIFs that qualify as alternative investment funds (AIFs) (Part II of the SIF Law). SIFs are funds that are regulated and subject to the prudential supervision of the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg supervisory authority. SIFs must be authorised by the CSSF before commencing their activity and are supervised by the CSSF on an ongoing basis. Key features Eligible investors:SIFs are reserved for “well informed investors”, who are:In­sti­tu­ti­o­nal and professional investors (within the meaning Annex II to Directive 2014/65/EU); or Other investors which have stated in writing that they adhere to the status of well-informed investor and, either (i) invest a minimum of 100,000 Euros in the SIF or (ii) have been the subject of an assessment made by a credit institution, an investment firm or a UCITS management company or an authorised alternative investment fund manager (AIFM) certifying their expertise, experience and knowledge to adequately appraise the contemplated investment in the SIF. Eligible assets:There is no restriction on eligible assets for SIFs. Corporate form and structuration of a SIF:SIFs are open or closed entities which take the form of:Fonds commun de placement (FCP) or common contractual fund, which is a fund without legal personality managed by a Luxembourg management company. Société d’In­ves­tis­se­ment à Capital Variable (SICAV) or investment company with variable capital, in the form of a corporate entity (e.g. SA, SCA, Sàrl) or of a partnership with or without legal personality (SCS or SCSp). SIFs can be formed as single funds or as umbrella structures with an unlimited number of ring-fenced sub-funds. Each sub-fund can have its own investment policy, specific features, governing rules or investment manager. Set up:The SIF may be set up as a partnership, a corporate company or an FCP further to the establishment or incorporation process of such entity (e.g. execution of a LPA, management regulations or incorporation of the company in front of a Luxembourg notary). The SIF must establish an offering document which includes the information necessary for investors to be able to make an informed assessment of the investment and related risks. The service agreements of the mandatory SIF’s service providers (as set out below) must be effective as of the date of its establishment / incorporation.A SIF must be approved by the CSSF and is under its permanent supervision through monthly and annual reporting. The approval triggers the entry of the SIF on the official list of SIFs held by the CSSF. Capital requirements:The net assets of a SIF may not be less than EUR 1,250,000, which must be reached within a period of twenty-four months following the authorisation of the SIF. Only 5% of the capital must be paid up on sub­scrip­ti­on. Di­ver­si­fi­ca­ti­on:A SIF cannot invest more than 30 % of its assets in securities of the same nature issued by the same issuer. Diversification rules do not apply to:Investments in securities issued or guaranteed by an OECD Member State or its regional or local authorities or by EU, regional or global supranational institutions and bodies; andInvestments in target UCIs that are subject to risk-spreading requirements at least comparable to those applicable to SIFs. SIFs may benefit from an initial ramp-up period to comply with the above risk-spreading rules. Marketing:A SIF only benefits from the European marketing passport to the extent that it falls under the scope of the full regime of the alternative investment fund managers directive (AIFMD). Service providers:SIFs must appoint several service providers, the main ones being as follows:a SIF qualifying as an AIF that is not self-managed and above the AIFMD threshold is required to appoint an authorised AIFM;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union) to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience must audit the annual report; anda central administrator which is located in Luxembourg;a portfolio manager in case of delegation by the AIFM. Tax regime:SIFs are not subject to Luxembourg corporate income tax, municipal business tax and net wealth tax but are subject to an annual subscription tax of 0.01 % on their net assets (calculated and payable on a quarterly basis). Some exemptions from subscription tax apply depending on the investment assets (e.g., assets invested in other Luxembourg UCIs subject to this subscription tax, investment in microfinance institutions and pension fund pooling vehicles). SIFs under the form of a corporate entity are subject to 20% real estate tax on rental income and capital gains realized upon disposal of Luxembourg real estate assets and disposal of interests or units in Luxembourg tax transparent entities or mutual funds holding Luxembourg real estate assets. Distributions made by SIFs are not subject to withholding tax. SIFs established under the form of a corporate entity may benefit from some tax treaties concluded by Luxembourg. Management services rendered to SIFs are exempt from VAT. In brief
12/07/2024
The reserved alternative investment fund (“RAIF”) in Luxembourg - UPDATED
Updated on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a RAIF? Luxembourg introduced the RAIF by a law of 23 July 2016 (the RAIF Law). RAIFs are also subject to the law of 12 July 2013 on Alternative Investment Fund Managers (the AIFM Law). RAIFs are considered as semi-regulated funds because they are not subject to the supervision of the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg supervisory authority but still involve the nomination of a duly authorised alternative investment fund manager (AIFM) subject to the AIFM Law. The RAIF regime aims at introducing a model with a less sophisticated process than regulated funds, without a double supervision by the CSSF, which make it more attractive for investment funds and asset management. The Luxembourg regime aligns with the European Union (EU)’s approach, through the Directive on AIFMs (the AIFMD), to focus on management supervision rather than product supervision. Key features Eligible investors:RAIFs are reserved for “well-informed investors”, who are:In­sti­tu­ti­o­nal and professional investors (within the meaning Annex II to Directive 2014/65/EU); or Other investors who have stated in writing that they adhere to the status of well-informed investor and, either (i) invest a minimum of 100,000 Euros in the RAIF or (ii) have been the subject of an assessment made by a credit institution, an investment firm or a UCITS management company or an authorised AIFM certifying their expertise, experience and knowledge to adequately appraise the contemplated investment in the RAIF. Eligible assets:There is no restriction on the eligible assets. A RAIF may state in its constitutive documents that its exclusive purpose is to invest in risk capital, in which case the portfolio is limited to investments in risk ca­pi­tal. Cor­po­ra­te form and struc­tu­ra­ti­on:RAIFs are open or closed entities which take the form of:Fonds commun de placement (FCP) or common contractual fund, which is a fund without legal personality managed by a Luxembourg management company; orSociété d’In­ves­tis­se­ment à Capital Variable (SICAV) or investment company with variable capital, in the form of a corporate entity (e.g. SA, SCA, Sàrl) or of a partnership with or without legal personality (SCS or SCSp). RAIF can be formed as a single fund or as an umbrella structure with an unlimited number of ring-fenced sub-funds. Each sub-fund can have its own investment policy, specific features, governing rules or investment manager. Set up:The RAIF may be set up as a partnership, a corporate company or an FCP further to the establishment or incorporation process of such entity (e.g. execution of a LPA, management regulations or incorporation of the company in front of a Luxembourg notary). The RAIF must establish an offering document which includes the information necessary for investors to be able to make an informed assessment of the investment and related risks. The service agreements of the mandatory RAIF’s service providers (as set out below) must be effective as of the date of its establishment / incorporation. The RAIF must be registered on the official list of RAIFs held with the Luxembourg trade and companies register. Capital requirements:The net assets of a RAIF may not be less than EUR 1,250,000, which must be reached within a period of twenty-four months following the entry into force of the management regulations of the FCP or from the incorporation of the SICAV. Only 5% of the capital must be paid up on subscription. Di­ver­si­fi­ca­ti­on:RAIFs are subject to an obligation of diversification. The RAIF Law does not impose diversification rules. In practice, a limitation of 30% of the RAIF gross assets in any single investment is generally applied. RAIFs may benefit from an initial ramp-up period to comply with the above risk-spreading rules. These above diversification requirements do not apply to RAIFs investing solely in “risk capital” investments. Marketing:RAIFs benefit from the European marketing passport provided by the AIFMD to market shares, units or partnership interests across the European Economic Area. Service providers:RAIFs must appoint several service providers, the main ones being as follows:an authorised AIFM. RAIFs cannot be internally managed;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union), to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience which must audit the annual report; a central administrator whose head office must be located in Luxembourg; and a portfolio manager in case of delegation by the AIFM. Tax regime: Default RegimeRAIFs are not subject to corporate income tax, municipal business tax or net wealth tax but are subject to an annual subscription tax of 0.01% on their net assets (calculated and payable on a quarterly basis). Some exemptions from subscription tax apply depending on the investment assets (e.g., assets invested in other Luxembourg UCIs subject to this subscription tax, investment in microfinance institutions and pension fund pooling vehicles). Distributions made by RAIFs are not subject to withholding tax. RAIFs established under a corporate form may benefit from some tax treaties concluded by Luxembourg. RAIF investing in risk capitalThis regime is similar to the SICAR regime. RAIF under a corporate form will be subject to corporate income tax and municipal business tax at the aggregate rate of 24,94% (for Luxembourg-city in 2023) with an exemption available for income and gains derived from (i) transferable securities representing investments in risk capital and (ii) income arising from funds held pending their investment in risk capital (only applicable for a maximum period of twelve months preceding their investment in risk capital and where it can be established that the funds have effectively been invested in risk capital). RAIFs will be exempt from Luxembourg net wealth tax except for the minimum net wealth tax. Dis­tri­bu­ti­ons made by RAIFs are not subject to withholding tax in Luxem­bourg. RAIFs should have access to the double tax treaties concluded by Luxem­bourg.  RAIFs under a partnership form are tax transparent and are not subject to corporate income tax, municipal business tax and net wealth tax. Distributions made by RAIFs are not subject to withholding tax. RAIFs should not be entitled to the double tax treaties concluded by Luxem­bourg. RAIFs under a corporate form are subject to 20% real estate tax on rental income and capital gains realized upon disposal of Luxembourg real estate assets and disposal of interests or units in Luxembourg tax transparent entities or mutual funds holding Luxembourg real estate as­sets. Ma­na­ge­ment services rendered to RAIFs are exempt from VAT. Investment management services provided to RAIFs are exempt from VAT.   In Brief:
12/07/2024
Unregulated special limited partnership (“SCSp”) in Luxembourg
Published on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a SCSp? The Luxembourg special limited partnership (société en commandite spéciale – SCSp) is a fund structure introduced in 2013 following the adoption of the law of 12 July 2013 on alternative investment fund managers (the AIFM Law). The SCSp differs from the common limited partnership (société en commandite simple - SCS) notably by the fact that it does not have legal personality. SCSps are subject to the law of 10 august 1915 on commercial compagnies (the 1915 Law) and to the AIFM Law to the extent that it qualifies as an alternative investment fund (AIF). It can in addition be subject to a product regime when used for a regulated fund vehicle (Part II UCI, SIF, SICAR or RAIF). Key features Eligible investors:There is no restriction on eligible investors for unregulated SCSps. Eligible assets:There is no restriction on eligible assets for an unregulated SCSp. Struc­tu­ra­ti­on:SCS­ps are open or closed entities. They can only be formed as a single fund (umbrella structure not available). Set up:An SCSp is formed, for a limited or unlimited duration, by one or more partners with unlimited and joint and several liability for all the obligations of the partnership, and one or more limited partners who only contribute a specific amount constituting partnership interests which may but need not be represented by instruments, as provided in the partnership agreement. The fund is set up by means of a limited partnership agreement which can be made by private or public deed and offers a large flexibility on the set up. All Luxembourg SCSps must maintain a register of the partners. This register must be accessible to any partner, unless the limited partnership agreement disposes otherwise. Capital re­qui­re­ments:The­re is no minimum capital requirement for SCSps. Liability of partners:General partners (associés commandités) have unlimited joint and several liability for the obligations of the SCSp, whereas limited partners (associés commanditaires) are only liable up to the amount of their respective contributions or commitments. Limited partners are prohibited from carrying out any act of management vis-à-vis third parties. The general partner may act both as general partner (associé commandité) and manager (gérant) of the SCSp, hence being considered as managing general partner (associé commandité - gérant) and therefore also being held liable in its capacity as manager. Di­ver­si­fi­ca­ti­on:The­re are no diversification requirements for unregulated SCSps. Marketing:An SCSp only benefits from the European marketing passport to the extent that it falls under the scope of the full regime of the alternative investment fund managers directive (AIFMD). Service providers: To the extent that the SCSp qualifies as an AIF that is not self-managed and above the AIFMD threshold, the following service providers are required:an authorised AIFM;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union), to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience to audit the annual report;a central administrator which is located in Luxembourg;a portfolio manager in case of delegation by the AIFM. Tax regime: An SCSp is tax transparent for corporate income tax and net wealth tax purposes. An SCSp qualifying as AIF is not subject to municipal business tax since it is not a business enterprise carrying out a commercial activity. The SCSp will however be deemed to be a business enterprise if its general partner is a capital company holding 5% or more of its partnership interests. Distributions made by an SCSp are not subject to Luxembourg withholding tax. An SCSp is generally not entitled to double tax treaties concluded by Luxembourg. The VAT status of an SCSp will depend on the activities performed. Main advantages of an SCSp:The main advantages for choosing the SCSp are, inter alia, that:it is internationally recognised and resembles the Anglo-Saxon limited partnership structures;it offers a high level of contractual flexibility and most of the rules can be freely determined in the partnership agreement, as there are very few compulsory provisions in the 1915 Law;it can be easily and rapidly set up and is subject to very limited registration formalities, allowing short time to market;it is not subject to CSSF authorisation or prudential supervision;it is tax transparent from a corporate and tax perspective;it offers confidentiality, as the information published on the Luxembourg Trade and Companies Register is limited to key provisions and does not include the identity of the limited partners nor their contributions; andit is not subject to any minimum capital requirement or minimum investment amount.
12/07/2024
Unregulated special limited partnership (“SCSp”) in Luxembourg
Published on July 12, 2024This Back to Basics note follows our key concepts briefings, which intend to provide high-level insights regarding funds fundamentals, funds vehicles and operational considerations, available here. What is a SCSp? The Luxembourg special limited partnership (société en commandite spéciale – SCSp) is a fund structure introduced in 2013 following the adoption of the law of 12 July 2013 on alternative investment fund managers (the AIFM Law). The SCSp differs from the common limited partnership (société en commandite simple - SCS) notably by the fact that it does not have legal personality. SCSps are subject to the law of 10 august 1915 on commercial compagnies (the 1915 Law) and to the AIFM Law to the extent that it qualifies as an alternative investment fund (AIF). It can in addition be subject to a product regime when used for a regulated fund vehicle (Part II UCI, SIF, SICAR or RAIF). Key features Eligible investors:There is no restriction on eligible investors for unregulated SCSps. Eligible assets:There is no restriction on eligible assets for an unregulated SCSp. Struc­tu­ra­ti­on:SCS­ps are open or closed entities. They can only be formed as a single fund (umbrella structure not available). Set up:An SCSp is formed, for a limited or unlimited duration, by one or more partners with unlimited and joint and several liability for all the obligations of the partnership, and one or more limited partners who only contribute a specific amount constituting partnership interests which may but need not be represented by instruments, as provided in the partnership agreement. The fund is set up by means of a limited partnership agreement which can be made by private or public deed and offers a large flexibility on the set up. All Luxembourg SCSps must maintain a register of the partners. This register must be accessible to any partner, unless the limited partnership agreement disposes otherwise. Capital re­qui­re­ments:The­re is no minimum capital requirement for SCSps. Liability of partners:General partners (associés commandités) have unlimited joint and several liability for the obligations of the SCSp, whereas limited partners (associés commanditaires) are only liable up to the amount of their respective contributions or commitments. Limited partners are prohibited from carrying out any act of management vis-à-vis third parties. The general partner may act both as general partner (associé commandité) and manager (gérant) of the SCSp, hence being considered as managing general partner (associé commandité - gérant) and therefore also being held liable in its capacity as manager. Di­ver­si­fi­ca­ti­on:The­re are no diversification requirements for unregulated SCSps. Marketing:An SCSp only benefits from the European marketing passport to the extent that it falls under the scope of the full regime of the alternative investment fund managers directive (AIFMD). Service providers: To the extent that the SCSp qualifies as an AIF that is not self-managed and above the AIFMD threshold, the following service providers are required:an authorised AIFM;a depositary having its registered office in Luxembourg or a branch in Luxembourg (if its registered office is in another Member State of the European Union), to ensure the safe keeping of its assets;an authorised independent auditor with appropriate professional experience to audit the annual report;a central administrator which is located in Luxembourg;a portfolio manager in case of delegation by the AIFM. Tax regime: An SCSp is tax transparent for corporate income tax and net wealth tax purposes. An SCSp qualifying as AIF is not subject to municipal business tax since it is not a business enterprise carrying out a commercial activity. The SCSp will however be deemed to be a business enterprise if its general partner is a capital company holding 5% or more of its partnership interests. Distributions made by an SCSp are not subject to Luxembourg withholding tax. An SCSp is generally not entitled to double tax treaties concluded by Luxembourg. The VAT status of an SCSp will depend on the activities performed. Main advantages of an SCSp:The main advantages for choosing the SCSp are, inter alia, that:it is internationally recognised and resembles the Anglo-Saxon limited partnership structures;it offers a high level of contractual flexibility and most of the rules can be freely determined in the partnership agreement, as there are very few compulsory provisions in the 1915 Law;it can be easily and rapidly set up and is subject to very limited registration formalities, allowing short time to market;it is not subject to CSSF authorisation or prudential supervision;it is tax transparent from a corporate and tax perspective;it offers confidentiality, as the information published on the Luxembourg Trade and Companies Register is limited to key provisions and does not include the identity of the limited partners nor their contributions; andit is not subject to any minimum capital requirement or minimum investment amount.
11/07/2024
Looking ahead to the EU AI Act
On 12 July 2024, the "Regulation laying down harmonised rules on artificial intelligence" (the so-called AI Act) was published in the Official Journal of the European Union. After a long and complex journey that began in 2021 with the European Commission’s proposal of a draft AI Act, the regulation will now enter into 20 days after its publication, i.e. on August 2, 2024. As the world's first comprehensive law to regulate artificial intelligence, the AI Act aims to establish uniform requirements for the development and use of artificial intelligence in the European Union. With this adoption of the world’s most significant legislation on Artificial Intelligence, the EU is solidifying its position as a pioneer among global legislators. This initiative aims to establish and reinforce the EU’s role as a premier hub for AI while ensuring that AI development remains focused on human-centered and trustworthy principles. The AI Act aims to ensure that the marketing and use of AI systems and their outputs in the EU are consistent with fundamental rights under EU law, such as privacy, democracy, the rule of law and environmental sustainability. Adopting a dual approach, it outright prohibits AI systems deemed to pose unacceptable risks while imposing regulatory obligations on other AI systems and their outputs. The new regulation, which also aims to strike a fair balance between innovation and the protection of individuals, not only makes Europe a world leader in the regulation of this new technology, but also endeavours to create a legal framework that users of AI technologies will be able to comply with in order to make the most of this significant development opportunity. In this article we provide a first overview of the key points contained in the text of the AI Act that companies should be aware of in order to prepare for the implementing regulation.
09/07/2024
CMS European Private Equity Study 2024
This study analyses hundreds of Private Equity deals that we advised on in 2023 and previous years, providing unique insights into market trends
03/07/2024
How to invest in commercial real estate in the Netherlands
This is a practical guide from CMS on how to invest in commercial real estate in the Netherlands. The guide starts off with a brief explanation of the Dutch legal system. Key information about and an outline of the preferred ownership and transfer structure for commercial real estate assets is provided. We also outline the most common transaction process as well as costs and taxes to consider.