Luxembourg fund structure

Complete formation of Luxembourg funds

Luxembourg fund structures

Luxembourg Alternative Investment Fund (AIF) Formation

Let us assist you with your Luxembourg fund formation. The following describes a Luxembourg fund setup for a Special Limited Partnership (“SLP”) fund of under EUR 100 million net asset value (NAV):

Managers of alternative investment funds are subject to the rules of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (AIFMD), which was transposed into national law by the Luxembourg Law of 12 July 2013 on alternative investment fund managers (AIFM Law).

The term “Alternative Investment Funds (AIF)” as provided by the AIFMD refers to collective investment undertakings, which raise capital from a number of investors with a view to investing it in accordance with a defined investment strategy for the benefit of those investors, and which do no not qualify as UCITS. Hedge funds, real estate and infrastructure funds, private equity funds etc. are therefore targeted by the AIFMD, regardless of their current legal regime or form. In Luxembourg, Part II UCIs, SIFs, SICARs and non-regulated investment vehicles can qualify as AIFs in this sense.

However, the AIFM Law provides exemptions for managers of smaller AIFs:

  • AIFMs managing AIFs which are not leveraged and without redemption rights for a period of five years, and with aggregate assets under management below EUR 500 million;
  • AIFMs managing AIFs whose assets under management, including any assets acquired through the use of leverage, do not exceed EUR 100 million.

Key points:

  • Under EUR 100 million AUM, the SLP fund is unregulated and, thus, is not subject to the AIFM Directive.
  • A fund manager is not required, but if a fund manager is desired, anyone can be the manager (private individual, corporate, resident or foreign).
  • Investor and investment size restrictions are not imposed, but if going to market in the EU, investors should be either institutional or well informed and sophisticated individuals.
  • The fund can invest in any type of asset, no limitation: hedge fund, private equity, real estate, derivatives, loans, arts, collectibles, renewables, securities, bonds, etc.
  • There is no limitation or risk-spreading rule for a SLP under EUR 100 million.

Contact us for your Luxembourg fund setup.