A new bill of law relating to Part-II Funds, SIFs and SICARs

It has been deposited before Luxembourg-Parliament on 18 January 2016 and addresses the following three items:

Modernisation of the UCI law in order to allow Part-II funds to issue shares/units at a different price than the NAV:

-      applies to closed-ended Part-II funds only, which are

-      either listed, in which case the lower listing price is taken as a basis,

-      or not listed, i.e. the issue price is composted by the NAV and a premium
(in order to, say, take the “J-curve” into account).

Will allow Part-II funds to be set-up as ELTIFs issuing their shares/units to retail investors (with a preferential subscription right).

Restricting the eligible assets for certain SIFs:

-      SIFs issuing their shares exclusively to professional investors in accordance with MiFID II are not affected and may continue to invest in all assets (legally available)

-      SIFs offering their shares also to other well-informed investors (i.e. HNWI) will not be allowed to invest in “atypical assets” (e.g. wine, diamonds etc.)

This does not seem to be very consistent with the draft bill on reserved alternative investment funds (RAIFs) which may invest in those “atypical assets” even when offering their shares to those “other well-informed investors”.

The bill provides that a future CSSF regulation shall determine the corresponding grand-fathering rules.

The SICAR law will essentially be adapted to the SIF law and SICARS must, by the end of 2016:

-      review their outsourcing structure and obtain an approval from CSSF, if necessary and

-      establish adequate risk management systems and notify them to the CSSF.