Modernisation of the Luxembourg Fund toolbox


On 24 July 2023, the law of 21 July 2023 modernising the Luxembourg fund toolbox (the “Law”) was published in the Luxembourg Official Gazette.

The Law amended the following Luxembourg laws:

The purpose of the Law is to enhance and modernise Luxembourg’s toolkit for investment funds, thereby increasing the attractiveness and competitiveness of Luxembourg’s financial sector by focusing on the following major aspects:

Amendments of the current provisions

a. Investment Funds

  1. Easing access of retail investors to Luxembourg RAIFs, SIFs, and SICARs.

The Law has amended the definition of well-informed investors, lowering the threshold for well-informed investors to EUR 100,000, from EUR 125,000.

  1. Extension of the period to reach the minimum capital of RAIFs, SIFs, SICARs, and UCIs Part II.

The Law introduced an extension period for RAIFs, SIFs, SICARs, to reach their minimum capital from 12 months to 24 months.  UCIs Part II are given 12 months to meet their minimum capital requirements instead of 6 months. This extension provided these investment funds with a more flexible timeframe to secure their necessary capital.

  1. Tax incentives for RAIFs, SIFs, and UCIs Part II.

In a bid to encourage investment, the Law introduced tax incentives for RAIFs, SIFs, and UCIs Part II which would be exempt from subscription tax (taxe d’abonnement) if they qualify as a European long-term investment fund in accordance with Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds, or a money market fund in accordance with egulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds or if they are reserved to individual investors acting through a pan-European personal pension product.

  1. New provisions for Depositaries.

The replacement of the depositary of a SICAR, SIF, UCI Part II or a UCITS, no longer has to occur within 2 months following the termination of the depositary agreement.

The depositary agreement shall provide a notice period allowing for the new depositary to take over the role. Should no new depositary be appointed, the Commission de Surveillance du Secteur Financier (the “CSSF”) will withdraw the investment fund from the official list where it has been registered, leading to its liquidation.

The last appointed depositary shall take all necessary measures in the interest of the investment fund’s shareholders/unitholders, which includes the obligation to retain the investment fund’s bank account open and open any account required for safe keeping of the assets until the closure of the liquidation of the investment fund.

UCITS, Part II UCIs and SIFs organised as SICAVs shall suspend subscriptions and redemptions when there is no longer a depositary, or in case the Depositary enters into liquidation, declaration of bankruptcy, suspension of payments, arrangement with the creditors or management supervision.

  1. More flexible features offered to UCIs Part II

Until now, UCIs Part II organised as investment companies with variable capital (sociétés d’investissement à capital variable) (“SICAV”) could only be established as a public limited liability company (société anonyme). The Law has extended the choice of legal forms to include partnership limited by shares (société en commandite par actions) (“SCA”), common/special limited partnership (société en commandite simple/spéciale) (“SCS/SCSp”), or private limited liability company (société à responsabilité limitée) (“SARL”).

However, in order to enhance retail investor protection, UCIs Part II formed under the legal form of an SCA, SCS/SCSp, or SARL must also be managed by an alternative investment fund manager authorised under the AIFM Law.

Under the Law, closed-ended UCIs Part II structured as SICAVs or common funds (fonds communs de placement) now have the option to establish rules for determining the issue price of their shares/units in their constitutive documents. This will enable them to benefit from enhanced flexibility as they would not need to rely solely on the net asset value.

b. Management companies

  1. Common framework for efficient liquidation of management companies and own funds requirement.

The Law has introduced new own funds requirements for management companies of UCIs in line with the own funds requirements applicable to authorised AIFMs under the AIFM Law.

Management companies shall invest their own funds in liquid assets or in assets that are easily convertible in short term liquidities and should refrain from taking speculative positions with their own funds.

Furthermore, the Law has outlined detailed procedures for the voluntary liquidation of AIFMs, emphasising the need for rigorous oversight by the CSSF. The appointment of liquidators, publication of relevant documents, and the approval of liquidation accounts are all subject to stringent regulatory scrutiny.

  1. Alignment of the AIFM regime with the UCITS Management Company regime

The Law has introduced the possibility for Luxembourg AIFMs to appoint tied agents as defined by article 1, point 1) of the Luxembourg law of 5 April 1993 on the financial sector, as amended, which must comply with the duties laid down in such law.

However, the AIFM remains fully and unconditionally responsible for any action or omission on the part of the tied agent and it shall monitor the activities of their tied agents.


In summary, these comprehensive legal reforms aim to foster a more investor-friendly environment while ensuring robust oversight and prudent financial management within the Luxembourg fund industry.

The amendments offered by the Law are the fruit of a major effort to align and make consistent five sectoral laws, not only with each other, but also in relation to other national laws and European texts, as well as enshrining administrative practice in law.

Get in touch with our team in Luxembourg for more information.