The transitional regime in the event of a hard Brexit

The United Kingdom was initially supposed to exit the European Union on March 29, 2019 but that departure date has been postponed, and it has now until October 31, 2019 to leave.

In case of leaving without a deal, a hard Brexit, Luxembourg has adopted two laws on April 8, 2019 namely the Brexit laws. Fund managers authorised under Directive 2009/65/EC (“UCITS Directive”) and/or Directive 2011/61/EU (“AIFM Directive”) will be considered as non-European entities and will lose their EU passport rights.

The Luxembourg financial supervisory authority, the Commission de Surveillance du Secteur Financier (“CSSF”) has released a new article relevant for Undertakings for Collective Investment (“UCIs”) and their managers in the case of a hard Brexit. In the case of a hard Brexit, the CSSF has pointed out that all entities impacted by Brexit shall inform the CSSF of their intention to continue to provide services in Luxembourg.

The CSSF has offered a transitional solution. United Kingdom entities authorised under UCITS Directive and/or AIFM Directive that want to continue to provide services in Luxembourg should notify the CSSF of their intention on the newly opened dedicated portal of the CSSF by September 15, 2019.

The Entities that wish to continue to provide services after the transitional period shall submit to the CSSF the corresponding application as soon as possible but no later than October 31, 2019.

It should be noted that the CSSF will grant the transitional regime under the condition that the entities have submitted the application before the deadline above mentioned.

The transitional regime is available for a period of 12 months following the date of the hard Brexit.

The CSSF has indicated that entities authorised under the UCITS Directive and the AIFM Directive shall submit a Brexit notification to the CSSF and the entities who have already submitted an application above mentioned shall also submit a Brexit notification to the CSSF.