The Luxembourg Parliament has adopted the law transposing the Alternative Investment Fund Manager Directive (AIFMD) into Luxembourg law.
Marc Saluzzi (pictured), chairman of ALFI, says: “With the legislative process now complete, the regulated alternative investment fund industry in Luxembourg is ready to take off.
“AIFMD pushed the alternative fund management industry towards a model which is based on the compromise of more regulation in exchange for a passport. This is the same as the UCITS model which we know so well in Luxembourg, and, combined with the fact that we already have a well-established ‘alternatives’ industry, the law puts the Luxembourg financial centre in a strong competitive position to develop our hedge, real estate and private equity activities even further.”
A key measure of the AIFMD involves the introduction of a European passport for alternative investment fund managers who wish to access the entire European market. ALFI expects that implementation of the AIFMD will further enhance Luxembourg as a leading domicile for fund and management companies in the alternative sector.
ALFI actively contributed to the draft law on the implementation into Luxembourg law that was submitted to Parliament on 24 August 2012.
Two major features of the law are likely to be of particular interest to the alternative investment fund community:
· The creation of a limited partnership structure, which adds a flexible and secure partnership structure to Luxembourg’s offering which will be particularly appealing to investors familiar with the Anglo-Saxon partnership regime;
· The law provides for additional clarifications regarding the taxation of carried interest.
In parallel with the law entering into force in Luxembourg, ALFI worked with the industry to put in place the operational requirements needed to comply with the directive and its delegated regulations. In addition, on 18 June 2013, the Luxembourg regulator published frequently asked questions to highlight some of the key aspects of the AIFMD regulation from a Luxembourg perspective, together with an application form for establishing a fully licensed alternative investment fund management company.
Saluzzi says: “ALFI is confident that the new regulatory framework will provide the global alternatives industry with a solution which combines investor protection with well-established industry practices at a reasonable cost.”