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CSSF issues new update to AIFMD law Q&A

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By Oliver Sciales, Chevalier & Sciales – Luxembourg’s Financial Sector Supervisory Authority has published on July 18 the latest update to its Frequently Asked Questions document on the grand duchy’s law of July 12, 2013 implementing the European Union’s Alternative Investment Fund Managers Directive and the European Commission’s Level 2 regulation on implementation of the AIFMD.

The FAQ document, now in its seventh version in just over a year, is intended by the CSSF to highlight aspects of the AIFMD rules from a Luxembourg perspective for the benefit primarily of alternative funds and managers established in the grand duchy.
It should be read in conjunction with the Q&A document published by the European Securities and Markets Authority, most recently updated on July 21

The European Commission also publishes on an ongoing basis answers to questions regarding the AIFMD.
The FAQs include the scope of the law, the authorisation and registration regimes applicable to alternative managers, delegation requirements, entry into force of the law and duration of transitional provisions, the scope of authorised managers’ activities, depositary aspects, the application of the AIFMD passport to Luxembourg managers and funds as well as for foreign managers marketing in Luxembourg, reporting, valuation, transaction costs and co-operation agreements signed by the CSSF with non-EU regulators.
The new version primarily updates information regarding reporting requirements, in conjunction with ESMA’s Reporting Guidelines and its Opinion on Reporting under Article 24(5) of the directive. The guidelines recommend that reporting periods for alternative fund managers be aligned with the calendar year, with quarterly, half-yearly or annual reporting periods depending on the requirements applicable to the particular manager.
CSSF says managers authorised between July 22, 2013 and June 30 this year must submit their first reporting statement, for the period starting July 1, by the end of October for those subject to quarterly reporting, or by the end of January 2015 for those reporting half-yearly and annually, or 15 days later in the case of fund of funds managers. They also have the option to report for periods before July 1. The deadline for transmission information is one month following the end of the reporting period for ordinary funds, and the 15th of the following month for funds of funds.
Following ESMA’s guidelines, the CSSF says managers should start reporting as of the first day of the following quarter after they have information to report until the end of the first reporting period – for instance, from April 1 to June 30 for a manager required to report half-yearly whose first information is as of February 15. Registered AIFMs, which represent more than half of all those in Luxembourg, must report annually. Once authorised or registered, AIFMs that have no funds on which to report must nevertheless report to the regulator to that effect.
The regulator has also clarified that managers are informed of the effective date of their status as authorised or registered AIFMs by the CSSF, and this date should be used as the basis for determining the application of reporting obligations.
The Q&A update also covers the initial capital and own funds requirements applicable to Chapter 15 (UCITS) ManCos that hold AIFMD licences (so-called Super ManCos), which are subject to the provisions of both Luxembourg’s 2013 investment fund legislation transposing UCITS IV and the 2013 AIFMD law and regulation.
These must hold at least €125,000 in initial capital, plus own funds equivalent to 0.02% of the value of AIF, UCITS and other fund portfolios managed exceeding a threshold of €250m. The maximum initial capital plus own funds is €10m, the minimum 25% of the fixed overheads projected in the business plan or of the fixed overheads of the previous year. Additional own funds for coverage of professional liability risks should be at least equal to 0.01% of the value of AIF portfolios under management, unless the manager has professional indemnity insurance. For Chapter 16 ManCos or other Luxembourg-based AIFMs, only the value of the alternative fund portfolios is taken into account in assessing own funds.
The CSSF states that the professional liability risks to be covered comprise risks of loss or damage caused by a relevant person (according to the Commission Level 2 regulation) through negligence in the performance of activities for which the AIFM has legal responsibility. The manager’s professional liability coverage must cover both master and feeder levels of such structures, insofar as the AIFM has legal responsibility for the aspects in question.
Finally, the Q&A sets out the rules for marketing alternative funds to professional investors in Luxembourg by non-EU managers. They may carry out such marketing without a passport, but must inform the CSSF when they start (and also stop), and are subject to reporting requirements set out in Article 24 of the directive, but only in respect of funds marketed in the grand duchy. The reporting requirement applies to both regulated and non-regulated Luxembourg funds. Once the AIFMD passport is available to non-EU managers, they will be required to report to the regulator of their member state of reference.
As of July 22 this year, non-EU managers that marketed alternative investment funds to professional investors in Luxembourg under the existing national private placement regime before July 22, 2013 will have to send to the CSSF the required information in order to continue to market their funds in Luxembourg under Article 45 of the 2013 legislation. This also applies to non-EU managers marketing regulated and non-regulated Luxembourg funds in the grand duchy.
The CSSF FAQs can be consulted here. 
Up-to-date information about the implementation of the AIFM Directive in Luxembourg as well as related regulatory measures, guidance and consultations issued by ESMA and the European Commission is published regularly in the AIFMD blog on the firm’s web site at


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