RAIF in Luxembourg (Reserved Alternative Investment Fund)

Published:
January 29, 2021
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Luxembourg is the primary investment area put on the planet after the United States with strong remaining as a worldwide asset center, and considers a wide scope of investment institutions, covering the sum of the asset systems on the global level after the US.

The Reserved Alternative Investment Fund (RAIF) is a fund for putting in that can place assets into diverse forms of investment.

Reasons behind picking Luxembourg RAIF

  • Luxembourg RAIF is really sensible to set up, work and are not limited to EUR 100M as for investing;
  • Luxembourg RAIFs are public, they can be progressed as openly as a traded on a market and genuinely transparent; they can be accessible to capital holders effectively through their web banking;
  • Luxembourg RAIF can be made in a short period of time (1.5 – 2.5 months), since it need not be confirmed by the Luxembour Commission de Surveillance du Secteur Financier (CSSF). In light of everything, the RAIF is coordinated by the AIFMD and directed by an affirmed Alternative Investment Fund Manager (AIFM);
  • It is possible to list the Luxembourg RAIF into the financial exchange field without striking a blow.

Taxes

  • A yearly participation cost of 0.01% of net assets should be paid at regular periods.
  • If the Fund holds bits of various assets, the previously indicated rule does not work, to keep away from taxes.
  • On a worldwide level, RAIF is basically covered by 28 of 76 tax agreements among Luxembourg and the other EU-countries.

Competent investors

These are described as professional investors who have confirmed proofs in form of a printed copy that they adhere to the “well-qualified” monetary expert status. Besides, they need to either invest no less than125K euros in the RAIF or have been evaluated by a credit company, venture organization or the board association that ensures the financial specialist’s expertise, experience and data in sufficiently getting the measure of an interest in the RAIF.

Legal background

RAIFs are covered by the Luxembourg Law of 23 July 2016 (the RAIF Law). The Luxembourg law of 12 July 2013 on Alternative Investment Fund Managers (AIFM Law) is also a regulator.

RAIF is placing resources into transient assets and, offering returns as per cash market rates or protecting the assessment of the asset, ought to agree moreover to the essentials of Regulation (EU) 2017/1131 on money market funds. There are some of additional guidelines (for instance concerning AML, MiFID, subordinates, securities financing trades, investor’s rights).

Business form

The RAIF may be set up as a following commercial structure:

  • A fonds commun de circumstance (FCP). The FCP directed by a Luxembourg executive association and has no legitimate essence.
  • A société d’investissement à capital variable (SICAV) or société d’investissement à capital fixe (SICAF), closed or public asset associations with fixed or variable capital independently. This corporate structure requires the drafting of consolidation instruments.
  • The FCP or SICAV/SICAF may be established as a lone asset or as a solitary unit with various compartments, each with a specific investment method.

Foundation and indirect management

Luxembourg RAIF need not the CSSF affirmation for being administered by a Management Company agreed by CSSF, as per the Directive AIFM 2011/61/UE. A legitimate authority does not have to approve Constitutional document of the fund. It is sufficient to ensure that the AIFM attests the fund’s creation, and that this information is disseminated in the authority periodical, the Mémorial.

Capital

The net RAIF funds may be not actually 1 250 000 euros. 5% of the capital ought to be paid at getting a membership.

Disclosure measures and monetary reports

A RAIF should involve a PRIIP Key Information Document (KID) if retail investors are able to make investments, and a yearly report. There is no obligation to send a semi-yearly reporting.

AIFM affirmation

RAIFs are expected to be accept by AIFM, they cannot be regulated inside. The AIFM can be set up in EU Member State or in a third country. If the RAIF is regulated by an organization association, it will in general be designated as AIFM.

Luxembourg RAIF has all advantages of general European area, allowing all associations put assets into the fund and to be advanced in all EU-countries.

A UCITS overseeing association may apply for approval as AIFM to regulate both UCITS and AIFs.

Suppliers of services

The overseeing association of a FCP should draw up the organization rules for the basic assets. Autonomous SICAV/SICAFs may simply administer monetary assets of their own portfolio and may not direct assets of third party. The central association of a RAIF ought to be in Luxembourg.

A RAIF should assign a Luxembourg depositary. The certified depositaries are Luxembourg credit foundations, yet furthermore Luxembourg speculation organizations fulfilling certain essentials set by the Law of 5 April 1993 concerning the financial field, as reexamined. An affirmed independent monitor with appropriate master experience ought to investigate the yearly report.

Different other services representatives for a RAIF consolidate lawyers, portfolio administrators, heads and trained professionals, domiciliation subject matter experts, wholesalers and paying subject matter experts.

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