New Luxembourg Investment Fund Available: the “Reserved Alternative Investment Fund (RAIF)”
24 August 2016
With unbeatable time to market and benefiting from indirect supervision through its authorized AIFM – thus allowing distribution under the EU marketing passport of the AIFM – the RAIF has a very promising future.
For your convenience, we set out the main characteristics of the RAIF below.
Structuring flexibility. A RAIF can either take a partnership (CLP, SLP), corporate (SA, Sàrl, SCA) or contractual (FCP) legal form. It may be created under a variable capital structure allowing flexible subscription, redemption and distribution features and be organized as an umbrella fund (i.e. with segregated compartments). On top of it, a RAIF can potentially issue various classes of securities, interests or other debt instruments.
No Investment Restriction. A RAIF has no limitation as regards eligible assets or investment policies. Depending whether it mirrors the characteristics of a SIF or a SICAR, it will be subject to a minimum risk-spreading requirement or will be restricted to risk capital investments.
Eligible investors. Similarly as a SIF or a SICAR, a RAIF is restricted to well-informed investors, i.e. institutional investors, professional investors and investors investing at least EUR 125,000 or involved in the management of the structure.
Managed by an authorized AIFM. A RAIF must be managed by an authorized AIFM, whether established in Luxembourg or in another EU Member State. As such, a RAIF benefits from an indirect regulatory supervision through the supervision applying to its AIFM.
For asset managers and fund initiators established outside the European Union, a structure involving a Luxembourg “white label” AIFM could usefully be implemented whereby such third country asset manager or fund initiator would act as investment advisor of the RAIF.
Marketing Passport. A RAIF will benefit from the EU marketing passport of its AIFM, thus being able to be distributed within the European Union to professional investors.
Depositary & Auditors. Similarly as a SIF or a SICAR, a RAIF shall appoint (i) a Luxembourg based credit institution or another professional of the financial sector for providing depositary services with respect to its assets as well as (ii) a Luxembourg approved statutory auditor in charge of the audit of its annual accounts.
Tax regime. Generally speaking, a RAIF benefits from the tax exempt status applicable to Luxembourg investment funds. Depending whether it mirrors the characteristics of a SIF or a SICAR, it will be subject to an annual subscription tax at a rate of 0.01% or to the tax regime applicable to SICARs, i.e. exempted for qualifying risk capital income and gains. In addition, as for other investment structures, management services performed to a RAIF shall benefit from VAT exemption.
Transformation. Under some conditions, existing regulated or non-regulated structures may elect for the RAIF regime. Similarly, an existing RAIF may elect for a regulated structure at a later stage, such as a SIF or a SICAR, and may thus be usefully set up before being converted into a fully regulated structure once achieving a critical mass.
The RAIF is a great option when setting up a dedicated alternative investment fund as it combines the advantages and attractiveness offered by regulated vehicles offering an increased investor protection with the flexibility and unbeatable time to market provided by unregulated instruments.
Our team is at your entire disposal for any queries you might have in respect of this new regime.
Me Aurélien HOLLARD, Senior Associate, email@example.com
Me Bernard FELTEN, Partner –Avocat à la Cour, firstname.lastname@example.org
Julie MASSON, Legal Advisor, email@example.com
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