Undertakings for Collective Investment in Transferable Securities (UCITS) are special funds created with the role of investing the savings or transferable securities and other specific liquid financial assets in the interests of its investors. They are different from the UCI - undertaking for collective investment.
These investments schemes should be organized and managed in such a way that they function in the best interest of the investors. The regulations for operating such funds are included in special laws and these structures are overseen by various Luxembourgish authorities, one of the most important being the CSSF (Commission de Surveillance du Secteur Financier).
Our law firm in Luxembourg can help you open a UCITS and comply with the existing regulations as well as with risk management.
UCITS organization forms
The UCITS must be marketed in at least one EEA member country and are using savings made by the public for the collective investment. There are two forms that a UCITS can adopt:
-FCP: undivided collections of transferable securities and/or other liquid financial assets;
-SICAF/ SICAV: an investment fund organised as an investment company with fixed or variable capital.
The FCP is a form of UCITS, established with no legal personality that relies on a company that manages it. The managing company is responsible for the transactions. At least 1,250,000 € are necessary in order to establish this type of fund. This amount must be reached no later than six weeks from the registration. According to law, the FCP can increase its assets to up to 2,500,000 €.
The SICAV/SICAF investment fund is organised as a company. The difference between the two is in the authorized share capital: the SICAF has fixed capital while the SICAV has variable capital. The latter takes the form of a Luxembourg limited liability company which has the objective to invest its funds in financial assets and/or transferable securities. The SICAF can generally take the form of any type of company in Luxembourg.
A SICAV/SICAF that does not managed by a management company must register in the beginning a minimum capital of 300,000 € (at incorporation). Within six months of its authorization this fund must reach a capital of 1,250,000 €. This capital can be increased as per the CSSF regulations.
Before commencing any activities, any undertaking for collective investment in transferable securities in Luxembourg must be authorised by the CSSF as per Article 129 of the law relating to undertakings for collective investment. A UCITS is authorized if the CSSF approved the instruments of incorporation or the management regulations. Additionally, any funds managed by a company must receive an approval from the CSSF concerning the managing company. The directors of a UCITS and/or those of the management company must prove that they have exceptional experience and reputation. The identity of the directors and their subordinates must be disclosed to the CSSF.
The video below presents the main steps required to open a UCITS fund in Luxembourg:
Forming a UCITS in Luxembourg
The registration of the UCITS with the Commission de Surveillance du Secteur Financier is based on the following documents: a standard Application Questionnaire, the articles of association or the management regulations, prospectus and key investor information document, recent financial statements of the promoter, certified true copy of passport, curriculum vitae, excerpt of criminal records of each person, agreements with third parties.
If the fund is registered it will be visible on the CSSF website on the list with all the UCITS. The registration process of a Luxembourgish UCITS is comprised between one and three months.
The Law of 17 December 2010 relating to undertakings for collective investment is the main legislative document governing UCITS in Luxemburg. Additionally, the CSSF has certain main regulations applicable to this type of funds and its management company. These regulations concern the governance of the UCITS, including risk management, the growth of the fund and the performance of the UCITS.
UCITS must submit annual and semi-annual reports and must observe the laws for anti-money laundering.
For more information about UCITS or other types of investments funds as well as complete details about how to open a company in Luxembourg you cancontact our law firm in Luxembourg.
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