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Establish Hedge Funds in Luxembourg

Establish Hedge Funds in Luxembourg

Updated on Wednesday 31st December 1969

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Establish-hedge-funds-in-LuxembourgLuxembourg is currently the largest financial center in Europe and the second largest worldwide because of the numerous facilities it offers to entrepreneurs setting up alternative investment funds here. Among these, hedge funds are among the most common structures employed. The main laws regulating the establishment of hedge funds in the Grand Duchy are the Law of 2002 for Undertakings for Collective Investments (UCITs), the Law for Undertakings for Collective Investment in Transferable Securities and the Law for Specialized Investment Funds.

One of the greatest advantages of setting up hedge funds under these regulations is that they are available for foreign investors from countries outside the EU.

Structures employed to set up hedge funds in Luxembourg

Luxembourg hedge funds can be established as open-ended or closed-ended types of entities. The open-ended investment fund can be set up as investment company with variable capital (SICAV), while the closed-ended one can take the form of investment company with fixed capital (SICAF), or as contractual fund (FCP) managed by another company in Luxembourg. Hedge funds are also allowed to register other sub-funds and to function as umbrella corporations.

SICAVs and SICAFs can be registered as limited liability companies in Luxembourg, while FCPs are deemed as co-proprietorships and have the advantage of offering limited liability to the extent of their contributions to their owners. All types of entities fall under the Luxembourg Company Law.

Our Luxembourg lawyers can provide you with information about the legal options available for opening hedge funds in the Grand Duchy.

Requirements to open a hedge fund in Luxembourg

Depending on the type of structure used to establish the hedge fund, investors is subject to certain capital and shareholding requirements imposed by the law. The minimum capital required to open a hedge fund in Luxembourg is:

  • -          12,500 euros for a private limited liability company;
  • -          31,000 euros for a public company and corporate limited liability partnership.

FCPs have no minimum share capital requirements. All types of companies must have at least one shareholder.

For assistance in setting up a hedge fund in the Grand Duchy, do not hesitate to contact our law firm in Luxembourg.

 

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