On 16 May 2022, the Luxembourg financial regulator (the "CSSF") released Circular 22/811 on the authorisation and organisation of entities acting as UCI administrators (the "Circular"). The Circular clarifies the activity of UCI administrators, specifying principles of sound governance and the CSSF's requirements in terms of internal organisation and applicable good practices by replacing Chapter D of Circular IML 91/75 (which dates back to 1991) in light of legislative developments, changes in technology and market evolutions affecting the activity of UCI administration. The Circular applies to entities acting as administrators of regulated or unregulated UCIs, established in Luxembourg or abroad, and enters into force with immediate effect.
CSSF prior authorisation
The Circular applies to all entities eligible to act as a UCI administrator. The appointment is subject to prior authorisation by the CSSF, which can be obtained by submitting an application or competing the administrative procedure detailed in the Circular. The Circular introduces a new type of UCI administrator authorisation for the following entities:
- management companies incorporated under Luxembourg law that are subject to either Chapter 15 or Chapter 16 of the 2010 Act;
- alternative investment fund managers authorised under Chapter 2 of the 2013 Act;
- foreign IFMs pursuing the activity of UCI administrator for UCIs established in Luxembourg;
- regulated Luxembourg UCIs;
- credit institutions authorised under Part I, Chapter 1 of the 1993 Act; and
- Luxembourg branches of credit institutions governed by foreign law that are authorised under Part I, Chapter 3 of the 1993 Act.
The application must include at least the information listed in Annex A to the Circular. An authorisation to act as a UCI administrator shall remain valid for as long as the facts and information on the basis of which it was granted remain changed. The authorisation requirement does not apply to entities already acting as UCI administrators on the date of entry in force of the Circular. In order to allow such entities to comply with the remaining provisions of the Circular, a grandfathering period of until 30 June 2023 is granted.
Annual reporting
Starting on 30 June 2023, UCI administrators will have to provide the CSSF, on an annual basis, with information about their business activities and resources, as listed in Annex B to the Circular. The CSSF must receive this information no later than five months from the close of the UCI administrator's financial year.
CSSF notification of critical or important delegation
Finally, in the event of delegation of critical or important operational tasks, the prior authorisation requirement is replaced by a prior notification requirement. In short, a UCI administrator that intends to delegate a critical or important operational task must notify the CSSF in advance of its plans in accordance with the instructions and, where applicable, the forms available on the CSSF's website. In general, this notification must be submitted at least three months before the planned delegation enters into effect. It should be noted that any such delegation does not affect the UCI administrator's responsibility. The UCI administrator remains fully responsible for complying with all relevant laws and regulations as regards the planned delegation.
