The majority of Luxembourg Part II UCIs to remain within the AIFMD depositary regime

A significant number of so-called Part II UCIs will remain within the scope of the AIFMD depositary regime. A legislative amendment to this effect was proposed late in the afternoon of 29 July 2016 to the Luxembourg Parliament (Chambre des Députés).

The proposal clarifies the scope of the UCITS and the AIFMD depositary regime in Luxembourg. Only Part II UCIs which are distributed to retail investors in Luxembourg will fall within the scope of the more stringent UCITS depositary regime. All other Part II UCIs may remain under the AIFMD depositary regime (the extent of the application of this regime will depend, as before, on whether or not their alternative investment fund manager is considered to be a sub-threshold alternative investment fund manager). To ensure that a Part II UCI falls within the scope of the AIFMD depositary regime, these funds are advised to include in their sales documentation information stating that they are not distributed to retail investors in Luxembourg. In order for these amendments clarifying the UCI law to enter into force, the proposal will need to be approved by vote of the Luxembourg Parliament.

This legislative proposal is the result of efforts by the Luxembourg fund industry to have the scope of the depositary regime clarified in legislation. Its purpose is to alleviate confusion created earlier this year, when changes were introduced to the depositary regime for the Part II UCIs. The changes caused uncertainty as to which Part II UCIs will be subject to the UCITS depositary regime and which will remain within the scope of the AIFMD depositary regime.

We remain at your disposal for any further questions.