On 27 November 2002, the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), issued Circular 02/77 concerning the protection of investors in cases of net asset value (NAV) calculation error and correction of the consequences of non-compliance with the investment rules applicable to undertakings for collective investments (Circular 02/77).
Circular 02/77 applies to undertakings for collective investment in transferable securities (UCITS), which are subject to part I of the law of 17 December 2010 on undertakings for collective investment, as amended (the Law of 2010), as well as to undertakings for collective investment subject to part II of the Law of 2010 (Part II funds). In its 2013 annual report, the CSSF took the approach that specialised investment funds (SIFs) subject to the law of 13 February 2007 on specialised investment funds, as amended, which did not set other specific internal rules, had to follow Circular 02/77.
Per Circular 02/77, the CSSF must be notified in the event of an NAV calculation error or in the case of non-compliance with investment rules (each, a Breach). However, Circular 02/77 does not indicate the format that such notification should follow.
On 3 January 2017, the CSSF issued a press release that introduced the form that must be used when notifying the CSSF of a Breach.
The form is intended to collect all the information that the CSSF needs in the event of a Breach and must be used for all undertakings for collective investment, i.e., UCITS, Part II funds and SIFs (whether they have decided to apply Circular 02/77 or have implemented different internal rules). The form must be sent electronically to a specific email address.
The CSSF advised that the notification process must start immediately after the discovery of a Breach and that if all the relevant information has not yet been collected, a new duly completed form must be submitted as soon as possible to complete the notification process.
The new procedure is applicable immediately, although the CSSF will accept notifications that use a different format until 1 March 2017. After that date, the CSSF will accept only the new form.
