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Depositary regime for Part II funds is now clarified in Luxembourg

Depositary regime for Part II funds is now clarified in Luxembourg
  • Luxembourg
  • Financial services - Asset managers and funds


Luxembourg implemented the UCITS V Directive (Directive 2014/91/UE) on 26 May 2016 extending the UCITS V depositary regime to the collective investment funds (the Part II Funds) subject to the Part II of the Luxembourg law of 17 December 2010 on undertakings for collective investment (the UCI Law). Nevertheless, after a couple of months, a bill of law (n°7024) was introduced before the Luxembourg parliament providing some exemptions. Consequently, there was a grey area in the market as to know which depositary regime applied to the Part II Funds between the AIFMD regime or the UCITS V regime.

After more than one year, the bill of law has been passed early this week amending the UCI Law and the Luxembourg law of 12 July 2O13 on alternative investment fund managers, as amended.

The legislator confirmed that Part II Funds are subject to the UCITS V depositary regime unless they do not market their units to retail investors. In such a case the prospectus of the Part II Funds shall expressly specify that the units of the Part II Fund are exclusively reserved to professional investors.

Therefore, the AIFMD depositary regime only applies to Part II Funds:

  • which are managed by an alternative investment fund manager;
  • which do not market their units in Luxembourg to retail investors;
  • whose the prospectuses clearly state that units are exclusively offered to professional investors.

It is thus important to modify the prospectus of your Part II fund if you want to remain subject to the AIFMD depositary regime.