The Ultimate Guide on How to Start a Fund in Luxembourg
Updated on Friday 05th May 2017
Rate this article 2 reviewsbased on
Luxembourg is a top investment destination, at both international and European levels. The investment market in Luxembourg is very stable and it provides one of the most developed legislations in this sense, as the first investment fund was set up in this country in 1959. Investors who are interested on how to start an investment fund in Luxembourg are invited to study the main categories of legislations regulating the wide variety of investment vehicles that can be registered here.
Legislation referring to investment funds in Luxembourg
Being the leading investment market at a European level, Luxembourg provides a solid legal framework. Those who may be interested on how to start a fund in Luxembourg will need to register the business structure with the Comission du Surveillance du Secteur Financier (CSSF), the main institution which authorizes the investment activities of an investment vehicle, including the hedge fund startups.
The 2002 law on investment funds in Luxembourg is divided into two main categories:
• Part I, referring to the undertakings for the collective investment of transferable securities (UCITS);
• Part II, referring to other types of investment vehicles that are not included in the UCITS category.
Another major legislation refers to the activity of the specialized investment funds operating in this country, which are regulated by the 2007 Law. It is important to mention that the 2007 Law is addressed to investment funds that offer a flexible framework and those who are interested in starting a hedge fund in Luxembourg will benefit from the provisions of this law. Our local affiliates can offer more details on the main stipulations of the 2007 Law in Luxembourg.
Regulations for hedge funds in Luxembourg
Investors who are considering hedge fund startups in Luxembourg should comply with the main requirements of the 2007 Law, which stipulates an initial capital of EUR 1,250,000 that should be pooled in a period of one year after the fund was approved by the CSSF.
The funds which are set up as SIFs in Luxembourg will need to receive an authorization from CSSF during the first month since the vehicle was incorporated. Each country has its own institutions for regulating the activity of the investment funds. For example, investment vehicles in Netherlands are regulated by the Authority for the Financial Markets (AFM).
Businessmen are invited to contact our affiliates in Luxembourg for specialized advice on the registration of an investment fund in this jurisdiction.