Luxembourg Is Home To Specialised Investment Funds
The introduction of a new type of investment fund in Luxembourg in 2007 may be of interest to well informed investors and professionals within the investment industry. The new Specialised Investment Fund (SIF) has been introduced in reaction to a strong growth within the industry and will provide an alternative mode of investment.
The SIF is a flexible Undertaking for Collective Investment (UCI) that provides more elasticity than common UCI or SICAV. However, the SIF will be more regulated than alternative non resident private funds that have been established in foreign jurisdictions.
Supervised by the Commission de Surveillance du Secteur Financier (CSSF – the financial supervisory authority for Luxembourg), no promoter approval is required for the SIF. It is also important to recognise the difference between the SIF-Fund and the SIF-SICAV. The SIF-Fund is a fiscally transparent fund that is held in trust by a Luxembourg-established management company. The SIF-SICAV, on the other hand, is fiscally non transparent. It could also enjoy treaty benefit and enjoys tax exemption.
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To qualify for SIF-SICAV is should be incorporated as a Private Limited Company or similar, although it is also possible to have a single member company.
It is important to remember that, while the SIF can invest in any type of securities – including hedge funds, real estates and shares, it will not offer shares to investors unless they are professional and well-informed. Those that have been deemed acceptable candidates for SIF shares include but are not limited to institutional investors, professionals and investors that have proven their credentials by, for example, holding a valued position in a bank or management company.
There are a number of restrictions and factors that must be taken into consideration when choosing investment schemes such as the SIF. For example, it must obtain approval for its legal documentation and activities from the CSSF within one month of its launch. Additionally, the supervision of assets and the deposit of securities must be undertaken by a Luxembourg bank and the Central Administration should also be based in Luxembourg.
The SIF must also ensure that an annual net asset value and a report are published in the six month period following the year-end. The minimum capital has been set at EUR 1,250,000 and this must be attained within one year. However, contributions in kind are permitted.
The success of the principle investment of funds is attributed as the driving force behind the Luxembourg government’s decision to introduce the SIF and a number of well-informed investors and organisations are testing its potential for themselves.
Adam Singleton writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
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