Fund services in Luxembourg

Liaising with the promoters and all other parties and their professional advisors, collating the information necessary for inclusion in the offering documentation (eg PPM) and the various agreements, and reviewing the fund offering document (PPM) and Limited Partnership Agreement (LPA).

TMF can provide services to AIFs and to UCITS funds either through white label or client-dedicated fund structures. Services offered are portfolio and risk management, fund distribution and marketing support, Annex IV reporting and various support services. For UCITS funds TMF provides ManCo services in cooperation with external fund administrators and custodian banks licensed to service funds investing in transferable assets.

• Processing of portfolio-related transactions
• Bookkeeping
• Monitoring and processing capital subscriptions and redemptions
• Reconciling bank accounts
• Calculating NAVs (including INREV NAVs)
• Full wire transfer responsibilities
• Facilitation of the annual audit
• Financial statement preparation under International Financial Reporting Standards (IFRS) or local GAAP.

• Receiving and recording the subscription, redemption, transfer, and switches of fund shares/units/partnership interests
• Initial investor AML-KYC for onboarding purposes
• Calculation of capital calls, preparation and follow up of call notices
• Equalisation calculations
• Waterfall calculations
• Maintaining the register of investors
• Liaising with investors and prospective investors
• Arranging for payments of redemptions, dividends and interest payments
• Collecting and updating investor AML-KYC and due diligence documentation on a regular basis

• AIFM-specific reporting quarterly according to Art. 3(3)(d) & Art.24(1) of Directive 2011/61/EU if required
• Provision of RC ("Responsable de Controle")
• Population of relevant sections of Annex IV of AIFMD (unless provided by an appointed AIFM)
• Country or industry specific reporting upon discussion (eg INREV / Solvency 2).

• Assistance with the convening of board meetings including preparation of necessary documentation
• Preparation of ad hoc written resolutions and proxies
• Maintenance of the minute book of the fund (in conjunction with the registered office)
• Filing of the annual return and audited accounts, if applicable, with the relevant regulatory authorities (in conjunction with the registered office).

• Provision of registered office
• Provision of dedicated office space (if required).

• Account holder classification
• Account holder analysis
• Remediation
• Report filing
• UBO services
• MDR services
• Tax and VAT reporting and compliance services.

*for closed-end funds and funds closed for redemptions for a minimum of five years, investing in assets other than financial instruments

TMF Fund Services (Luxembourg) S.A. is approved to act as Depositary for alternative investment funds (AIFs) and is authorised to supervise the activities of fund managers in order to protect investors in the fund, under the law of 5 April 1993 on the financial sector ("LFS") Article 26-1, applicable to professional depositaries of assets other than financial instruments.

We are authorised to act as depositary for the following assets:

• real estate – direct investments or via SPVs or property
• private equity – direct participation or via SPVs, debt or equity-financed
• private debt and lending structures
• infrastructure
• commodities and trade financing
• OTC financial instruments – for hedging purposes (explicitly not for speculative purposes and not as part of the investment strategy)
• other tangible or intangible assets – licenses
• fund of funds.

Services include:

• cashflow monitoring
• due diligence of service provider and compliance monitoring
• oversight function for transaction of assets and share capital
• ongoing verification of asset ownership.

The SICAR and the SIF are regulated fund entities that need to be approved by the CSSF before launch. As the SICAR and the SIF laws were in existence before the arrival of the AIFMD, these funds are required to appoint a depositary. If the Assets under Management are below the threshold of EUR 500 million (without leverage) or EUR 100 million (if leveraged) the General Partner or the Board of Directors can act as “sub-threshold” or “de minimis” AIFM. SIF and SICAR can only be subscribed to by “well-informed” investors, as described in the SIF and SICAR laws.

The SICAR

The SICAR is an investment company for risk capital investments, established on 15 June 2004. It is the “classic” structure for investments in Private Equity and Venture Capital but can, if qualified as risk capital, also invest in opportunistic Real Estate projects. The SICAR can be set-up as a multi-compartment fund structure. The advantage of a Risk Capital company is the fact that there is no risk diversification requirement, so the fund may invest in one investment only. SICARs taking the legal form of a (special) limited partnership (SCSp and SCS) are tax transparent and therefore not subject to local taxes; those that are set up as partnership limited by shares (SCA) are fully taxable companies; however, income from transferable securities invested in risk capital is tax-exempted.

The SIF

The SIF is a fund based on the law of 13 February 2007 and can be used for investments in any asset class, including any type of alternative asset. SIFs can be set-up as multi-compartment funds but must respect a diversification requirement of investing a maximum of 30% in one single asset, leading to a minimum of 4 target investments per fund or subfund/compartment on an on-going basis. The SIF can be set up as a company (mainly the SA and Sàrl), a partnership (SCS, SCSp or SCA) or as a mutual fund (FCP). SIFs are not subject to Luxembourg taxes on capital gains or income; however, a subscription tax of 1 basis point, based on the net asset value, will be charged on a quarterly basis.

The RAIF

In July 2016, the RAIF law entered the Luxembourg legal and regulatory environment, with a short time-to-market and no requirement for Luxembourg regulatory approval. The Luxembourg funds industry can now offer, on short notice, a product that is not subject to supervision by the Commission de Surveillance du Secteur Financier (CSSF), with full fund flexibility.

This product is unprecedented in the market. RAIF law combines the advantage of the existing regulated fund regime with segregation of risk and fast implementation. It makes use of well-known criteria regarding eligible investors, passporting and a tax framework from the existing SIF and SICAR regimes.

TMF Fund Services (Luxembourg) S.A. provides the full range of services required for an alternative investment asset manager to operate a RAIF, including AIFM, central administration and depositary services. Our senior business leaders have at least 15 years’ experience in the alternative investment industry, providing stability and sound market knowledge. We have strong experience with SICAR and SIF, making us the ideal partner to discuss your needs relating to RAIFs as well as fully non-regulated fund structures.

The SCSp

The unregulated Special Limited Partnership is one out of 3 partnership structures available for structuring alternative funds in Luxembourg – and the most frequently used one with around 4,000 entities set up since its inception in 2013. While the common limited partnership and the partnership limited by shares – the SCS and the SCA – both have an own legal personality, the SCSp does not, and therefore constitutes a non-incorporated entity. It leaves the General Partner with highest flexibility with regards to the structuring of the partnership. While regulated and indirectly regulated funds are obliged to appoint either depositary and/or AIFM, there is no such requirement for the SCSp. However, should the SCSp be marketed throughout the EU, an AIFM and a depositary would need to be appointed unless the NPPR can be applied*. There is also no obligation to appoint an auditor, to calculate a net asset value or to apply the fair-value concept when valuing assets. The SCSp, as a partnership without legal personality, is a fully tax-transparent entity. There are no risk diversification rules to be respected but the SCSp does not allow for compartmentalization i.e. the set-up as multi-compartment funds is not foreseen by the law.

*likely to be impacted by the CBD/R applying as of 2 August 2021.