While Luxembourg is committed to a faithful transposition of AIFMD 2, the Bill introduces clarifications and flexibilities to adjust to our market.
In relation to alternative investment funds (“AIFs”), the Bill introduces the following key provisions:
- Governance strengthening: the proposed changes should not materially affect the Luxembourg industry which is already largely aligned with AIFMD 2 requirements.
- Extension of the scope of services that may be performed by AIFMs
- to include new activities of credit servicing and benchmark administration; and
- to allow AIFMs to service third parties (i.e. AIFs not managed by the AIFM, intermediary vehicles, co-investment vehicles, carried-interest vehicles or other legal entities) and to provide them, as ancillary activities, with the same functions they perform for the AIFs they manage—such as risk management, portfolio management, administration, or marketing. Commentaries to the Bill adopt a broad interpretation of the covered activities to include operational and business support such as IT, HR, corporate, AML, and marketing services.
- Extension of the existing delegation rules to all functions listed in Annex I AIFMD 2 and to the ancillary services.
- Setting-up of common rules for loan origination by AIFs: implementation of efficient policies, procedures and processes for granting loans, diversification rules, prohibition to lend to certain entities, risk retention requirement, allocation of proceeds. While AIFs will be prohibited to grant loans to consumers in Luxembourg, they may still engage in such activities in other EU countries where permitted by local law. Grandfathering provisions will apply to AIFs which originate loans and are formed before 15 April 2024.
- Use of liquidity management tools: AIFMs managing open-ended AIFs will be required to use at least two liquidity management tools from a selected list provided by AIFMD 2 (e.g., swing pricing, side pockets), while remaining entitled to use additional liquidity management tools, as appropriate.
- Enhanced transparency requirements: among other additional disclosures, AIFMs will be required to report annually all fees, charges and expenses directly or indirectly borne by investors and to periodically disclose the composition of the originated loan portfolio (if any).
The Bill will proceed through the legislative process. Once adopted, the law is expected to take effect on 16 April 2026, while some reporting requirements will apply from 16 April 2027.
The Bill may be consulted here.
For any questions or assistance, please do not hesitate to contact the authors or your trusted Tiberghien advisor.
