News•Business• 27.08.2018 • Margaret Ferns & Jean-Michel Laleu
New CSSF circular limits the number of manadates permitted to alternative fund managers.
Photo: Delano archives.
On 23 August 2018, the Luxembourg financial sector supervisory commission (CSSF) issued a new circular (CSSF 18/698) imposing certain new requirements on fund management companies and alternative investment fund managers.
In addition to certain anti-money-laundering and anti-terrorist financing measures, it defines, in particular, certain requirements regarding the substance, governance and organisation of alternative investment funds (AIFs)
"This circular replaces circular 12/546 concerning Ucits management companies and is immediately applicable", Yannick Arbaut, counsel at Allen & Overy Luxembourg told Paperjam in a recent interview. "It largely codifies the existing administrative practice of the CSSF, but it also provides for significant changes that will force players to review their organisation."
He explained that the CSSF's intention is to better adhere to the different positions developed by the ESMA, the European Securities and Markets Authority, concerning the substance of AIFs and that the circular is the consequence of a convergence of European regulatory requirements in the context of Brexit.
According the Paperjam article, the purpose of the new circular is to provide further details on certain conditions of approval, including the shareholding structure, capital requirements, management bodies, central administration and governance, and the rules governing the supervision of delegations.
In the article, Yannick Arbaut stated that clear boundaries are now in place with regards to fund managers operating multiple mandates. He explained that, an AIF manager will have two limitations--the number of hours devoted to his professional commitments must not exceed 1,920 hours per year--corresponding to 240 eight-hour days--and he can no longer hold more than 20 terms in regulated entities and operating companies.