Special funds SIF
Legal aspects
- The SIF can be structured as a SICAV or SICAF.
- Possible legal forms:
- corporation,
- limited-liability company,
- association limited by shares,
- co-op in the form of a corporation.
- The headquarters of the administrative company or investment company (in accordance with the articles of incorporation), as well as the main administrative office, must be located in Luxembourg.
- The deposit of the effects must be transferred to a depositor with headquarters in Luxembourg (in accordance with the corresponding articles of incorporation). Its liability is limited to damages suffered on the part of shareholders / stockholders caused by non-fulfilment or insufficient/inferior fulfilment of its duties.
- The annual report is to be examined by an auditor certified in Luxembourg.
- No later than 12 months after approval by the CSSF, the fund’s assets must amount to at least EUR 1,250,000.00. In the case of the SICAV, the issued shares must be fully listed, but only 5% of the listed capital must be generated in cash or by material assets.
- In the company name, the identifier ”SIF“ must be included (i.e. ”SICAV-SIF“).
Shareholders
Shareholders (in the context of the Special Funds Code) must be ”knowledgeable investors“ These include:
- Institutional investors,
- Professional investors,
- Well-informed investors.
“Well-informed investors“ must have this status as experienced investors confirmed in writing and invest at least EUR 125,000.00 in a special funds, or submit an assessment from a bank which verifies the client’s experience and knowledge.
Approval / oversight
- Special funds require approval by the CSSF (national oversight board for financial markets) prior to initiating business activities; this approval must be applied for in advance, however, in the month following the issuance or establishment of the funds.
- This approval is granted by the CSSF, following the inspection of the establishment documentation and the status of the depository bank.
- The appointment of an initiating agent is not required.
- The approval of the investment manager by the CSSF is not required.
- The manager of the special funds and the manager issued by the depository bank must present proof of the necessary level of respectability and professional qualification.
Investment policy
- Special funds can, as a rule invest in all types of assets (traditional / alternative)
i.e., in transferable securities, money-market funds, real estate(funds), hedge funds and private-equity(funds).
Publication and reporting requirements
- For each special funds, a sales prospectus is to be created. The information included in the emission document must allow the reader to draw conclusions on investment policy and investment risks.
- For each fiscal year, an annual report is to be created. This annual report must be made available to investors at the latest six months following the end of the fiscal year. The annual report is to be created according to a pre-defined scheme of organisation. It must contain a balance sheet/statement of assets, a profit-and-loss account, remarks on the course of the fiscal year as well as additional information to facilitate the assessment of the transaction development and profit generated by the special funds.
- No obligation to create a semi-annual report.
- No obligation to consolidate the companies held in the portfolio for investment purposes.
- No requirement to publish the net inventory values.
Net inventory value calculation, listings and redemptions
- At least once per fiscal year, a net inventory value is to be calculated. The assessment of the assets takes place, as a rule, at the market value.
- Flexible handling with regard to the issuance and redemption of shares/stock.
- Issue price and net inventory value are not necessarily identical amounts.
Taxation
- As a rule, the special funds does not serve as a basis for an income-tax obligation within Luxembourg.
- As a rule, the special funds does not fall into the area of application for the EU interest directive.
- The annual subscription tax amounts to 0,01%. The base for this subscription tax is the total amount of net assets held by the special funds.
- The company is subject to a non-recurring capital-gains tax of EUR 1,250.00, which becomes due upon establishment.
The SIF is suitable for individual investors who would like to issue an own funds.
