Luxembourg: Luxembourg adopts a new flexible and quick time to market alternative investment vehicle : the RAIF
On 14 July 2016, the Luxembourg parliament adopted a law adding a new fund structure, the Reserved Alternative Investment Fund (RAIF), to the existing range of investment vehicles available to alternative investment fund investors and managers based in Luxembourg.
The main advantage of the RAIF is to cater for investors by providing a new unregulated flexible entity. The flip side of this feature is the requirement to endow the RAIF with a manager regulated as an authorised alternative investment fund manager (AIFM) in Luxembourg or any other EU member state.
This shift in the regulatory focus ‘from the fund to the manager’ was caused by the transposition of the alternative investment fund managers directive in 2013 which, -combined with the existing regulated alternative investment vehicles such as the specialised investment fund (fonds d’investissement spécialisé - FIS) or investment company in risk capital (société d’investissement en capital risque – SICAR)-, could lead to an overlapping double supervision at both fund and managers level.
The RAIF shall be attractive to sophisticated investors by proposing them an investment vehicle with same features as a SIF or a SICAR without the regulatory supervision and prior approval of the CSSF at the fund level. This relaxed regulation allows Luxembourg to position itself once again as true alternative to AIFs set-up in the Cayman Islands, the BVI or Delaware.
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