S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G

Transcription

1 S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G

2 Luxembourg, a favorable environment for your investment vehicle I d e a l l y l o c a t e d a n d a gateway to the European market. With highly skilled multicultural and multilingual professionals. Benefiting from political and economic stability. And more specifically Ranked 1 s t investment fund center in Europe and 2 n d in the world. A unique concentration of investment fund i n d u s t r y e x p e r t s i n a l l a s p e c t s o f p r o d u c t development. Offers a flexible and secured legal environm e n t f o r p r o m o t e r s, a s s e t m a n a g e r s a n d investors. Proximity with the regulator and legislator ensuring a constructive and innovative business friendly approach. With an attractive tax regime for alternative investment vehicles and a broad network of double tax treaties. Distribution of investment fund assets in Euro area OTHERS 1 0 % THE NETHERLANDS 8 % LUXEMBOURG 3 5 % 3,679.3 EUR billions FRANCE 1 2 % IRELAND 1 7 % GERMANY 1 8 % Ref : European Central Bank, June 2016

3 Overview of the main Luxembourg alternative investment vehicles NON-REGULATED VEHICLES SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR REGULATED VEHICLES Choosing a regulated or a non-regulated vehicle? Regulated vehicles may be more attractive to investors as they offer additional protection, being subject to supervision by the Luxembourg financial authority (CSSF) both at implementation and on an on-going basis. As a consequence of regulatory requirements, regulated vehicles will have lengthier implementation and operational processes and will support additional functioning costs compared to the non-regulated solutions. However, their non-regulated counterparts come with unbeatable time to market and flexibility, but less investors protection. Your targeted group of investors should therefore be your main driver when opting for the regulated or non-regulated route. Why having to choose between flexibility and security? Luxembourg is welcoming the RAIF! Introduced in July 2016, the Reserved Alternative Investment Fund (RAIF) might just be the perfect investment fund solution, providing a relevant balance between the regulated and non-regulated options. With this new type of alternative investment funds (AIF), fund initiators and authorized alternative fund managers (AIFM) may set up an investment fund having substantially the same characteristics and flexibilities as the already well-established specialized investment fund (SIF) or investment company in risk capital (SICAR) but without requiring approval and ongoing supervision from the Luxembourg regulator. With unbeatable time to market and benefiting from indirect supervision through its authorized AIFM thus allowing distribution under the EU marketing passport of the AIFM the RAIF has a very promising future. S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 2

4 M a i n A l t e r n a t i v e I n v e s t m e n t S o l u t i o n s N O N - R E G U L AT E D V E H I C L E S SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR S O PA R F I The SOPARFI is the traditional s o l u t i o n f o r p r i v a t e e q u i t y investments. It is a standard Luxembourg company taking the form of a partnership limited by shares (SCA), a public limited company (SA) or a private limited company (SARL) with a dedicated primary activity in holding financial ( such as listed and non- listed equity) and non-financial (such as real estate) assets. Although a fully taxable structure, the SOPARFI benefits from exemptions on dividends, capital gains and liquidation proceeds and is also e l i g i b l e t o d o u b l e t a x t r e a t y benefits. Key features: No investor eligibility requirements No investment restrictions No diversification requirements Managed by a sole manager, a management body or a general partner Fully taxable but exemptions on dividends, capital gains and liquidation proceeds Eligible to double tax treaty benefits No supervision by the Luxembourg financial regulator S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 3

5 SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR PA R T N E R S H I P T h e P a r t n e r s h i p i s t h e n o n - regulated solution elected for being highly flexible ( terms of the partnership are freely determined between investors in the partnership agreement) and tax transparent and, as such, not subject to taxes. Investors are treated as if they directly held the investments for tax purposes. In a Partnership, the ownership is divided between limited partners who have a limited liability and one or more general partners, acting usually as manager( s), with unlimited liability although itself usually set up as a local or foreign limited liability company. Key features: No investor eligibility requirements No investment restrictions No diversification requirements M a n a g e d b y a g e n e r a l p a r t n e r o r a n o t h e r appointed manager High flexibility in setting the terms of the partnership Simplified accounting and publication requirements Tax transparent No supervision by the Luxembourg financial regulator C O M B I N E D S T R U C T U R E A Combined structure consisting of a Partnership holding participations in one or more SOPARFI(s) may be usefully implemented. It allows a full flexibility at the Partnership level for organizing the terms governing e.g. the investments, rights of investors and governance, and benefits from the underlying tax opaque entities (SOPARFI) with its applicable tax regime and eligibility to double tax treaties. It also allows the segregation of different investment pools by using the respective SOPARFIs as dedicated compartments. S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 4

6 SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR S E C U R I T I Z AT I O N Luxembourg law allows the securitization of all types of risks and makes it accessible to all types of investors. A securitization vehicle will be flexible, tax neutral and usually not subject to supervision by the Luxembourg financial regulator (if not issuing to the public on a continuous basis). Key features: No investor eligibility requirements Limited to securitization transactions No diversification requirements Financed through the issue of equity/debt instruments Managed by a sole manager, a management body or a general partner Segregation of assets via multiple compartments possible Independent auditor required Tax neutrality No supervision by the Luxembourg financial regulator (under conditions) S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 5

7 R E G U L AT E D V E H I C L E S SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR S I F The Specialized Investment Fund ( SIF) offers an increased investors protection with initial approval and ongoing supervision b y t h e L u x e m b o u r g f i n a n c i a l regulator, mandatory appointment of a depositary and independent auditors. A SIF may invest in all types of assets, provided that they comply with minimum diversification rules, and is restricted to well-informed investors, i.e. institutional, professional or qualified investors investing a minimum of EUR 125, 000 or certified by a banking institution or a management company. It benefits from a tax exempt status, only subject to a yearly subscription tax of 0.01% of its net assets. Key features: Legal form: company (with fixed of variable capital), partnership or contractual form (FCP) Subscribed share capital to reach EUR 1,250,000 within 12 months of creation L i m i t e d t o w e l l - i n f o r m e d i n v e s t o r s ( i. e. i n s t i t u t i o n a l, p r o f e s s i o n a l o r q u a l i f i e d i n v e s to rs) No investment restrictions Diversification requirement: 30% rule (rampup period possible) A n a u t h o r i z e d m a n a g e r ( A I F M ) m u s t b e appointed if total assets exceeds certain thresholds Segregation of assets via multiple compartments possible Open or closed ended Mandatory independent audit and depositary Tax exempt status (but yearly subscription tax of 0.01%) Restricted eligibility to double tax treaty benefits Supervised by the Luxembourg financial regulator S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 6

8 SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR S I C A R The SICAR is a regulated and fiscally efficient structure specifically designed for risk capital investments, i.e. investments in all types of assets provided that they are considered as opportunistic or high risk with the intention to develop them. A SICAR may invest in only one asset and is restricted to wellinformed investors. Key features: Legal form: company (with fixed or variable capital) or partnership Subscribed share capital to reach EUR 1,000,000 within 12 months of creation Limited to well-informed investors (i.e. institutional, professional or qualified investors) Restricted to risk capital investments No diversification requirements An authorized manager (AIFM) must be appointed if total assets exceed certain thresholds Segregation of assets via multiple compartments possible Open or closed ended Mandatory independent audit and depositary Fully taxable but exemption on income and gains from risk capital S u p e r v i s e d b y t h e L u x e m b o u r g f i n a n c i a l regulator S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 7

9 S E M I - R E G U L AT E D V E H I C L E SOPARFI SECURITIZATION RAIF UCI - PART II SIF SICAR R A I F As mentioned above, a RAIF is a non- regulated vehicle subject to indirect supervision of the Luxembourg financial regulator t h r o u g h i t s f u l l y a u t h o r i z e d a l t e r n a t i v e i n v e s t m e n t f u n d manager (AIFM). Its features mirror either the SIF or the SICAR and may thus be implemented for all types of investment strategies. Specific transformation rules apply to the RAIF, which might for instance evolves into a fully regulated structure. As such, the RAIF might also be seen as an incubator. Key features: S u b s c r i b e d s h a r e c a p i t a l t o r e a c h E U R 1,250,000 within 12 months of creation Limited to well-informed investors (i.e. institutional, professional or qualified investors) Mirroring either SIF or SICAR features Mandatory independent audit and depositary Semi-regulated, i.e. no direct supervision but managed by a fully authorized European based AIFM S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 8

10 K e y c o n s i d e r a t i o n s w h e n s e l e c t i n g y o u r L u x e m b o u r g i n v e s t m e n t v e h i c l e B a s i c O p e r a t i o n a l F e a t u r e s NON-REGULATED SEMI-REGULATED REGULATED SOPARFI COMBINED STRUCTURE SECURITIZATION RAIF SIF SICAR Setup time Weeks Weeks Weeks Weeks Weeks Months Months Setup cost Depositary No No No No Yes Yes Yes Independent auditors No* No* No* Yes Yes Yes Yes Supervisory fees None None None None* None Yes Yes AIFM Optional* Optional* Optional* None Required Required* Required* Investor s protection Low Low Low Low Medium High High * Subject to exceptions B a s i c I n v e s t m e n t F e a t u r e s NON-REGULATED SEMI-REGULATED REGULATED SOPARFI COMBINED SECURITIZATION RAIF SIF SICAR STRUCTURE Investor eligibility Well-informed Well-informed Well-informed No No No No requirements investors investors investors All if SIF Eligible investments All All All All Risk capital only All Risk capital only if SICAR Risk diversification requirements No No No No Yes if SIF No if SICAR Yes (30%) No Segregated Compartments No No Yes Yes Yes Yes Yes S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 9

11 B a s i c Ta x Tr e a t m e n t a s o f 0 1 / 0 1 / NON-REGULATED SEMI-REGULATED REGULATED TAXES* SOPARFI SECURITIZATION RAIF SIF SICAR CORPORATE INCOME TAX 20.33% n/a 20.33% n/a 20.33% Exemptions* Dividend income Capital gains realized by the company MUNICIPAL BUSINESS TAX (ICC) 6.75% 6.75% 6.75% n/a n/a in Luxembourg in Luxembourg in Luxembourg Dividend income Exemptions* Capital gains realized by the company LIQUIDATION PROCEEDS n/a n/a n/a Based n/a n/a either on NET WEALTH TAX** 0.5% n/a 0.5% SIF / SICAR tax regime n/a Exemptions* Qualifying participations TAX ON PAID DIVIDENDS 15% n/a n/a n/a n/a Fixed minimum only Qualifying parent companies Exemptions* Application of double tax treaty VALUE-ADDED TAX 17% 17% 17% 17% 17% Exemptions* Management services to AIF*** SUBSCRIPTION TAX n/a n/a n/a 0,01% n/a (Net Assets) * Subject to conditions ** Subject to a fixed minimum *** Alternative Investment Fund under AIFM regulation S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 0

12 A b o u t F E LT E N & A s s o c i é s With over 20 years of service, FELTEN & Associés is a full service corporate law firm located in Luxembourg, one of the most important financial centers worldwide. FELTEN & Associés is a human-sized firm with a multilingual team in which partners and associate lawyers with substantial experience, tax experts, paralegal assistants and officers co-operate closely. The firm provides independent legal and tax services, both at an advisory and litigation level, to private, professional and institutional clients in daily operations as well as in complex business transactions, both domestic and international, and may rely on the resources of well-known international co-operation networks. The firm is notably member of the Multilaw Network which is ranking in the highest Elite category for law firm networks since 2015 and enjoys a steady growth. O u r C l i e n t S e r v i c e P h i l o s o p h y We aim at adapting our offer to our clients needs and therefore developed several levels of involvement, ranging from: An all-inclusive approach We assist you in all aspects of your project and lead its implementation, from the selection of relevant service providers to the launch of the investment vehicle or closing of the transaction. We may also continue our involvement on an ongoing basis by monitoring the daily operations of the structure in place. The standard approach We assist you in the legal aspects of your project, setting up the relevant legal structure and preparing relevant legal documentation. The compliance approach Working closely with your in-house legal counsel, we ensure compliance of the contemplated structure and review your legal documentation at the light of the most recent legal and tax developments and therefore provide you with the necessary legal comfort for all your projects. Based on the relevant approach for your projects and your needs, we endeavor to find the most appropriate billing arrangements, whether agreeing on a flat fee, dedicated hourly rates and/or success fees. In all our involvements, we commit to efficiency, responsiveness and transparency so that you look at us not only as reliable and competent legal advisors but also as true business partners. S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 1

13 O u r D e d i c a t e d Te a m Bernard FELTEN Partner Tel: (+352) bfelten@feltenlawyers.com Aurélien Chris HOLLARD Senior Associate Tel: (+352) ahollard@feltenlawyers.com Julie MASSON Legal Advisor Tel: (+352) jmasson@feltenlawyers.com Sarra MOUHLI Legal Advisor Tel: (+352) smouhli@feltenlawyers.com S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 2

14 O u r s e r v i c e s BANKING, FINANCE & INVESTMENT FUNDS CORPORATE AND COMMERCIAL LAW INSURANCE LAW TAX INSOLVENCY & RESTRUCTURING INTELLECTUAL PROPERTY REAL ESTATE DEBT RECOVERY DISPUTE RESOLUTION EMPLOYMENT AND SOCIAL SECURITY LAW HEALTH & SAFETY FAMILY LAW MARITIME LAW S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 3

15

16 GENEVE Rue de la Cité, 27 CH-1204 Genève Tel: (+41) Fax: (+41) LUXEMBOURG Rue J.P. Brasseur, 2 L-1258 Luxembourg Tel: (+352) Fax: (+352)