Wildgen, Partners in Law, whose origins go back to the 1920 s, is today one of the largest and bestknown law firms in Luxembourg.

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2 Wildgen, Partners in Law, whose origins go back to the 1920 s, is today one of the largest and bestknown law firms in Luxembourg. Since the 1980 s, Wildgen has focused its activity on business, corporate, tax, and financial law, undergoing significant development together with the upsurge in the Luxembourg financial market. While remaining fully independent, Wildgen boasts a wide network of foreign correspondents and contacts, and collaborates with experts worldwide. Wildgen is fully-committed to the success of its clients and stresses the values of the profession in a modern world: a sense of ethics and integrity, proactivity and responsiveness, a multilingual and multicultural staff, and the utmost flexibility in meeting our clients needs and adapting to the ever-changing market. Wildgen offers a wealth of experience and a strong, long-standing track record in advising on cross border transactions. Over the years, Wildgen has acquired a strong client base in Europe, C.I.S, U.S.A, Middle East, and Asia. It represents a number of multi-national corporate institutions, investment (mutual) funds, pension funds, private equity funds, leading banking and financial institutions, and insurance service providers. Wildgen s lawyers assist clients with regard to all legal matters in the following practice areas: Administrative Law, Aviation and Maritime, Banking and Financial Law, Capital Markets, Corporate Finance, Corporate Law, Employment and Pensions, Insurance Law, Investment Funds, IP/TMT, Islamic Finance, Litigation and Arbitration, Real Estate, Securitisation, Tax, Private Equity and Venture Capital. Copyright 2013 Wildgen, Partners in Law

3 Table of Contents NEW PAYMENTS LEGISLATIVE PACKAGE ADOPTED BY THE EUROPEAN COMMISSION... 4 LUXEMBOURG LAW CREATING THE NEW CATEGORY OF PROFESSIONALS OF THE INSURANCE SECTOR... 7 LUXEMBOURG AIFM LAW: IMPACTS ON THE BANKING & FINANCE AND CAPITAL MARKET SECTORS... 9 THE LUXEMBOURG DOUBLE TAX TREATIES NETWORK AMENDMENT OF THE REGULATION ON BANKS ISSUING MORTGAGE BONDS WILDGEN S NEWS ITECHLAW COMMITTEE NOMINATION BREAKFAST BRIEFING ON SOCIAL ELECTIONS UPCOMING EVENTS P a g e

4 New Payments Legislative Package adopted by the European Commission Michel Bulach (Partner) - Frédéric Gervais (Director) - Luis Marques Guilherme (Senior Associate) - August 2013 On July 24 th, 2013 the European Commission published the awaited proposal for a revised Payment Services Directive ( PSD2 ) 1 having for its purpose to complete and recast the Payment Services Directive (N 2007/64/EC, PSD1 ) implemented in the Grand Duchy of Luxembourg by the Law of November 10 th 2009 on payment services. 2 The aims of the PSD1, which were the harmonisation of the legislation on payment services throughout the European Union (and extended to the EEA area), the implementation of new payment products (based on the SEPA products) allowing cross-border payments in Euro as simple and secure as domestic payments, and the improvement of the protection of the payment services users ( PS users ), are found in the PSD2. If approved, PSD2 will widen the scope of application of the European legal framework related to payment services. New players in the payment services will qualify as payment services providers ( PSP ), namely the third-party Payment Service Providers, providing: payment initiation services, i.e. services enabling the access to a payment account, where the payer can be actively involved in the payment initiation or the third-party PSP s software, or where payment instruments can be used by the payer or the payee to transmit the payer s credentials to the PSP holding the payment account; and, account information services, i.e. a payment service where consolidated and user-friendly information is provided to a PS user on one or several payment accounts held by the PS user with one or several PSPs. 1 More information available on: 2 Mémorial A 215, 11 novembre Copyright 2013 Wildgen, Partners in Law

5 These third-party Payment Service Providers will be subject to the same regulatory requirements and supervision as those applicable to any entity already qualifying as PSP. Furthermore, PSD2 will extend the application of rules related to the transparency and obligations of information of PS users to the one-leg transactions. Under the PSD1, rules governing the compulsory information and transparency of the services of payments apply only to payments made from and in the EU (i.e. where the PSP of the payer and of the payee are both located in the EU) and in the Euro or another member State currency. Under the PSD2, PSPs located in the EU will have to comply with the same transparency and information obligations each time they provide a payment service, notwithstanding the fact that such payment could originate from or be made to an account located outside of the EU and notwithstanding the currency (Euro, EU or non-eu currency) of the payment. PSD2 will further reinforce security rules for online transactions and places under the PSPs responsibilities the obligation to enforce stronger consumer authentication procedures, i.e. procedure based on the use of at least two elements categorised as knowledge, possession, and inherence and that are independent (e.g. for the use of a debit card: the possession of the card and the use of a PIN code). The liability regime of the PSP will also be amended under the PSD2. In cases of unauthorised card payments, consumers will have to bear losses up to a maximum of 50 EUR (instead of 150 EUR currently). Moreover, the PSD2 will grant the consumer an unconditional right to a refund of any disputed payment transactions, in cases of card payment or domiciliation (this refund right will be aligned with the existing SEPA SDD standard), except where the payee has already fulfilled the contractual obligations and the services have already been received or the goods have already been consumed by the payer. The proposal of the Commission to recast the payment services regulation is completed by a proposal of Regulation on Multilateral Interchange Fees (MIFs) (the Regulation ), having for its purpose to regulate at the European level the interchange fees applicable on debit and credit card transactions and card-based payment transactions undertaken through banking cards. Commercial cards or three party scheme cards will be excluded from the regulation. 5 P a g e

6 Maximum levels of interchange fees will be imposed for cross-border transactions during a transition period of two years following the publication of the Regulation. It is therefore proposed that, after the transitional phase, the same maximum fees that apply to cross-border acquired transactions will also apply to domestic transactions. All (cross-border and domestic) 'consumer' debit card transactions will have a maximum interchange fee of 0.20% and all (cross-border and domestic) consumer credit card transactions will have a maximum interchange fee of 0.30%. The Regulation further provides for business rules that will be applicable to all categories of card transactions, notably: transparency rules (PSPs will have to provide at least monthly statements to their clients acting as merchants, disclosing the fees paid by the merchant concerning each category of card); no discrimination between card users as regards the issuing bank or the provenance of the card holder (however, without prejudice to the limitation of the Honor All Cards Rule set forth by the regulation); prohibition of any regulation preventing or limiting merchants from steering customers to more efficient payments instruments ('no steering rules'); and, merchants shall be entitled to disclose to their customers the fees they pay to their PSP. At this time, the PSD2 Directive and the MIFs Regulation proposals have been released as provisional versions, but already allow professionals, users and practitioners to consider and start anticipating the new legal framework to come. To be continued The article is available on our website Copyright 2013 Wildgen, Partners in Law

7 Luxembourg Law creating the new category of Professionals of the Insurance Sector Michel Bulach (Partner) - August 2013 The Luxembourg legal framework of the insurance sector is about to experience significant changes in the coming months. The implementation of Solvency II directive is still a legislative work in progress with two legs, consisting in a draft bill that will restate in full the existing law of 1991 on the insurance sector and a second draft bill that will amend both the law of 1997 on insurance contracts and the law of 1994 on annual accounts of insurance and reinsurance companies. The Luxembourg legislator has however decided to move forward ahead of the forthcoming Solvency II legal instruments with the vote and publication of the law dated 12 July 2013 that amends the law of 1991 by creating a new category of Professionals of the Insurance Sector and restating provisions governing insurance and reinsurance intermediaries as well as authorised managers of companies active in the insurance sector. Although the concept of Professional of the Insurance Sector, inspired from the longstanding and ever-evolving group of Professionals of the Financial Sector, is brand new to the world of Luxembourg insurance, its scope partly covers and supplements the provisions that previously applied to certain professionals such as the companies providing management services to reinsurance undertakings or to pension funds. The new law however goes further by authorising and regulating new professions such as management companies for insurance captives, actuarial service providers or governance service providers, which are notably expected to play a role in helping small and medium-size insurance and reinsurance companies to adapt to future Solvency II organisational requirements by widening their outsourcing possibilities. Other specialised professionals like run-off management companies and claim handlers will usefully complete the Luxembourg offer of services to the insurance and reinsurance industry. From an international perspective, foreign professionals intending to set-up a branch in Luxembourg in order to provide services that fall under the scope of the new category shall apply for a license in Luxembourg under the same conditions as Luxembourg professionals. 7 P a g e

8 The complete list of Professionals of the Insurance Sector as set forth under the law of 12 July 2013 is the following: management companies for insurance captives management companies for insurance undertakings in run-off management companies for reinsurance undertakings management companies for pension funds authorised provider of actuarial services insurance portfolio management companies authorised provider of services relating to the governance of insurance and reinsurance undertakings claim handlers / loss adjusters It has to be noted that insurance and reinsurance intermediaries (brokers and agents) are not caught under the category of Professionals of the Insurance Sector due to the existence of a specific set of European legal instruments applicable to them. The law of 12 July 2013 nevertheless restates and supplements the rules previously applicable to brokers in a way that is quite similar to the provisions now governing the professionals of the insurance sector in terms of financial assets, professional liability insurance, audit reporting and supervision. By way of example the law provides for the application of the same requirements of minimum financial assets to individual brokers (net assets of EUR upon authorisation to be brought to EUR within 5 years) and to brokerage firms (paid-in capital of EUR upon authorisation to be brought to EUR within 5 years) as those applicable to Professionals of the Insurance Sector. With this new legislation Luxembourg has implemented the first piece of a process aiming at maintaining a harmonised level playing field for the Luxembourg insurance industry while preserving its specificities. Although (or because) they imply a higher level of regulation and an adaptation to new standards, it is expected that those legal instruments will have positive results on the market and be an asset to industry players in developing the new opportunities that may follow from them. The article is available on our website Copyright 2013 Wildgen, Partners in Law

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10 Luxembourg AIFM Law: Impacts on the Banking & Finance and Capital Market sectors Mevlüde-Aysun Tokbag (Partner) - Giuseppe Cafiero (Associate) - Katarina Gerard (Junior Associate) - August 2013 Potential impacts of the new Luxembourg law on alternative investment fund managers adopted on 10 July 2013, effective since 15 July , and implementing the Directive 2011/61/EU of the European Parliament and of the Council of 27 May 2011 regarding alternative investment fund managers (the AIFM Law ) on the Luxembourg Banking & Finance as well as the Capital Market sectors: 1) Private Placements The AIFM Law impacts, inter alia, a so-called private placement in Luxembourg. A private placement consists in marketing of securities to a relatively small number of selected investors as a way of raising capital and, as such, does not principally fall within the scope of the Luxembourg law of 10 July 2005 on prospectuses for securities, as amended. In this respect, the Luxembourg supervisory authority of the financial sector (Commission de Surveillance du Sector Financier - the CSSF ) confirms in its recently published Frequently Asked Questions (dated 19 July ) that both EU and non-eu alternative investment fund managers (the AIFM ) may continue to market both their EU and non-eu alternative investment funds (the AIFs ) in Luxembourg under the existing Luxembourg private placement rules while remaining unaffected by the provisions of the AIFM Law until 22 July 2014 (being, however, uncertain as to whether this applies only to existing placements and/or also to new placements of existing AIFs). Thereafter, the EU AIFMs will have to comply with the provisions of the AIFM Law, being an authorisation by or registration with the CSSF as an AIFM (if other criteria are met and/or relevant exemptions are not applicable). In addition, further to ESMA s 3 Mémorial A 119 of 15 July 2013, Copyright 2013 Wildgen, Partners in Law

11 approval of centrally-negotiated co-operation arrangements with 34 non-eu securities regulators, the CSSF announced via press release on 31 May 2013 that it has signed a memorandum of understanding with each of these non-eu authorities such as, inter alia, Hong Kong, USA, Singapore, and Switzerland. As a consequence, those non-eu AIFMs may continue their marketing activities for EU and non-eu based AIFs in Luxembourg under the private placement regime until July 2015 (but after 22 July 2014 subject to the compliance of some requirements of the AIFM Law) and potentially with a passport thereafter. 2) New PSF By amending the Luxembourg law of 5 April 1993 regarding the financial sector as amended (the PSF Law ) the AIFM Law (laying down the mandatory appointment of an independent depositary by the AIFs) provides for a new category of professional in the financial sector (the New PSF ), which will enable non-credit institutions to act as a depository for AIFs (new article 26-1); being the status of the professional depositary of assets other than financial instruments. This New PSF is allowed to act as depositary for Luxembourg SIFs, SICARs, and other AIFs governed by the AIFM Law which (i) have a lock-up period of five years as from the date of the initial investments, and (ii) in accordance with their investment policy, do not invest in assets which need to be held in custody or in non-listed entities or companies (e.g. investment capital funds or companies, venture capital funds or companies, real estate funds or companies) in order to eventually take their control. Depositaries of AIFs can also delegate to this New PSF the safekeeping of non-liquid assets or assets other than financial instruments. Only corporate entities having a minimum subscribed and paid-up share capital of EUR 500,000 can be authorised to act as professional depositary of assets other than financial instruments. This New PSF status can be combined with other PSF status, for example fund administrator or transfer agent, as long as the administrative and the depositary functions within the same entity are duly segregated in order to avoid any potential conflicts of interest. The AIFM Law also provides for the abolition of the PSF status of managers of noncoordinated UCIs effective as of 22 July This status is currently governed by article 28-8 of the PSF Law. 11 P a g e

12 The activity of this PSF is limited to the management of foreign non-ucits funds. As the main part of such funds is qualified as AIFs under the AIFM Law, their management shall now only be entrusted to an AIFM duly authorised under the AIFM Law. As a consequence thereof and in order to continue their activity, managers of non-coordinated UCIs shall comply with the provisions of the AIFM Law and, in particular, shall apply for an authorisation to act as an AIFM prior to 22 July After this deadline, any existing manager of non-coordinated UCIs who has not been authorised as an AIFM will no longer be authorised to manage non-coordinated UCIs. 3) Securitisation The AIFM Law generally does not apply to securitisation special purpose entities ; however, as it refers to entities whose sole purpose is to carry on a securitisation within the meaning of article 1 (2) of Regulation (EC) 24/2009 of the European Central Bank of 19 December 2008 on statistical reporting. Compared to the Luxembourg law of 22 March 2004 on securitisation, as amended (the Securitisation Law ), this European Central Bank regulation provides a much more detailed definition of securitisation and therefore it is not broad enough to cover the entire securitisation and structured finance business in Luxembourg. The Securitisation Law indeed provides a very broad definition of securitisation, which allows for almost any asset producing a regular flow of income or any risk to be securitised and consequently in light of this broad concept of securitisation, Luxembourg has become an attractive jurisdiction for structured finance and securitisation transactions over the last years. However, based on this broad concept of securitisation under the AIFM Law, certain vehicles may not necessarily, or at least not automatically, fall within the AIFM Law exemption on securitisation and thus there is a risk that such vehicles may indeed be classified as an AIF. The article is available on our website Copyright 2013 Wildgen, Partners in Law

13 The Luxembourg Double Tax Treaties Network Tax Practice Group & Knowledge Management Department - September 2013 Latest updates 13 September Protocol on exchange of information upon request with Poland is in force as of 25 July 2013 and with Russia as of 30 July New tax treaty with Macedonia is in force as 23 July 2013, with Tajikistan as of 27 July 2013 and with Seychelles as of 19 August 2013 (Mémorial A 168, 13 September 2013). The three new tax treaties include the international standard of exchange of information upon request 30 July Luxembourg and Mongolia to begin new tax treaty negotiations to facilitate better access to investment services. 26 July Protocol on exchange of information upon request with Belgium is in force as of 25 June 2013 and with Switzerland as of 11 July 2013 (Mémorial A 134, 26 July 2013) 25 July Protocols on exchange of information upon request with Romania and Malta are in force as of 11 July 2013 (Mémorial A 132, 25 July 2013) 04 July Law of 14 June 2013 implementing new tax treaties with Germany, Kazakhstan (protocol included), Laos (Lao People's Democratic Republic), Macedonia, Seychelles, Sri Lanka and Tajikistan and protocols to existing tax treaties with Canada, South Korea, Italy, Malta, Poland, Romania, Russia and Switzerland was published in the Official Journal (Mémorial A 144, 04 July 2013). Entry into force dates will be precised in forthcoming publications. 20 June A protocol with Slovenia was signed. This protocol will include the international standard of exchange of information upon request. 10 May A new tax treaty with Guernsey was signed. This new treaty will include the international standard of exchange of information upon request. 07 May On the occasion of the Euromoney Conference taking place in Saudi Arabia, Luc Frieden, Luxembourg Minister of Finance, signed a new tax treaty with the Saudi Minister of Finance Dr Ibrahim Al-Assaf. 13 P a g e

14 17 April A new tax treaty with Jersey was signed. This new treaty will include the international standard of exchange of information upon request. 08 April A new tax treaty with Isle of Man was signed. This new treaty will include the international standard of exchange of information upon request. 15 March A new treaty with Singapore was initialed. This new treaty will replace the initial 1993 treaty when it will be applicable. 07 March Draft law 6552 implementing new tax treaty with Taïwan submitted to the Luxembourg Parliament. 07 March The Finance Ministers of Luxembourg and the Czech Republic signed on Tuesday 05 March an agreement on preventing double taxation which replaces the agreement of This new treaty will include the international standard of exchange of information upon request. Situated at the crossroad of Europe, the Grand-Duchy of Luxembourg is based on a dynamic and open economy which actively promotes the development of cross border trade and investments. Its major role in matter of international trade in the sectors of banking and finance, investment funds and holding companies has for a consequence that a strong network of double tax treaties has been developed over the years. To that end, Luxembourg has entered into 64 comprehensive double tax treaties based on the OECD model tax convention on income and capital in order to mitigate the risks of double taxation for businesses. The Grand Duchy treaty partners are amongst the most industrialised countries with inter alia all of the states in the European Union but Cyprus, the United States, Japan, Brazil, China, Mexico, Hong Kong and Russia, Canada. Luxembourg tax treaties as most bilateral agreements are designed and balanced to address a specific economic context. Given their very nature, tax treaties are constantly negotiated and updated to the latest international standards. Another perspective to the steady expansion of Luxembourg tax treaties must be added. Luxembourg endorsed on 13 March 2009 the international standard of exchange of information upon request embodied in article 26-5 of the OECD model tax convention. As a result, 31 treaties containing the said standard were concluded at the moment. The article and list are available on our website Copyright 2013 Wildgen, Partners in Law

15 Amendment of the regulation on banks issuing mortgage bonds Frédéric Gervais (Director) - July 2013 The Law dated 27 June 2013 relating to the banks issuing mortgage bonds and amending the Law of 5 April 1993 on the financial sector, has been published in the Luxembourg Official Journal on 1st July Mortgage banks are credit institutions having as their main object the granting of loans secured by rights on immoveable property, bonds or similar debt instruments, commitments from public entities (as specified by the Law of 5 April 1993), and the issuing on that basis of debt instruments secured by those rights or charges, such instruments being known as mortgage bonds. The regulation on mortgage banks as amended by the Law dated 27 June 2013 is improved with regard to the liquidation / sursis de paiement process applicable to mortgage banks, in a view to protect the interests of holders of mortgage bonds, and by the insertion of a new type of mortgage bonds, namely mutual mortgage bonds, which are: loans granted to credit institutions (participating in a deposit-guarantee scheme) established in EU, EEE, or OCDE countries and the issue of mortgage bonds guaranteed by the receivables resulting from the loans; or, loans granted by a mortgage bank and guaranteed by bonds issued by credit institutions, the mortgage bank issuing mortgage bonds guaranteed by the receivables resulting from the loans. This Law has entered into force on 4 July Should you need assistance or more information about this requirement, please do not hesitate to contact Michel Bulach or Mevlüde-Aysun Tokbag, Banking and Finance Partners. The article is available on our website 5 Mémorial A 111 of 01 July P a g e

16 WILDGEN S NEWS Wildgen s News Copyright 2013 Wildgen, Partners in Law

17 ITechLaw Committee Nomination We are delighted to announce that Emmanuelle Ragot, Head of IP/TMT, has been nominated and appointed to serve as Vice-Chair for the ITechLaw's Data Protection Substantive Law Committee for the coming year. Committee leaders are key members of ITechLaw s leadership team and this nomination confirms her position as Luxembourg key expert for data protection issues. ITechLaw has been serving the technology law community worldwide since 1971 and is one of the most widely established and largest associations of its kind. It has a global membership base representing six continents and spanning more than 60 countries. Its members and officials reflect a broad spectrum of expertise in the technology law field. Breakfast Briefing on Social Elections On 13 th November 2013, social elections will be held in Luxembourg and employees will have the opportunity to elect members of their company s staff delegation and of the Chambre des salariés. Considering the importance of these elections, Jackye Elombo, Partner, and Jerome Commodi, Associate, both specialising in Employment Law at Wildgen, will lead a breakfast briefing presentation on social elections on 30 th September at 8.30a.m. at Wildgen s premises. On this occasion, they will detail the practical aspects and issues related to this procedure in order to avoid any problems arising from these elections. Contact / Registration: marketing@wildgen.lu P a g e

18 Upcoming Events 2 OCTOBER OCTOBER 2013 ITECHLAW 2013 EUROPEAN CONFERENCE The ITechLaw 2013 European Conference, organised in Amsterdam from the 2nd to the 4th October 2013, brings together the world s leading technology lawyers who will discuss on topical mobile payment systems, outsourcing, cloud, data protection, intellectual property and regulatory developments issues. As Head of IP/TMT at Wildgen, Partners in Law, Emmanuelle Ragot will participate in this unique event as a speaker and will draw up an overview of the different factors making Luxembourg a strategic location for technologies business and IP rights. 6 OCTOBER OCTOBER 2013 INTERNATIONAL BAR ASSOCIATION ANNUAL CONFERENCE Pierre Metzler and Michel Bulach, both Partners at Wildgen, attend the next IBA Annual Conference organised from 6th to 11th October 2013 in Boston. On this occasion, Wildgen is delighted to organise/sponsor two events: Meet International Friends in Boston Organised by Wildgen to bring together lawyers from European & US jurisdictions, this breakfast will be held on 8th October 2013 at the Four Seasons Hotel (Boston). Copyright 2013 Wildgen, Partners in Law

19 IBA Committee on Banking Law and Securities Law Wildgen sponsors and takes part in the IBA Committee on Banking Law and Securities Law to be held on 8th October 2013 at This joint lunch is arranged by IBA Committees to enable their members and other delegates interested in the committees activities to meet informally in a relaxed atmosphere, and are a key element of the more practice-specific networking available at the IBA Annual Conference. Feel free to contact us at marketing@wildgen.lu should you need more information about Pierre and Michel's participation in those events. Pierre and Michel are looking forward to meeting you there. Venue (Meet International Friends in Boston): Four Seasons Hotel Conference Room Gilbert Stuart 200 Boylston Street MA Boston Venue (IBA Committee on Banking Law and Securities Law): Grill Berkeley Street MA Boston 19 P a g e

20 69, boulevard de la Pétrusse L-2320 Luxembourg Tel: Fax: lawyers@wildgen.lu Follow Wildgen on Twitter, LinkedIn and Facebook: If you have a friend or colleague that you think might find this newsletter informative, why not taking it away for him/her? To subscribe to this newsletter or to contact us, please send an to marketing@wildgen.lu The Copyright present newsletter 2013 contains Wildgen, general Partners information Law only. It is not intended to be, and should not be relied upon as, a comprehensive statement of the law. Therefore, WILDGEN can not accept any liability for any errors, omissions or opinions contained herein and for the implementation of the principles set out without its active involvement.