AIFM Luxembourg: Alternative Investment Fund Manager

CSSF authorisation: procedure and conditions

The AIFM authorisation application with the CSSF requires a complete file including: detailed programme of activities, remuneration policy, risk management policy, compliance and internal control framework, operational organisation with organisation chart, and proof of minimum capital (€125,000 of initial own funds + additional own funds of 0.02% of assets beyond €250M). The authorisation timeline is 3 to 6 months. The AIFM must employ at least 2-3 conducting officers (directors approved by the CSSF) residing in Luxembourg.

Ongoing regulatory obligations

• AIFMD reporting: quarterly/semi-annual/annual reports to the CSSF and to investors' national regulators
• Independent valuation of assets (external valuer or internal procedure with separation of functions)
• Mandatory authorised depositary: safekeeping of assets, cash flow monitoring, fund oversight
• Risk management policy: market, credit, liquidity, leverage risk, with regular stress tests
• Transparency to investors: offering document, audited annual report, pre-contractual information (art. 23 AIFMD)

Delegation and European passport

The Luxembourg AIFM may delegate portfolio management to an external manager (including outside the EU) under strict conditions: justification of delegation, due diligence on the delegate, ongoing supervision and ability to take back management. The AIFM cannot be a "letter-box entity". The AIFMD European passport allows the AIFM authorised in Luxembourg to market its funds to professional investors throughout the EU/EEA via a simple notification to national regulators, without additional authorisation in each country.