Luxembourg Undertakings for Collective Investments in Transferable Securities (UCITS) Guideline

Luxembourg Undertakings for Collective Investments in Transferable Securities (UCITS) License
Undertakings for Collective Investments in Transferable Securities (UCITS) are governed by the Luxembourg law of 17 December 2010 (2010 Law) as modified by the law of 10 May 2016 implementing EU Directive 2014/91/EU (“UCITS V”). In particular Chapter 5 of the 2010 Law outlines the investment policy of a UCITS including risk diversification requirements.
About the UCITS
UCITS is an investment fund that invests in liquid assets and can be distributed publicly to retail investors across the EU. The fund meets the criteria laid down by EU Directives to be eligible for sale in EU Member States. The UCITS may be set up as a single fund or as an umbrella fund with multiple compartments. The constitutional documents must expressly provide for that possibility and the prospectus must describe the investment policy of each compartment.
A UCITS must be authorised by the Commission de Surveillance du Secteur Financier (CSSF) before commencing its activity. Afterwards, it is supervised by the same on an ongoing basis e.g. by means of regular reporting requirements. The CSSF charges an annual fee for its supervisory activity.
Legal Requirements

Sr. No	Element	Requirement(s)
	Entity Requirements	A UCITS may be constituted as: a common contractual fund (fonds commun de placement – FCP). The FCP has no legal personality and must be managed by a Luxembourg management company; an open or closed ended investment company with variable capital (société d’investissement à capital variable – SICAV), or fixed capital (société d’investissement à capital fixe – SICAF). The creation of such a corporate entity requires the drafting of instruments of incorporation. as a SICAF (societe d’investissement a capital fixe) and it can be incorporated as any legal entity accepted under the legislation available in Luxembourg; the SICAF is established in order to invest its funds in transferable securities and to minimize the risks of the investors.
	Director’s Requirements	The licensee will need at least 2 (two) natural person Fit and Proper Directors of any jurisdiction.
	Shareholder requirements	The minimum number of shareholder for the UCITS in one.
	Prospectus or Offering Document	A UCITS must prepare a fund prospectus. The contents of the prospectus are set out in Schedule A of Annex I of the 2010 Law and in Chapter L of IML Circular 91/75 (as modified).
	Fund Manager	UCITS can be managed by a Luxembourg management company or by a management company based in another EU Member State. A common fund must be managed by a management company, whereas a SICAV/F may either be self-managed or designate a management company. If applicable, the management company of an FCP must draw up the management regulations for the common fund. Self-managed SICAV/Fs may only manage assets of their own portfolio and may not manage assets on behalf of a third party. In case of a Luxembourg management company, the central administration must be in Luxembourg.
	Fund Depositary	A Luxembourg UCITS must appoint a Luxembourg depositary which is among other things responsible for the safekeeping of the fund’s assets. The eligible depositaries are Luxembourg established credit institutions, but also Luxembourg established investment firms fulfilling certain requirements laid down by the Law of 5 April 1993 on the financial sector, as amended. The conducting officers of the UCITS and of the depositary must be of sufficiently good repute and have sufficient experience also in relation to the type of UCITS concerned.
	Auditor	The annual report must be audited by an authorised independent auditor with appropriate professional experience.
	Minimum Capital Requirements	The net assets of an FCP may not be less than EUR 1,250,000. This minimum must be reached within a period of six months following its authorisation. The minimum capital of a self-managed SICAV/F may not be less than EUR 300,000 at the time of authorisation. The capital of a SICAV/F must reach EUR 1,250,000 within six months from its authorisation.
	Other Service Providers	Typical other service providers of a UCITS are lawyers, portfolio managers (investment advisers), administrators/ registrars/transfer agents/domiciliation agents, distributors/ nominees, market makers, paying agents.

Ongoing Obligations
SIFs are subject to few regulatory requirements, which include:

1. Submission of issuing document and any amendments to CSSF for approval.
2. Issuance of an audited annual and semi-annual report for each financial year within six (6) months of the end of the financial year.
3. A UCITS must prepare a fund prospectus, a Key Investor Information Document (KIID).

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