The CSSF published the new approach on 7 August 2020 through an update of its FAQ on the Luxembourg law of 17 December 2010 on undertakings for collective investment (the “CSSF FAQ” on the “UCI Law”). Now, under new Q&A 1.13 of the updated CSSF FAQ on the UCI Law, the CSSF states that loans cannot be treated as assets as referred to in Article 41(1) and (2)(a) of the UCI Law, as loans qualify neither as money market instruments nor as transferable securities within the meaning of applicable law and CESR guidelines (CESR being the predecessor of ESMA).

This new position is the result of a detailed eligibility assessment of loans by the CSSF, and reflects discussions held at ESMA level as well as the regulatory practices of other EU Member States.

Luxembourg-domiciled UCITS that are invested in loans are required to disinvest from these positions by 31 December 2020. All such disinvestments will have to be made taking into account the best interest of investors. In addition, the prospectuses of these UCITS will have to be updated by 31 March 2021 at the latest so that they no longer allow for investments in loans.

Note that the wording of the new Q&A 1.13 only covers direct investments in loans by UCITS; thus, indirect investments may still be permissible.

For further information, please liaise with your usual contact on the Fund Formation Team.

To read the updated CSSF FAQ on the UCI Law, click here_


Michèle Eisenhuth

Michèle Eisenhuth is a Partner in the Investment Management practice of Arendt & Medernach and a member of the firm’s strategy board. She specialises in investment fund law, advising domestic and international clients on corporate, regulatory, compliance and governance matters arising in the course of the structuring, operation and reorganisation of investment funds and their management entities. She has been a member of the Luxembourg Bar since 1995. She sits on the boards of directors of several funds and management companies / AIFMs launched by international asset management groups. She has also served on the board of directors of the Association of the Luxembourg Fund Industry (ALFI) sin...



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