Implementation of the AIFM Directive in Luxembourg. · specifies the delegation rules with respect...
Transcript of Implementation of the AIFM Directive in Luxembourg. · specifies the delegation rules with respect...
Toolkit
2013
Implementation of the AIFM Directive
in Luxembourg.
Implementation of the AIFM Directive in Luxembourg
Outline.
CSSF FAQ
Structure of the AIFMD Law
Part I: Implementation of the AIFM Directive
Part II: Amendments to sectorial laws
Your contacts
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Implementation of the AIFM Directive in Luxembourg
CSSF FAQ.
2
Transitional provisions.
22 July 2013 22 July 2014
AIFMs (including internally managed
regulated AIFs) : have until 22 July
2014 to submit an application for
authorisation. This means they should
be AIFMD compliant as from the
moment of their authorisation as AIFM
by the CSSF or by 22 July 2014 at the
latest
Externally managed regulated AIFs
(SIFs, SICARs + Part II UCIs) : have
until the moment their external
manager obtains its authorisation as
AIFM, or until 22 July 2014 at the
latest, to take all necessary measures
to comply with the AIFMD product
rules
AIFMs (including internally managed
regulated AIFs) : have to be AIFMD
compliant as from the moment of their
establishment
AIFMs (including internally managed
regulated AIFs) : have to be AIFMD
compliant from the moment of their
establishment
Externally managed regulated AIFs
(SIFs, SICARs + Part II UCIs) :
have to comply with the AIFMD product
rules from the moment of their
establishment
Externally managed regulated AIFs
(SIFs, SICARs + Part II UCIs) : have to
comply with the AIFMD product rules
as from the moment of their
establishment. However, if their
external manager existed before 22
July 2013 and performed activities
captured by the AIFMD Law , these
AIFs have until the moment their
external manager obtains its
authorisation as AIFM, or until 22 July
2014 at the latest, to take all
necessary measures to comply with the
AIFMD product rules Source: CSSF FAQ related to the implementation of the AIFM
Directive in Luxembourg, version 1.0, released on 18 June
2013
Implementation of the AIFM Directive in Luxembourg
CSSF FAQ.
On 18 June 2013, the CSSF FAQ provided additional clarifications in relation to the provisions of the AIFMD Law.
The key points are inter alia the following:
> Further details regarding the authorisation and registration procedures (the application form being released the same day)
> Transitional provisions:
New sub-fund(s) of an umbrella AIFs created prior to 22 July 2013 will benefit from the transitional provisions granted to the umbrella even if
the sub-fund is launched on or after 22 July 2013
> Letter box entities :
In order to ensure that an AIFM is not considered as a letter-box entity under the AIFMD Law, the following texts have to be taken into
consideration: (i) the Commission delegated act supplementing the AIFMD (article 82) and (ii) section 7 of CSSF Circular 12/546 which
specifies the delegation rules with respect to Chapter 15 ManCos and self-managed UCITS under the Law of 2010 (these principles apply by
analogy to Luxembourg AIFMs delegating investment management functions)
> Delegation of portfolio management and/or risk management functions :
An AIFM may delegate the two functions (i.e. portfolio management and/or risk management functions) in the understanding that the AIFM
does not delegate both functions in whole at the same time and to the extent that the AIFM does not become a letter box entity. It is clarified
that portfolio management and risk management are multi faceted functions consisting of various core activities and may in that respect be
partially delegated
> Domiciliary services provided to SOPARFIs :
An AIFM is allowed to provide SOPARFI domiciliary services provided that such SOPARFI either (i) qualifies as AIF and that AIFM is the
designated manager of that SOPARFI/AIF or (ii) such SOPARFI is a subsidiary controlled by an AIF
> List of the cooperation agreements required under the AIFMD signed by the CSSF
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Implementation of the AIFM Directive in Luxembourg
Structure of the AIFMD Law.
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Implementation of the AIFM Directive in Luxembourg
> Part I (Chap 1 to 11): General provisions related to the implementation of the AIFM Directive
> Part II (Chap 12): Amendments to several sectorial laws in relation to the implementation of the
AIFM Directive as well as additional amendments:
− 17 December 2010 Law related to UCIs
− 13 February 2007 Law related to SIFs
− 15 June 2004 Law related to SICARs
− 5 April 1993 Law on the financial sector
− 13 July 2005 Law related to institutions for occupational retirement
− 12 November 2004 Law related to AML
− 23 December 1998 Law establishing the CSSF
− 10 August 1915 Law on commercial companies
− 4 December 1967 Law related to the Personal Income Tax Law and 12 February 1979 Law
related to VAT Law
Structure of the AIFMD Law.
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Implementation of the AIFM Directive in Luxembourg
Part I: Implementation of the AIFM
Directive.
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Implementation of the AIFM Directive in Luxembourg
AIFM
Directive
Capital
requirements
Conduct of
business
rules
Organisational
requirements
Delegation
Depositary
duties Controlling
stakes
Leverage
disclosure
Transparency
and reporting
Passport
How will AIFMD affect the landscape?
AIFMD aims to create a comprehensive and effective
regulatory and supervisory framework for alternative
investment fund managers (AIFM) within the EU.
The Luxembourg law provides for a literal implementation of
AIFMD into Luxembourg law.
Luxembourg AIFs will have to ensure the compliance with a
certain number of requirements under AIFMD. In this
respect, it is anticipated that Luxembourg regulated vehicles
should be in a position to proceed to a smooth transition
under AIFMD as a substantial part of the new requirements
are already embedded in the Luxembourg legal and regulatory
framework.
The AIFMD introduces a new framework for managers of AIFs.
A Luxembourg AIF will have the option to either appoint an
AIFM or to decide to be self-managed.
EU AIFMs will have the possibility to market Luxembourg
AIFs throughout EU via a passport. Non-EU AIFMs will have
the possibility to take advantage of the passport under certain
conditions.
Private placement regimes will continue to exist but may be
abolished as from 2018.
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Implementation of the AIFM Directive in Luxembourg
In scope Out of scope Exemptions
> EU AIFM managing EU or non-
EU AIF
> Non-EU AIFM managing EU
AIF
> Non-EU AIFM marketing EU or
non-EU AIF within the Union
> Holding companies
> Institutions for occupational retirement
> Supranational institutions (ECB, EIB, EIF, FSB, EBRD, IMF,
World Bank…)
> Luxembourg central bank and other national central banks
> National, regional and local governments and bodies or
institutions which manage funds supporting social security and
pension systems
> Employee participation or savings
> Securitisation vehicles*
> Group vehicles
> Lux AIFM managing leveraged AIFs and
AuM of less than EUR 100m
> Lux AIFM managing unleveraged AIFs,
no redemption for 5 years and AuM of
less than EUR 500m
> Lux AIFMs under these thresholds may
however opt-in under the Law
* provided their activities are covered by
ECB Regulation n°24/2009
> AIF under the Law means:
− any collective investment undertaking other than UCITS
− which raises capital from a number of investors (i.e. at least two)
− with a view to investing for the benefit of those investors in accordance with a defined investment policy
> AIFM under the Law means:
− legal persons whose regular business is to manage one or more AIFs
Scope.
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Implementation of the AIFM Directive in Luxembourg
Vehicle In / Out of Scope
AIF
Part II UCI In Scope
SIF In Scope – unless dedicated to a single investor in its constitutional and/or issue document
SICAR In Scope – unless dedicated to a single investor in its constitutional and/or issue document
Unregulated investment vehicle Out of Scope – unless it meets the conditions laid down in the definition of AIF
Securitisation vehicle Out of Scope – provided it carries out activities which are covered by ECB Regulation 24/2009
ASSEP / SEPCAV (pension funds) Out of Scope
AIFM
Chap 15 Manco In Scope if (i) it manages AIF and (ii) it has not appointed an external AIFM
Chap 16 Manco In Scope if (i) it manages AIF and (ii) it has not appointed an external AIFM
Self-managed AIF In Scope
Managing GPs of SCA and SCS Out of Scope – unless it manages more than one SCA / SCS
Discretionary portfolio manager Out of Scope
Managers of non-coordinated foreign
UCIs
To be abolished on 22 July 2014
New sui generis AIFM status In Scope
What does this mean for Luxembourg?
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Implementation of the AIFM Directive in Luxembourg
Part II: Amendments to sectorial laws.
Note: This document does not aim to cover all amendments to the sectorial laws and focuses on the key changes to the
following sectorial laws only:
> UCI Law
> SIF Law
> SICAR Law
> FSP Law
> Personal Income Tax Law and VAT Law
Amendments to the 1915 Law in respect of the new limited partnership vehicle are dealt with in a separate document
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Implementation of the AIFM Directive in Luxembourg
The UCI Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding Part II UCIs
required to appoint an
AIFM
Depositary provisions:
> AIFMD depositary provisions applicable to those Part II UCIs
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State (branches of non-EU banks are no longer acceptable)
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law).
Safekeeping and supervision of assets and liability provisions are subject to AIFMD requirements
Amendments to the UCI Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding Part II UCIs
required to appoint an
AIFM
Other provisions:
> Requirement to appoint an AIFM (external or internal)
> Central administration must be located in Luxembourg
> Independent valuation of Part II UCIs’ assets
> Delegation rules
> Transparency requirements (annual report, investors information, etc.)
> Rules for cross-border marketing and management of AIFs
Part II UCIs existing before 22 July 2013 shall comply with the new rules by 22 July 2014 at latest, with the exception of:
> Closed-ended Part II UCIs which do not make additional investments after 22 July 2013 (which will not be obliged to
comply with the new requirements)
> Closed-ended Part II UCIs whose investment period ended before 22 July 2011 and whose term will not exceed 22
July 2016 (which will not be obliged to comply with the new requirements, excepted reporting requirements)
Amendments to the UCI Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding Part II UCIs
benefiting from
exemption not to
appoint AIFM*
Depositary provisions:
> AIFMD depositary provisions not applicable
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State or third country
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law).
Current safekeeping and supervision of assets and liability provisions remain unchanged (i.e. not subject to AIFMD requirements)
Other provisions:
Current regime applicable to Part II UCIs remain unchanged
Amendments to the UCI Law.
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* Under article 3 of the Law
Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
applicable to Chapter
15 (UCITS)
Management
Companies
Chapter 15 Management Companies may manage AIFs subject to CSSF approval
> Authorisation as AIFM under simplified procedure
Permitted activities: all activities permitted to Chapter 15 Management Companies + activities permitted to AIFM +
ancillary services when managing AIFs (including reception and transmission of orders on financial instruments)
> Chapter 15 Management Companies managing AIF before 22 July 2013 shall comply with the new rules and apply for
authorisation as AIFM by 22 July 2014 at latest
New regime for Chapter
16 (non-UCITS)
Management
Companies
> Article 125-1: Chapter 16 Management Companies are not required to become AIFM in order to:
− Act as management company for AIFs, which appoint an external AIFM
− Manage investment vehicles which are not AIFs
− Manage one or more AIFs, if their AuM do not exceed EUR100m (leveraged AIF) or EUR500m (unleveraged AIF)
(in this case only reporting and disclosure requirements apply)
> Article 125-2: Chapter 16 Management Companies are required to become AIFM in order to manage one or more AIF,
if their total AuM exceed EUR100m (leveraged AIF) or EUR500m (unleveraged AIF)
− These management companies are not authorised to managed non-AIF UCI
> Chapter 16 Management Companies managing AIF before 22 July 2013 shall comply with the new rules and apply for
authorisation as AIFM by 22 July 2014 at latest
Amendments to the UCI Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
Management Company
liquidation
Possibility for the CSSF to request the dissolution and liquidation of the management companies that have been
withdrawn from, or not registered on CSSF’s official list
Notarial deed
translation
Widening the exemption to translate notarial deeds drafted in English to all types of deeds (e.g. AGM, EGM, merger deeds
etc.)
Publication of reports Extended deadline for the publication of annual reports of Part II UCIs
> Semi-annual report: 3 months from the end of the relevant period
> Annual reports: 6 months from the end of the relevant period
Merger of UCITS When a UCITS SICAV is absorbed, notarial deed must certify the effective date of the merger
When a UCITS FCP is absorbed, the effective date of the merger is decided by the Management Company (unless provided
otherwise in the management regulations) and such decision shall be published in the RCS and Mémorial
KIID UCITS have only to be made available KIIDs to investors in a Non-EU country if required by local competent authority
Amendments to the UCI Law.
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Implementation of the AIFM Directive in Luxembourg
The SIF Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SIFs
qualifying as AIFs and
required to appoint an
AIFM
Depositary provisions:
> AIFMD depositary provisions applicable to those SIFs
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law).
Safekeeping and supervision of assets and liability provisions are subject to AIFMD requirements
Amendments to the SIF Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SIFs
qualifying as AIFs and
required to appoint an
AIFM
Other provisions:
> Requirement to appoint an AIFM
> Central administration must be located in Luxembourg
> Independent valuation of SIFs’ assets
> Delegation rules
> Transparency requirements (annual report, investors information, etc.)
> Rules for cross-border marketing and management of AIFs
SIFs existing before 22 July 2013 shall comply with the new rules by 22 July 2014 at latest, with the exception of:
> Closed-ended SIFs which do not make additional investments after 22 July 2013 (which will not be obliged to comply
with the new requirements)
> Closed-ended SIFs whose investment period ended before 22 July 2011 and whose term will not exceed 22 July 2016
(which will not be obliged to comply with the new requirements, excepted reporting requirements)
Amendments to the SIF Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SIFs which (i)
do not qualify as AIFs
or (ii) benefit from
exemption not to
appoint an AIFM*
Depositary provisions:
> AIFMD depositary provisions not applicable
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State or third country
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law)
Current safekeeping and supervision of assets and liability provisions remain unchanged (i.e. not subject to AIFMD requirements)
Other provisions:
Current regime applicable to SIFs remain unchanged
New limited partnership
regime
SIF Law has been adjusted to accomodate the provisions of the new Luxembourg limited partnership regime
Amendments to the SIF Law.
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* Under article 3 of the Law
Implementation of the AIFM Directive in Luxembourg
The SICAR Law.
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Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SICARs
qualifying as AIFs and
required to appoint an
AIFM
Depositary provisions:
> AIFMD depositary provisions applicable to those SICARs
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law).
Safekeeping and supervision of assets and liability provisions are subject to AIFMD requirements
Amendments to the SICAR Law.
23
Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SICARs
qualifying as AIFs and
required to appoint an
AIFM
Other provisions:
> Requirement to appoint an AIFM
> Central administration must be located in Luxembourg
> Independent valuation of SICAR’s assets
> Delegation rules
> Transparency requirements (annual report, investors information, etc.)
> Rules for cross-border marketing and management of AIFs
SICARs existing before 22 July 2013 shall comply with the new rules by 22 July 2014 at latest, with the exception of:
> Closed-ended SICARs which do not make additional investments after 22 July 2013 (which will not be obliged to
comply with the new requirements)
> Closed-ended SICARs whose investment period ended before 22 July 2011 and whose term will not exceed 22 July
2016 (which will not be obliged to comply with the new requirements, excepted reporting requirements)
Amendments to the SICAR Law.
24
Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New provisions
regarding SICARs which
(i) do not qualify as
AIFs or (ii) benefit from
exemption not to
appoint an AIFM*
Depositary provisions:
> AIFMD depositary provisions not applicable
> Entities eligible to act as depositary :
> Credit institution having its registered office in Luxembourg or the Luxembourg branch of a credit institution
with registered office in another Member State or third country
> Investment firm whose licence authorises ancillary safe-keeping service for clients, subject to:
− Registered office in Luxembourg or the Luxembourg branch of an investment firm with registered office
in another Member State
− Minimum capital requirement: EUR 730k (minimum own funds to be specified by the CSSF)
− Compliance with organisational requirements applicable to depositary banks
> Professional depositary for assets other than financial instruments, subject to certain conditions (please see
section re. amendments to the 1993 Law).
Current safekeeping and supervision of assets and liability provisions remain unchanged (i.e. not subject to AIFMD requirements)
Other provisions:
Current regime applicable to SICARs remain unchanged
New limited partnership
regime
SICAR Law has been adjusted to accomodate the provisions of the new Luxembourg limited partnership regime
Amendments to the SICAR Law.
25
* Under article 3 of the Law
Implementation of the AIFM Directive in Luxembourg
The 1993 Law on the Financial Sector.
26
Implementation of the AIFM Directive in Luxembourg
Content of the amendment
New FSP licence:
Professional depositary
for assets other than
financial instruments
> A new financial sector professional (“FSP”) licence as “professional depositary for assets other than financial
instruments” to act as depositary of SIFs, SICARs and AIFs which are closed for redemptions during the first 5 years
and which generally invest in assets other than financial instruments (e.g. private equity and real estate funds),
subject to a minimum capital requirement of EUR 500k (minimum own funds to be specified by the CSSF)
These FSPs
> Can act under delegation received from the AIF’s depositary
> Can act as administration agent (subject to an appropriate hierarchical and organisational separation), registrar,
communication agent or domiciliary agent
> Can not perform management of UCIs or alternative funds
Managers of Non-
Coordinated UCIs (art.
28-8 of the FSP Law)
Managers of non-coordinated UCIs managing alternative investment funds before 22 July 2013 have until 22 July 2014 to
comply with AIFMD requirements
Amendments to the Law on the
Financial sector.
27
Implementation of the AIFM Directive in Luxembourg
The Personal Income Tax Law.
28
Implementation of the AIFM Directive in Luxembourg
Content of the amendment
Beneficiaries > Individuals employees of managers (gestionnaires) or management companies (sociétés de gestion) of investment
structures (IS)
> No Luxembourg tax residence (or liability to personal income tax in Luxembourg) during the 5 years preceding the
entry into force of the new Law
> Luxembourg tax residence during the year of implementation of the new Law (or within the 5 following years)
Definition of carried
interest
> Specific share in the profit of the IS granted based on the specific situation of the beneficiary and the performance of
the investment (but excluding dividends or capital gains on shares/units/investments in the IS)
Taxation of carried
interest
> Taxation as extraordinary income at 25% of the global personal income tax rate, i.e. up to approx. 11%
Other conditions > No advance(s) payments of carried-interest
> Initial investment of the shareholders/unitholders must be reimbursed prior to any carried-interest payment.
Temporary measure > Favorable tax regime for 11 years max. (as from the exercise of the Luxembourg professional activity)
Amendments to the Personal Income
Tax Law and VAT Law.
Value added Tax
Value Added Tax
(“VAT”)
> Management services provided in relation to AIFs are exempt from VAT
29
Implementation of the AIFM Directive in Luxembourg
Well connected.
30
Implementation of the AIFM Directive in Luxembourg
Your AIFMD team in Luxembourg 1/2.
31
Hermann Beythan Partner, IMG
Tel: (352) 2608 8234 [email protected]
Emmanuel F. Henrion Partner, IMG
Tel: (352) 2608 8279
emmanuel-
Josiane Schroeder Counsel, IMG
Tel: (352) 2608 8275 [email protected]
Silke Bernard Managing Associate, IMG
Tel: (352) 2608 8223 [email protected]
Rodrigo Delcourt Counsel, IMG
Tel: (352) 2608 8293 [email protected]
Benoit Delzelle Managing Associate, IMG
Tel: (352) 2608 8220 [email protected]
Christian Hertz Managing Associate, IMG
Tel: (352) 2608 8207 [email protected]
Xenia Thomamüller Managing Associate, IMG
Tel: (352) 2608 8281 [email protected]
Freddy Brausch Partner, IMG
Tel: (352) 2608 8231 [email protected]
Implementation of the AIFM Directive in Luxembourg 32
Your AIFMD team in Luxembourg 2/2.
Emmanuel Avice Managing Associate, IMG
Tel: (352) 2608 8286 [email protected]
Marianna Tothova Managing Associate, IMG
Tel: (352) 2608 8338 [email protected]
Manfred Müller Counsel, Corporate
Tel: (352) 2608 8272 [email protected]
Jean-Paul Spang Partner, Corporate
Tel: (352) 2608 8253 [email protected]
Olivier Van Ermengem Partner, Tax
Tel: (352) 2608 8224 [email protected]
Aurélie Clementz Managing Associate, Tax
Tel: (352) 2608 8203 [email protected]
Nicolas Gauzès Partner, Corporate
Tel: (352) 2608 8284 [email protected]
Implementation of the AIFM Directive in Luxembourg 33
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