Luxembourg reserve alternative investment fund (RAIF) is an innovative model of a legal structure of funds in Luxembourg, which entered into force in 2016. For almost all alternative investment strategies, RAIF is considered to be a profitable financial product in every sense. In this article we will analyze how to register an investment fund in Luxembourg and types of funds that you can arrange on the territory of this state.
R.A.I.F. can take two legal forms:
- Fonds Commun de Placement is an organization, that does not have a legal entity status, F.C.P. is jointly owned by a company.
- Investment company, R.A.I.F. will take a form of S.I.C.A.V. or S.I.C.A.F. In this case, you will be able to open an investment fund in Luxembourg in one of the following legal forms:
- Public JSC;
- Partnership, limited by shares;
- Private LLC;
- Simple LP;
- Special LP.
R.A.I.F. may also take an integrated structure.
In order to register the Luxembourg reserve fund for alternative investments, you must comply with the RAIF rules:
- A fund is subject to capitalization in the amount of 1,250,000 EUR. This amount must be reached within 12 months from the date of registering a RAIF in Luxemburg.
- It must be managed by an authorized manager (AIFM).
- It must have management bodies, located in Luxembourg, who will be represented as an agent at the place of registration of the fund.
- Assets must be held in trust by a depository agent (a credit institution, the investment company, a professional depository).
- Annual reports must be checked and approved by the Luxembourg auditor.
- By virtue of the R.A.I.F. Law, and with the exception of any other provision in the constituent documents, the assets of a fund will be evaluated annually.
YB Case experts will provide you with professional support in opening a Luxembourg investment fund.
Firstly, a fund provides greater flexibility regarding investments. Therefore, registering an investment fund in Luxembourg can be a profitable solution. The funds may adopt a traditional or alternative investment strategy. This flexibility allows you to establish a wide variety of investment structures, led by R.A.I.F.: the equity fund, a real estate fund, a social entrepreneurship fund, a green fund, etc.
Secondly, R.A.I.F. protects its investors. Luxembourg reserve alternative investment fund Act indicates, that a fund is required to diversify its investments (“Risk Diversification”).
If you are considering opening an investment fund in Europe and working in the European market, registering an investment fund in Luxembourg can be an actual solution for you!