GDPR Newsletter - The PwC DPO voice - N°17 - May 2018 edition
The GDPR final countdown
Luxembourg hosts more than 300 Management Companies (a.k.a. ManCo), holding a UCITS or AIFM licence, or both. In 2017, they confirmed their rise with a growth of 6,3%, according to the 2018 Barometer of the Observatory for Management Companies, with 12 new ManCos that were created.
Through PwC's Observatory for Management Companies, we pursue in depth analysis of the ManCo world and connect the dots to give you an outstanding view of where the industry is, to make you understand the latest figures and trends and to guide you as a trusted partner in your business plans for the future.
Consequently, this in depth analysis led us to create both:
The PwC ManCo Index measures ManCos' activities in Luxembourg. Discover the latest trends regarding the growth in the number of UCITS ManCos and AIFMs, the number of employees in the UCITS Mancos, and the evolution of their AuM.
All regulated investment vehicules, which are investment funds (UCITS, Part II and SIF funds) shall appoint a Management Company or be "self-managed". UCITS may only appoint a Management Company subject to Chapter 15 of the 2010 Law whereas, Part II and SIF funds may appoint either a Management Company subject to Chapter 15 of the 2010 Law or a Management Company subject to Chapter 16 of the 2010 Law. In case of AIFs, there is need to have an alternative investment fund manager ("AIFM") or to have an "internally-managed" AIF status.
Management Company and "self-managed" SICAV status
All investment funds (UCITS, Part II UCIs and SIFs) must either appoint a Management Company or be "self-managed" (if they are not organised under the contractual form). UCITS can only appoint a Management Company subject to Chapter 15 of the UCI Law whereas, Part II UCIs and SIFs may appoint either an AIFM or a Management Company subject to Chapter 16 of the UCI Law.
The activity of a Chapter 15 Management Company is the collective portfolio management of at least one UCITS, which encompasses three sub-functions:
A Chapter 15 Management Company might, in addition (subject to additional requirements in terms of capitalisation, general organisation of the Management Company, and compliance with certain MiFID rules):
The activity of a Chapter 16 Management Company is the collective portfolio management of all types of investment vehicles, except UCITS.
When the fund does not appoint a Management Company and is organised under a corporate form, it may alternatively choose to be a self-managed SICAV/SICAV. It remains a “product” as such, the units of which are to be sold to investors, it cannot perform services to another fund or client, and the management of its assets shall be its sole purpose.
AIFM and "internally managed AIF" status
AIFs (Part II UCIs, SIFs, SICARs, RAIFs) need to appoint an AIFM unless they are internally managed (however, RAIFs cannot be internally managed and need to appoint an external authorised AIFM).
The AIFM Law defines the AIFM as any "legal person whose regular business is managing one or more AIFs". "Managing AIFs" is defined as "performing at least investment management functions for one or more AIFs" (i.e. the portfolio management and risk management functions). This is understood as meaning the AIFM is the entity which has responsibility for each function, and has sufficient substance to oversee both, but it may delegate either function (or elements of either or both functions) to another entity, subject to stringent rules and in particular that it does not become a letter-box entity.
In addition, an authorised AIFM may thus perform the following non-core functions:
The GDPR final countdown
Governance is a priority for the Luxembourg investment fund industry, especially in the current situation, as the country becomes even more attractive with the Brexit aftermath.
On 20 March, the Luxembourg and French Governments signed a new double tax treaty ("DTT"), together with an accompanying Protocol (the "Protocol").
In March 2018, the Luxembourg Finance Minister announced the introduction of the VAT Group as a quick reaction to the recent ECJ cases on cost-sharing arrangements (Independent Groups of Persons - IGPs).