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Insight

Loss of EU passport for UK funds and UK asset managers after December 2020: Are you ready?

Locations

Luxembourg

The EU Commission confirmed that the UK will become a third-country as regards the implementation and application of EU law in the EU Member States.

UCITS and AIMF fund rules will consequently no longer apply to the UK so that, from a EU perspective:

  • UK funds managers will qualify as third-country alternative investment funds (AIFs) managers and will lose the benefit of their EU passport to manage and market funds in the EU. The loss of the EU passport benefit applies to the freedom to provide services on a cross-border basis or through a branch;

  • UK funds will qualify as non-EU AIFs and will no longer be able to be distributed across the EU.

Albeit some mitigation measures that may be available to address certain circumstances, such as relying on the national private placement regime, where available, for the distribution of funds, there is no satisfactory mid-way solution: UK funds managers willing to ensure a steady business continuity in Luxembourg will have to get a licence locally by either relocating to Luxembourg or setting-up a Luxembourg subsidiary.

Simlarly, the loss of the MiFID authorisation for UK asset managers in the absence of an equivalence decision by ESMA or the Luxembourg regulator may affect their performance and obligations under existing contractual arrangements.

Not much time left to get ready? We help you revisit your strategies for the Luxembourg markets and notably:

  • Map the best suitable solution for the continuance of your business in Luxembourg;

  • Assist and guide you through the authorisation process for obtaining a UCITS management company or AIFM licence;

  • Assist and guide you through the authorisation process for obtaining a UCITS or AIF licence;

  • Advise you on required governance and substance;

  • Perform due diligences for the selection of your Luxembourg services providers.

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