Securitisation Funds in LuxembourgUpdated on Friday 10th June 2016
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Foreign investors who are interested in asset management in Luxembourg can establish a securitisation fund, which is a vehicle set up as a financial structure used for the conversion of assets. Luxembourg represents the best financial market in the European Union for fund domiciliation and our team of experts can provide an in-depth presentation on the main advantages of this type of securitisation vehicle.
Securitisation vehicles in Luxembourg
Securitisation refers to the action taken by a securitisation vehicle, which can issue transferable securities for the conversion of assets. The action consists of comprising a number of assets which are estimated to produce a certain value of cash flow; the assets are turned into securities, which can be bonds or shares.
According to the law applicable in Luxembourg, the following types of assets can become securities:
• securities in the form of shares, loans or bonds;
• debt risks;
• movable and immovable property;
• any valuable activity which can lead to a certain level of income.
Foreign investors who want to open a securitisation vehicle can incorporate the entity either as a company, either as fund; our financial consultants can provide you with more information on this matter.
Securitisation vehicles established as funds in Luxembourg
A securitisation vehicle is not a legal entity; in order to be allowed to carry out activities in Luxembourg, the fund is required to be managed by a management company incorporated as commercial entity.
According to the Securitisation Law, a securitisation fund has to specify in its management regulations that it complies with the provisions of the above mentioned legislation in order to qualify as a securitisation fund.
The fund can be established as a co-ownership or a trust, which can be further categorized in sub-funds.
A securitisation fund does not have to submit a minimum capital; the directors of the management company managing the fund are required to have a business experience relevant for the function.
An important aspect is the accounting procedures for a securitisation fund are done under the Investment Law 2010; the fund is not liable to paying the corporate income tax or municipal business tax; another relevant aspect is that a securitisation fund is not required to pay a subscription tax, as it is exempted from this tax, although it is applicable to other types of investment funds.
If you need further information on the securitisation funds in Luxembourg, please contact our financial agents for assistance on this matter.