The Advantage of Creating Compartments in a FundUpdated on Friday 10th June 2016
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Foreign investors interested in establishing a fund in Luxembourg are advised to choose this country as a domiciliation of an investment fund due to the legal and tax framework created by the local authorities. Luxembourg is also the most representative financial market in the European Union, providing very stable investment conditions. Businessmen who want to open a fund in Luxembourg should know that the local legislation states that a fund can contain compartments, which can provide many financial advantages; our team of experts can provide you with more details on this matter.
Compartments in an investment fund in Luxembourg
The local legislation allows the establishment of compartments (or sub-funds) in an investment fund, which can function as independent funds within the same legal entity.
The main advantages an investor can have in such situation are related to the investment strategies he can apply at the same time. Other advantages refer to taxation or to administrative aspects. At the same time, operating an investment fund through several compartments can provide a better centralization of the operating activities.
According to the legislation applicable in Luxembourg, a compartment can have different assets than the ones of another compartment. A sub-fund can also establish different rights and can create shares that possess different statutory rights; our financial consultants can offer more information on the statutory rights of a compartment structure.
Compartment structure in Luxembourg
Investment funds in Luxembourg can establish compartments within its structure following one of the two options in this sense:
• single compartment structure;
• multiple compartment structure, which can apply a different investment policy.
It is allowed to establish a compartment structure for the investment funds available under the legislation provided for Undertakings for Collective Investments in Transferable Securities, for 2010 Law Part II and for Special Investment Funds.
Not only funds can establish compartments, as the legislation is available for investment companies as well, which are allowed to create single or multiple compartments.
If you need further information on the advantages of a compartment in an investment fund, please contact our team of financial experts in Luxembourg.