Loyens & Loeff

Luxembourg proposes transition period for UK-based fund managers in case of hard Brexit

The Luxembourg parliament has released a draft bill dated 31 January 2019 in respect of measures to be taken in connection with the financial sector in case of a hard Brexit.

As regards AIFMD, the draft bill grants special powers to the Luxembourg supervisory authority for the financial sector (CSSF) with a view to maintain the good functioning or stability of the financial markets or guarantee the protection of investors. Based on the proposed powers, in case of a hard Brexit, the CSSF would be able, for a maximum duration of 21 months from the date of withdrawal of the United Kingdom and Northern Ireland from the EU, to allow UK-based authorised AIFMs managing Luxembourg AIFs at the time of said withdrawal to continue to exercise their activities in Luxembourg by means of the free provision or services or a branch. Any such measures taken by the CSSF would apply to agreements entered into after the withdrawal date only to the extent those would be closely linked to the agreements already existing as of the withdrawal date.

The draft bill includes similar provisions in respect of UK-based UCITS management companies and investment firms.