In October 2012, the Luxembourg supervisory authority (the "CSSF") published a press release on the promotion of Luxembourg UCITS.
Until now, the CSSF required each Luxembourg UCITS to identify a promoter, in essence a deep pocket. The idea of a promoter was driven by investor protection considerations. Such promoter had to be approved by the CSSF. To be eligible, promoters had to have a sufficient financial surface and be regulated.
The CSSF's requirement for a promoter (and the very concept thereof) has been debated for some time and will now be abandoned.
This is the result of the increased demands imposed by CSSF Circular 12/546 on Luxembourg self-managed UCITS and UCITS management companies. The CSSF now considers that a self-managed UCITS or a UCITS management company ensures a high enough level of investor protection if it complies with such Circular.
Once the CSSF has confirmed to the self-managed UCITS or UCITS management company that it is in compliance with Circular 12/546, the entity acting as a promoter will be released from its obligations.
Since compliance with Circular 12/546 must be ensured before 1 July 2013, the concept of promotership will effectively cease to exist on such date.
With respect to the so-called "Part 2" funds (non-UCITS funds, set-up under Part 2 of the law of 17 December 2010 on UCIs), the requirement for a promoter will be assessed after the implementation into Luxembourg law of AIFMD.
One may wonder whether the CSSF will nevertheless continue to ask for information on the entity at the origin of a UCITS project, similar to what is currently required with respect to specialised investment funds (SIFs) and investment companies in risk capital (SICARs) and their so-called "initiator".
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