Circular CSSF 25/901
Executive Summary
Circular CSSF 25/901 consolidates and modernizes the supervisory framework for Luxembourg specialised investment funds (SIFs), investment companies in risk capital (SICARs), and undertakings for collective investment subject to Part II of the Law of 17 December 2010 (Part II UCIs), including their sub-funds. It streamlines investment rules, diversification limits, borrowing, disclosures, and risk management while enhancing flexibility for sophisticated investors and formalizing prior informal guidance, reducing regulatory complexity without compromising investor protection. #
What Changed
- Diversification and investment limits: Introduces tailored percentage-based thresholds; for funds marketed to unsophisticated retail investors, limits remain at 25% per issuer/UCI/asset, raised to 50% per issuer/UCI/asset or 70% per infrastructure investment for well-informed/professional investor funds, with CSSF derogations possible on justification. Limits apply on assets/commitments basis with look-through for intermediary vehicles. - SICAR-specific rules: Confirms risk capital investments (e.g., equity, mezzanine) must align with development objectives, exceed mere market risk, and deploy incoming cash into eligible assets; indirect investments via PE/VC/real estate funds allowed if aligned, but hedge funds generally excluded. - Borrowing: For retail-exposed SIFs/Part II UCIs, inves
What You Need To Do
- Review and update fund documents (e
- Assess and document compliance with new/relaxed diversification, borrowing, and SICAR investment rules; apply for CSSF derogations where justified
- Ensure risk-spreading in derivatives/collateral and deployment of SICAR cash into eligible assets; confirm look-through for intermediaries
- For retail-marketed funds
- Maintain robust governance/documentation to leverage flexibility; reference CSSF's Compilation for concepts
Key Dates
Compliance Impact
Urgency: High – Formalizes prior informal guidance into binding rules with enhanced flexibility but stricter retail protections and disclosure mandates, requiring immediate document reviews/updates for non-compliant SIFs/SICARs/Part II UCIs to avoid supervisory scrutiny or authorization issues; critical for funds targeting private markets or retail.
Who is Affected
Summary
relating to specialised investment funds, investment companies in risk capital and undertakings for collective investment subject to Part II of the Law of 17 December 2010