The CSSF published the new approach on August 7, 2020 through an update of its FAQ on the Luxembourg law of December 17, 2010 on undertakings for collective investment (the “CSSF FAQ” on the “UCI Law”). Now, in the new Q&A 1.13 of the updated CSSF FAQ on the UCI law, the CSSF declares that loans cannot be treated as assets as referred to in article 41 (1) and (2) (a) of the OPC law, because the loans are eligible. neither as money market instruments nor as transferable securities within the meaning of applicable law and CESR guidelines (CESR being the predecessor of ESMA).
This new position is the result of a detailed assessment of loan eligibility by the CSSF, and reflects discussions held at ESMA level as well as regulatory practices in other EU Member States.
Luxembourg domiciled UCITS which are invested in loans are required to divest from these positions before December 31, 2020. All these divestments must be carried out taking into account the best interests of investors. In addition, the prospectuses of these UCITS must be updated no later than March 31, 2021 so that they no longer allow investments in loans.
Note that the wording of the new Q&A 1.13 only covers direct investments in credits by UCITS; thus, indirect investments can still be allowed.
For more information, please contact your usual contact within the Fund Formation Team.
To read the updated CSSF FAQ on the UCI law, click here_