The Luxembourg Cabinet yesterday approved new legislation providing for transitional measures in the finance sector in the event of a no-deal Brexit.
On Friday 15 March 2019, the Cabinet met under the chairmanship of Prime Minister Xavier Bettel to discuss current international and European political affairs. The Cabinet meeting particularly focused on preparations for the potential withdrawal of the United Kingdom from the European Union without prior agreement.
In this context, the Cabinet ministers approved a draft law on financial sector measures in the event of a no-deal. They thus amended the law of 17 December 2010 on undertakings for collective investment (UCIs) and the amended law of 13 February 2007 on specialised investment funds.
The proposed law will provide for transitional measures in the event of a no-deal Brexit, as well as in all other cases of withdrawal. Even if an agreement between the UK and the EU was concluded, the status of the UK would shift from Member State to third State. Thus, this draft law will ensure the smooth functioning and stability of the financial markets and the protection of UCI unitholders, allowing a transitional period for UCIs to respect the obligations concerning their respective investment policies.
The proposed law will also provide for specific provisions for UK UCITS which are currently marketed in Luxembourg to retail investors and which will qualify after the withdrawal of the UK from the EU as alternative investment funds from third countries within the Directive 2011/61/EU. The measures provided for in this draft law are justified by their limitation to investment funds which already hold positions in eligible assets at the time of the withdrawal of the UK or who are already marketing their UCI shares to retail investors in Luxembourg at the time of withdrawal.
