The UCI Law — Law of 17 December 2010 relating to undertakings for collective investment
The 2010 UCI Law is Luxembourg's core fund statute — the mainstream, retail-facing rulebook that the specialised SIF, SICAR and RAIF regimes sit alongside. It runs on a two-part split: Part I is the UCITS regime — the harmonised, EU-passportable retail fund that must obey a strict eligible-asset list and the 5/10/40 diversification limits; Part II is the home for other public UCIs that don't qualify as UCITS and so cannot rely on the EU passport to reach retail investors across the EEA. Either way the fund is a CSSF-authorised product: the regulator signs off before launch, enters it on an official list, and supervises it on an ongoing basis.
Scope and the Part I / Part II split
The law governs Luxembourg undertakings for collective investment whose units are offered to the public. Its defining feature is a two-part structure. Part I transposes the UCITS Directive (2009/65/EC): a Part I fund is a UCITS, which buys the single-market passport to be marketed to retail investors across the EEA in exchange for accepting a harmonised, prescriptive rulebook — a closed list of eligible assets and hard diversification limits. Part II covers other UCIs that are still sold to the public but do not meet the UCITS conditions (for example because of their asset mix or structure); a Part II fund is authorised and supervised by the CSSF but cannot use the UCITS passport to reach retail investors elsewhere in the EEA, and, where it is an alternative investment fund, its manager falls under the AIFM Law. The 2010 Law largely re-enacted the earlier Law of 20 December 2002, keeping the provisions the UCITS IV Directive did not touch — most of the current Part II is inherited from the 2002 Law. The statute also carries the Luxembourg management company regimes (Chapter 15 for UCITS ManCos, Chapter 16 for managers of Part II and other UCIs) and the depositary rules.
Key provisions
| Provision | What it says | The practical point |
|---|---|---|
| Who can invest | Both Part I (UCITS) and Part II funds may be offered to the public, including retail. This is the line that separates the UCI Law from the well-informed-investor regimes (SIF, SICAR, RAIF). | Retail-facing is the whole point — and the price is the heaviest rulebook of the LU vehicles. If your investors are all professional, a SIF/RAIF is usually the lighter route. |
| Eligible assets (UCITS) | A UCITS may invest only in the closed list in Article 41 — transferable securities and money-market instruments on a regulated market, units of other UCIs, deposits, and financial derivatives. | The eligible-asset list is exhaustive, not illustrative. Anything off-list (physical property, commodities direct, loans originated by the fund) forces you out of UCITS and into Part II or an AIF wrapper. |
| Diversification (UCITS) | Chapter 5 sets the 5/10/40 issuer-concentration limits (max 5% of assets in one issuer, raisable to 10% provided such holdings above 5% do not together exceed 40%), plus a 20% cap on a single other UCI (Article 46). | The 5/10/40 rule is the definitional heart of UCITS risk-spreading — breach it and you are not running a UCITS, whatever the prospectus says. |
| Minimum net assets | Net assets may not fall below EUR 1,250,000, to be reached within six months of authorisation (Article 23 for the FCP; the equivalent applies to the SICAV). | A hard floor, time-boxed. Seed capital and a credible ramp plan are a launch precondition, not a nice-to-have. |
| Legal forms | A contractual common fund (FCP, no legal personality, run by a management company) or an investment company (SICAV / SICAF). May be a single fund or an umbrella with ring-fenced compartments. | The FCP/SICAV choice drives tax treatment and investor optics; compartments let one legal vehicle house several strategies without cross-liability. |
| Depositary + central admin | The fund must appoint a single Luxembourg depositary and keep its central administration in Luxembourg. The UCITS depositary duties were tightened by UCITS V and are elaborated in CSSF circulars. | Substance in-country is fixed cost. The depositary's oversight and asset-safekeeping liability is a genuine control, not a rubber stamp. |
| Management company | UCITS ManCos are authorised under Chapter 15; managers of Part II / other UCIs under Chapter 16. Authorisation and organisation are detailed in CSSF Circular 18/698. | The ManCo carries the governance, risk and delegation obligations — read the UCI Law together with 18/698 when you scope a management-company set-up. |
| Subscription tax | Annual taxe d'abonnement of 0.05% of net assets, dropping to 0.01% for money-market funds and certain institutional share classes, with statutory exemptions; payable quarterly. No corporate income tax on the fund itself. | The 0.05% NAV levy (0.01% for MMFs) is the fund's headline tax cost — confirm which rate and which exemptions apply before you model fees. |
| CSSF authorisation | The fund is authorised by the CSSF before launch, entered on the official list, and supervised on an ongoing basis. | Product-level authorisation adds weeks to the timeline versus an unsupervised RAIF — plan the approval runway in. |
Amendment history
| Date | Instrument | What changed |
|---|---|---|
| 17 Dec 2010 | Loi du 17 décembre 2010 | Transposed the UCITS IV Directive (2009/65/EC) and recast the Law of 20 December 2002 — added the management-company passport, master-feeder structures, cross-border UCITS mergers and the KIID. In force 1 January 2011. |
| 12 Jul 2013 | AIFM Law of 12 July 2013 | Transposed AIFMD; aligned Part II UCIs that are alternative investment funds with the manager-level regime (authorised AIFM, depositary and reporting duties). |
| 10 May 2016 | UCITS V transposition (Law of 10 May 2016) | Reshaped the UCITS depositary regime (eligible entities, delegation, strict asset-safekeeping liability) and introduced remuneration rules and harmonised sanctions. |
What it works with
The UCI Law is the mainstream statute in Luxembourg's fund toolkit; the specialised laws are best understood by contrast with it. Where the 2010 Law is retail-facing and prescriptive, the SIF Law and RAIF Law trade the retail passport for investment freedom and a well-informed-investor base, and the SICAR Law is the risk-capital vehicle with no risk-spreading requirement at all. For a Part I fund the governing EU instrument is the UCITS Directive; for a Part II fund that is an AIF, the AIFM Law governs the manager. On the supervisory-doctrine layer, read the UCI Law together with CSSF Circular 18/698 (ManCo authorisation and organisation) and the risk-management circular CSSF 11/512. For a cross-border view, the domicile comparison sets Luxembourg against Ireland and the Channel Islands.
The gotcha: "Part I" and "Part II" are not tiers of the same product — they are different regulatory animals. A Part I UCITS carries the EU retail passport but is boxed in by the eligible-asset list and the 5/10/40 limits; a Part II fund can hold what a UCITS cannot, but loses the passport and, if it is an AIF, drags in the full AIFM Law at manager level. Choosing the wrong Part is not a tweak — it changes who you can sell to, across which borders, and which rulebook governs your manager. And the eligible-asset list bites at the edges: a single off-list holding (a direct property line, an originated loan, a physical commodity) is enough to disqualify a fund from UCITS status.
To verify
- The precise article numbers for the 5/10/40 issuer-concentration limits and the SICAV minimum-capital provision (this page cites Chapter 5 and Article 23/FCP; confirm the SICAV article against the coordinated text before relying on a specific number).
- Current subscription-tax exemptions (e.g. pension-pooling and certain fund-of-fund layers) — the 0.05% / 0.01% headline rates are settled, but the exemption list is amended periodically; check the live taxe d'abonnement guidance.