Article Post on 11 September 2019

Guidelines on the RBO in Funds’ Industry

The law of 13 January 2019 establishing the register of beneficial owners was published in the Luxembourg Official Journal on 15 January 2019 and entered into force on 1 March 2019 (the “RBO Law”). An extension to the administrative deadline has been recently granted by the Luxembourg Business Register, and entities falling within its scope now have until 30 November 2019 to comply with their new obligations. In a nutshell, the creation of a register of beneficial owners (the “RBO”) aims at centralising personal information on the beneficial owner(s) of entities registered with the Luxembourg trade and companies register.

On 9 August 2019, a task force composed of the ALFI, ALCO, LuxReal and LPEA issued common guidelines to support Luxembourg players in the identification of beneficial owner(s) in the investment funds industry (the “Task Force Guidelines”). While remaining non-binding from a legal perspective, such document provides practical illustrations to determine who is/are beneficial owner(s) in various types of investment funds so as to complete RBO Law’s provisions.

As a preliminary remark, the liability for the identification of the beneficial owner(s) and the assessment related to it lies with the board (i) of the fund, (ii) of the management company of the fund if the latter is structured as a fonds commun de placement, or (iii) of the general partner if the fund is structured as a partnership.

Generally speaking, the Task Force Guidelines do not provide a one-size fits all approach, and the identification of the beneficial owner(s) of each fund must still be conducted on a case-by-case basis aiming at identifying the natural person(s) exercising effective control on the structure, following a three-step approach:

  • Step 1: identification of any natural person(s) exercising control through ownership who ultimately has(ve) a controlling interest in the entity, i.e. voting rights or shares, owned directly or indirectly (being understood that a percentage of 25% of control is considered as an indicative threshold); 
     
  • Step 2: if no one has been identified in step 1, identification of any natural person(s) exercising control through other means, i.e. power to appoint or remove a majority of the board of directors, the management, an executive committee etc.; and
     
  • Step 3: if no one has been identified in step 2, the beneficial owner(s) is(are) the natural person(s) who hold(s) the position of senior managing official(s).

For the avoidance of doubt, such reasoning shall be conducted at the sub-fund’s level in the presence of an umbrella fund.

The Task Force’s Work then provides six examples of identification of beneficial owner(s) depending on the distribution strategy of the fund: widely distributed funds, dedicated funds, exchange traded funds, funds with one or more main intermediairies, funds of funds and funds with limited distribution. 

_If you have any queries in relation to your obligations with respect to the RBO Law, then please do not hesitate to get in touch with a member of Wildgen’s Investment Funds practice group.

Share this content