The CSSF clarifies its position on unlaunched or inactive sub-funds

Launch it or lose it?

On 9 July 2012 the CSSF published CSSF Circular 12/540 (the “Circular”) dealing with unlaunched sub-funds, sub-funds waiting to be reactivated and sub-funds in liquidation. The Circular applies to UCITS and SIFs alike.

The purpose of the Circular is to provide clarification on information to be transmitted to the CSSF in situations where:

– a sub-fund remains unlaunched i.e. it has been approved by  the CSSF but has not yet been launched after the approval, or
– a sub-fund is pending reactivitation i.e. a sub-fund has become inactive after launch, or
– a sub-fund is in liquidation.

A sub-fund will be considered to be unlaunched where approval by the CSSF is not followed promptly by an issue of its units. A sub-fund will be considered to be pending reactivation where it had started issuing units but has become inactive after a total redemption of its units, and such redemptions are not promptly followed by the reactivation, sale and/or new issue of its units.

Where a sub-fund is still considered unlaunched or pending reactivation within a period of 18 months, the sub-fund is not to be included in the prospectus and the CSSF will consider any previously proposed launch of the sub-fund as abandoned. In cases where such a sub-fund is still included in the prospectus, it should be removed from the prospectus at its next update. Such an update should take place no later than within 6 months after the expiry of the 18 month period. References to any such sub-fund should also be removed from marketing materials.

Where the board of directors of an investment company or a management company decide to liquidate a sub-fund, details of the sub-fund must be removed from the prospectus of the fund at its next update. A similar requirement applies where the board decide to close a sub-fund by making and distributing  all assets to investors as this is to be considered a liquidation. The update of the prospectus must take place no later than within 6 months from the date of the decision to liquidate.

All UCITS and SIFs are therefore required to complete a form and transmit it to the CSSF by email or use another reporting method authorised by the CSSF. The form to the CSSF should contain information relating to all (if any) sub-funds which have not been launched, all the sub-funds pending reactivation and sub-funds contained in the prospectus, but whose liquidation or closure have been decided or closed. 

The purpose of this exercise is to enable the CSSF to maintain up-to-date information in relation to the current situation as it relates sub-funds. At Laven we are of the view that, this now gives investment companies and management companies the opportunity to carry out an assessment of the sub-funds they manage that fall within the categories described above and make a decision as to the viability of launching or reactivating any sub-funds in existence.

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