Omnibus Law of 27 February


Omnibus Law of 27 February: Amendment to the Law of 17 December 2010 regarding Part II Funds

9 March 2018

Regulatory News Alert


The Omnibus Law of the 27 February introduced a much-awaited change for the UCI industry. It modifies and amends the Law of 17 December 2010 ("UCI Law") with effect from 5 March 2018. The modification was delayed due to intense exchanges on another provision of the Omnibus law the change to article 41 (please refer to the alert here).

The changes introduced concerns about the completion of the post-UCITS V regulatory transition regarding depositaries for undertakings for collective investment governed by the Part II of the UCI Law ("Part II Funds"). The change remedies a potential source of goldplating for these part II funds that would have otherwise had to apply a full-fledged UCITS V depositary regime.

The law requires that for such Part II funds that are not to be offered or prohibit the offer to retail investors in Luxembourg, be they managed by an AIFM or a non-EU AIFM, the fund must appoint one depositary that is subject to the AIFMD depositary rules.

The UCITS V depositary regime and the AIFMD depositary regime differ on two aspects important for some of Part II funds; the AIFMD depositary regime allows:

  1. to contractually agree the transfer of liability from the depositary to a sub-depositary (i.e., to a broker acting as sub-depositary) and
  2. to extend possibilities for rehypothecation.

The amendment is of particular relevance for Part II Funds relying on strategies that imply the recourse to a prime broker acting as sub-depositary.

The Law punctuates the divide between UCITS, AIF and Part II funds; it should be noted that following the EMSA Opinion of Summer 2017 that a new twist should intervene in the fund depositary regulation to align segregation practices across funds and other regulations.

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