CHEVALIER & SCIALES Luxembourg Law Firm

Newsflash Investment Management 28 August 2012

CSSF publishes circular on non-launched, inactive and closed fund compartments

Luxembourgs financial regulator, the Financial Sector Supervisory Authority (CSSF) published on July 9 a circular aimed at all Luxembourg undertakings for collective investment established under the funds law of December 17, 2010 (implementing the Ucits IV Directive) and the Specialised Investment Fund law of February 13, 2007.

Circular CSSF 12/540 aims to provide clarification regarding compartments of investment funds (but not classes of shares or units within them) that have been approved by the CSSF but not yet launched, or that have been launched but have become inactive or are in liquidation, and regarding information to be provided to the regulator in these cases.

According to the circular, a non-launched compartment is one for which approval by the CSSF is not followed promptly by the issue of its units. A compartment that has been launched may become inactive if all its units are redeemed, and this is not followed by prompt reactivation and new subscription and issue of units, leaving it without assets in the form of cash or securities.

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If the board of directors of an investment company or management company decides to liquidate a compartment of a fund, it must be removed from the funds prospectus or offering document at its next update, which must be no more than six months following the liquidation decision. The boards decision to close a compartment by realising and distributing all its assets to investors is considered a liquidation. A non-launched compartment or one awaiting reactivation that appears in the funds current prospectus or offering document may remain there, subject to the proviso that the compartment will have 18 months to be launched from the date of the CSSFs approval letter or the date on which it became inactive respectively. Existing compartments of either kind have 18 months from the date of publication of the circular.

If at the end of 18 months the compartment has not been launched or reactivated, if it is not contained in the funds current prospectus or offering document, the CSSF will consider its launch or reactivation to have been abandoned. If it is contained in the prospectus or offering document, it must be removed at the next update (no more than six months later) and the funds marketing documents amended.

Funds are required to keep the CSSF updated on the current state of approved compartments by completing a unique reporting form published on the regulators web site at http://www.cssf.lu/fileadmin/files/Formulaires/compartimentsinactifs.xls. The fund must

indicated any compartments that have been approved but not launched, compartments awaiting reactivation, or compartments that have been closed or whose closure has been decided, but that are still contained in the prospectus or offering document.

Funds without any compartments in these categories should indicate this on the form, which is to be e-mailed to comp@cssf.lu or transmitted to the CSSF via another approved electronic channel. Unique reporting forms must be submitted to the regulator by Monday, October 15, 2012 with information valid as of the end of September.

The unique reporting form is in addition to communication to the CSSF of financial information on approved and activated compartments required by Circulars IML 97/136 and CSSF 07/310, as amended by Circular CSSF 08/348.

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51, route de Thionville L-2611 Luxembourg Tel : +352 26 25 90 30 Fax : +352 26 25 83 88

For further information, please contact Olivier Sciales oliviersciales@cs-avocats.lu

www.cs-avocats.lu

This document is for information purposes only and does not constitute nor can it be relied upon as binding legal advice. Before implementing a transaction on the basis of the information included, it is highly recommended to seek detailed advice.

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