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A German sub-threshold AIFM may market an AIF in Luxembourg to investors.

"Marketing" is defined under article 1(9) of the Luxembourg law of 12 July 2013 (the "Law") on alternative investment fund managers as "a direct or indirect offering or placement, at the initiative of the AIFM or on behalf of the AIFM, of units or shares of an AIF it manages, to or with investors domiciled or with a registered office in the Union".

Marketing within the meaning of the Law takes place when the AIF, the AIFM or an intermediary on their behalf seeks to raise capital by actively making units or shares of an AIF available for firm purchase by a potential investor.

The CSSF has provided guidance on marketing in its AIFMD FAQs last updated on 27 September 2019 (the "CSSF FAQs"; point 21 for more details).

The CSSF has no objection to the fact that sub-threshold EU AIFMs („Registered EU AIFMs") market AIFs they manage in Luxembourg pursuant to local private placement rules (registered EU AIFMs can not benefit from the EU passport as foreseen by the Directive 2011/65/EU on Alternative Investment Fund Managers (the „AIFMD")).

When conducting marketing activities in Luxembourg, the sub-threshold AIFM must ensure that the marketing activities do not fall within the definition of an offer to the public and meets the private placement exemptions set out, among other in (i) Art. 1 Sec. 4 of the Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, as amended, if any, and (ii) in Article 4 of the Luxembourg law of 16 July 2019 on prospectuses for securities, as amended, if any, in the case of a closed-ended AIF.

According to Art. 4 the obligation to publish a Prospectus does not apply to public offers of securities:

  1. which are not subject to notification in accordance with Art. 25 of Regulation (EU) 2017/1129
  2. whose total amount in the European Union is less than EUR 8,000,000, this limit being calculated over a 12-month period

There are no obligations as such, linked to the AIFMD, pertaining to the fact that the sub-threshold AIFM is marketing its AIF in Luxembourg.

It is nevertheless required to look at the requirements imposed by the Home Country Regulator of the registered AIFM (i.e. Germany in this case).

As far as Luxembourg is concerned as a country of marketing, in the context of a German registered AIFM, please note that no Annex IV AIFMD reporting needs to be performed towards the CSSF directly.

No fees are levied by the CSSF as there is no specific notification to be done towards the CSSF as of today. As the AIF will not be notified for marketing in Luxembourg by the German registered AIFM, the Grand-Ducal Regulation of 21 December 2017 relating to the fees to be levied by the CSSF is not applicable.


A German sub-threshold AIFM may, prior to marketing the AIF in Luxembourg, conduct market sounding activities / pre-marketing to gauge investor interest among potential investors in Luxembourg.

The CSSF has provided guidance on marketing in its FAQ (see especially point 21 b and c). The term pre-marketing is not used but by explaining what marketing means, the CSSF implicitly draws a line between marketing and pre-marketing.
The CSSF has confirmed that providing draft documents to a prospective investor does not constitute a marketing activity as long as the draft documents cannot be used by the investor to formally subscribe or commit to subscribe shares/interest in the AIF.

Against this background, the following activities should qualify as pre-marketing:

  • Sending a communication to investors in the existing previous fund informing them, as part of a general update on that fund, of the intention to raise a successor fund
  • Providing a flipbook with strategy, team and track record.
  • Providing (i) a detailed term sheet without a PPM, LPA or subscription agreement or (ii) providing a draft PPM that on its face is plainly draft and bears a legend indicating that no investment is solicited or possible, as long as no material on the specific fund is provided which can be used to formally subscribe or commit to subscribe for shares or units of the AIF.
  • Providing a PPM, LPA, subscription agreement or similar formal offering document in substantially final form, so long as these documents cannot be used to formally subscribe or commit to subscribe for shares or units in the AIF. For the avoidance of doubt the presentation of such documents at the initiative of the AIF or the authorised AIFM shall no longer allow the benefit of reverse solicitation by the investors to whom they have been presented.

Reverse Solicitation

Pursuant to the CSSF FAQ the reverse solicitation consists in providing information regarding an AIF and making units or shares of that AIF available for purchase to a potential investor following an initiative of that investor (or an agent of that investor) without any solicitation made by the AIF or its AIFM (or an intermediary acting on their behalf) in relation to the relevant AIF.

The CSSF has confirmed that reverse solicitation applies where:

• The investor (or its agent) has solicited the AIFM or the AIF on its own initiative with the intention of investing in (or receiving information regarding) AIF(s) managed by such AIFM; and

• neither the AIFM, nor the AIF (nor any intermediary acting on their behalf) has solicited the investor to invest in the relevant AIF.

The CSSF places the burden of proof of the aforementioned components on the AIFM. The AIFM can demonstrate this by means of a written confirmation from the investor that the investor has decided on its own initiative to invest in (or, initially, request for information regarding) the relevant AIF.

The distribution to prospective investors by an AIFM of draft documents in relation to AIFs it manages shall not longer allow the benefit of reverse solicitation by the investors to whom they have been distributed.

Please be advised that reverse solicitation does not have to be relied on in terms of fund raising. It is not considered as a way to market or distribute an AIF.

Important Note

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. The above information reflects the legal situation as of February 10, 2020. Before marketing a fund into the respective country, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Arendt & Medernach