Open a SICAR in Luxembourg

Luxembourg is currently the largest global financial center in the European Union and the second largest in the world, according to statistics. The main reasons Luxembourg is recognized as one of the greatest global financial centers are its legal and tax systems which combine the versatility of business structures with an attractive taxation regime. These two attributes have led to the increase in the ranks of foreign entrepreneurs setting up investment funds in the Grand Duchy. There are two types of investment funds one can establish in Luxembourg:

• -          the specialized investment fund (SIF);
• -          the risk capital investment fund (Société d’investissement en capital à risque, SICAR).

The latter was introduced in the Luxembourg legislation in 2004.

What is a Luxembourg SICAR?

Risk capital investment funds were enabled in order to offer personalized vehicles for raising private equity and venture capital. The Luxembourg SICAR will mainly invest is assets by contributing to the capital of companies to be launched, undergoing expansion or preparing to be listed on the Stock Exchange. Because the investment made represents a risk, the SICAR must abide by two rules:

• -          it must involve a high risk;
• -          it must have the intention of helping a company with its development plans.

However, there are no rules with respect to where in the company the capital must be injected. Our Luxembourg lawyers can provide you with more information about the legislation related to SICARs.

How to set up a SICAR in Luxembourg

The risk capital investment company may be registered under one of the following forms:

• -          partnership limited by shares;
• -          limited partnership;
• -          special limited partnership;
• -          private limited company;
• -          public limited company;
• -          cooperative under the form of a public limited company.

The minimum share capital of the Luxembourg SICAR will depend on the type of structure selected, but it must reach 1 million euros within the first 12 months after the authorization. SICARs will usually have a determined lifespan. Also, this type of entity is only available for qualified investors and will be supervised by the Financial Regulator in Luxembourg.

If you need assistance in setting up a SICAR fund in the Grand Duchy, please contact our lawyers in Luxembourg.