The SICAR has been introduced by the law of June 15, 2004. It has been amended by the following laws:
the law of July 10, 2005 on prospectus for securities
the law of October 24, 2008 improving the legislative framework of the Luxembourg financial centre
the law of December 19, 2008 revising the regime applicable to certain company acts as regards registration taxes, indirect taxes and securitization.
the law of December 18, 2009 concerning the audit profession
The SICAR does not constitute a new legal form of company. It should rather be regarded as a legal and tax framework applicable to an existing legal form.
The purpose of the SICAR is to invest in securities representing risk capital in order to enable the investors to the benefit of the result of the management of such assets in consideration for the risk incurred.
Investing in a SICAR is reserved to sophisticated investors know as “Well Informed Investors”. Well informed investors are
Any other investor who have declared in writing their status as an experienced investor and who meets the following conditions;
invests a minimum of EUR 125,000, or
benefits from an assessment by a credit establishment within the meaning of the Directive 2006/48/EC, an investment company within the meaning of the Directive 2004/39/EC, or a management company within the meaning of Directive 2001/107/EC certifying their expertise, their experience and their understanding to appreciate in an adequate manner investments in risk capital
Public Limited Company (SA)
Limited Company (SARL)
Limited partnership (SCS)
Partnership Limited by Shares (SCA)
Cooperative Company organized as a Public Limited Company (SCoSA)
Authorisation and supervision
The SICAR must be authorized by the Commission de Surveillance du Secteur Financier (hereafter referred as the “CSSF”) before being able to start its activities
The SICAR is subject to the supervision of the CSSF.
A SICAR shall be authorized only if the CSSF has approved its documents of incorporation (Private Placement Memorandum, articles of association, etc.) and the choice of the custodian bank.
The replacement of the custodian bank or of a director and the amendment of any documents in relation with the incorporation of the SICAR are subject to the prior approval of the CSSF.
Authorized SICARs shall be listed by the CSSF.
The directors of the SICAR must justify probing experience and be of good standing with regard to the contemplated investment.
The SA, SCA must have a minimum capital of EUR 31,000
The SARL must have a minimum capital of EUR 12,500
The subscribed capital, increased by an eventual share premium, shall not be less than EUR 1,000,000. This minimum must be reached within a period of 12 months from the authorisation of the company.
A variable share capital is possible.
SICARs are not obliged to create a legal reserve.
The Investment should qualify as “risky capital” such as for instance:
There is no legal restriction regarding the financing of the target companies. It can be through equity, mezzanine financing, subordinated bonds, etc.
There is further no obligation of risk diversification.
Investments in short term deposits is authorised but only for the purpose of investing in risk capital.
Legal and regulatory framework
The registered office and the head office of a Luxembourg SICAR must be situated in Luxembourg.
SICARs are subject to the general provisions applicable to commercial companies.
The custody of the assets of a SICAR must be entrusted to a custodian bank.
It must be a credit institution within the meaning of the law of 5 April 1993 on the financial sector.
The depositary must either have its registered office in Luxembourg or be established in Luxembourg if its registered office is in another State.
The depositary’s liability shall not be affected by the fact that it has entrusted all or some of the assets in its custody to a third party.
The promoter / initiator shall not have any minimum subscribed capital requirement and does not need to be authorized by the CSSF.
The central administration of the SICAR must be situated in Luxembourg.
The central administration can be entrusted to an external administrative agent (LuxGlobal Trust Services for instance).
The Central administration does not need to have a CCSF Licence known as Professional of the Financial Sector (“Professionnel du Secteur Financier”)
Offering document and annual report
Draft of a prospectus only upon incorporation or in case of modification of this latter or in case of a setting up of a new compartment.
Publication of an annual report together with the report of the statutory auditor within 6 months from the end of the period these reports refer to.
The SICAR is not required to establish a set of consolidated financial statements.
The annual accounts have to be reviewed by an approved statutory auditor (“réviseur d’entreprises agréés”).
Issue of new shares
The SICAR can issue new shares in accordance with the conditions and procedures set forth in the articles of incorporation.
Distribution of dividends to investors is not subject to any restrictions other than those provided in the articles of incorporation.
SICARs are not subject to any rules in respect of payment of interim dividends other than those contained in their articles of incorporation.
Net asset valuation
The valuation of the assets of the company is based on the fair value. Such value must be determined in accordance with the rules set forth in the articles of incorporation.
The SICAR may be incorporated with multiple compartments.
Each compartment may have its own investment policy, characteristics and distribution rules.
Each compartment is deemed to be a separate entity unless otherwise provided in the articles of association. A given compartment may be separately liquidated without leading to the liquidation of another compartment.
The rights of investors and of debtors concerning a compartment are strictly limited to the assets of that compartment unless otherwise agreed in the incorporation.
SICARs incorporated under the legal form of a Limited partnership are tax transparent.
Any income received is therefore automatically deemed attributed to the investors in proportion of their shares in the SICAR.
Taxation at the level of the investors depends on the tax rules applicable in their country of residence.
Distributions of profit made by the SICARs to its investors are not subject to any withholding tax.
SICARs incorporated under the legal form of an SCA, SA, SCoSA and SARL are fiscally opaque.
The result is therefore taxed at the level of the company and is not automatically attributed to the investors.
SICARs are subject to the Corporate Income Tax (CIT), Municipal Business Tax (MBT).
SICARs are exempt from Net Wealth Tax (NWT).
Income derived from securities as well as income resulting from the transfer, contribution or liquidation of such securities are tax exempt. Any losses realised or not derived on said transferable securities may not be deducted from the taxable base of the company.
Income arising from funds invested in non risky assets before being invested in such risky assets is exempted. However, this exemption is only applicable for a maximum period of twelve months preceding their investment in risk capital and where it can be established that the funds have effectively been invested in risk capital.
Dividends and liquidation proceeds distributed by the SICARs are not subject to any withholding tax.
The distribution of a SICAR are furthermore not in the scope of the Savings Directive at the time being.
Provision of management services to a SICAR are exempted from VAT.