Luxembourg’s parliament needs to make sure that its proposed update for the Grand Duchy’s law on investment funds will provide more clarity on how fund redemptions are to be treated by its national regulator CSSF, the country’s top advisory body has said.
The Council of State, which advises the parliament on legislative proposals about to be debated, on Tuesday issued its commentary on the proposal, known as Bill 8183. The report underlined the need for clarity on the topic of suspensions of fund redemptions.
The legal update would authorise CSSF to suspend redemptions when the supervisor feels funds no longer meet their obligations under the fund’s statutes. The Council called for explicit explanations regarding the purpose, duration, and potential withdrawal of regulatory approval during such suspensions, and said it questions the purpose of such a suspension.
“The Council of State questions the purpose of such a suspension,” it said in its review. “Is the suspension a temporary measure aimed at compelling the fund to comply with the legislative, regulatory, or statutory provisions that are no longer respected? If so, the Council of State recommends clarifying the modalities of the suspension power, particularly by specifying the possible duration of a suspension and the timing of the withdrawal of authorization.»
Bill 8183 is due to be discussed in the parliament’s financial affairs committee during the coming weeks. People familiar with Luxembourg law said the parliament will attempt to adopt the proposal before the summer holidays in August. Adoption after the summer holidays is unlikely, they said, given that the country faces general elections on October 8, with campaigning expected to go into full swing during September.