How to Set Up a CSSF-Regulated AIFM or UCITS Management Company in Luxembourg

Luxembourg Is Europe’s Premier Fund Management Hub

Luxembourg is widely regarded as the global leader for cross-border fund distribution, serving thousands of investment funds across:

• Private equity
• Venture capital
• Real estate
• Hedge funds
• Infrastructure
• UCITS retail funds
• Institutional mandates

With world-class fund structures (RAIF, SIF, SICAV, SICAR, AIF), robust legal frameworks, and the highly respected CSSF (Commission de Surveillance du Secteur Financier) as regulator, Luxembourg is the preferred destination for:

• Fund managers targeting global distribution
• EU AIFMs seeking passporting rights
• UCITS Management Companies (ManCos)
• Multi-jurisdiction asset managers
• Umbrella fund platforms

This guide explains exactly how to set up a CSSF-regulated AIFM or UCITS Management Company, including the licensing steps, governance, capital, and operational readiness requirements.

1. Understanding the Types of Management Companies in Luxembourg

Luxembourg offers two main regulatory regimes for fund management:

1.1 AIFM — Alternative Investment Fund Manager

AIFMs manage:

• Private equity funds
• Venture capital funds
• Hedge funds
• Real estate funds
• Debt funds
• Infrastructure funds
• Professional/Institutional AIFs

AIFMs come in two variants:

A. Full-Scope AIFM

• EU passporting rights
• Mandatory depositary
• Independent risk management
• Annex IV reporting
• Liquidity/stress testing (for certain funds)
• Valuation rules

B. Sub-Threshold / “Registered” AIFM

Applicable if:

• AUM < €100m leveraged or AUM < €500m unleveraged

Pros:

• Lower obligations
• No full Annex IV
• No depositary required (depending on structure)

Cons:

• No AIFMD passport unless upgraded

1.2 UCITS Management Company (ManCo)

UCITS ManCos manage:

• Retail UCITS funds
• Regulated liquid strategies
• Multi-asset vehicles
• Cross-border distribution funds

Key features:

• Passporting across the EU
• High governance & operational standards
• Strong investor protection rules

2. Fund Structures Used with AIFM/UCITS Licenses

Common structures include:

AIF Structures

• RAIF (Reserved Alternative Investment Fund)
• SIF (Specialised Investment Fund)
• SICAR (Investment Company in Risk Capital)
• SICAV (Open-ended) / SICAF (Closed-ended)
• Partnership Structures (SCSp, SCS)

UCITS Structures

• UCITS SICAV
• UCITS umbrellas with multiple sub-funds

Luxembourg is the world leader in UCITS distribution.

3. CSSF Licensing Process for AIFM or UCITS ManCo

The licensing process is thorough and documentation-heavy, but highly organised.

Step 1: Define Scope of Activities

You must specify whether you will perform:

• Portfolio management
• Risk management
• Administration
• Distribution
• Marketing passport use
• Additional MiFID services (optional)

Step 2: Prepare and Submit the Application Dossier

The application pack is extensive and typically includes:

3.1 Regulatory Business Plan

Covering:

• Investment strategies
• Target investor base
• Risk management methodology
• Portfolio management policy
• Outsourcing arrangements
• Liquidity management
• Valuation procedures
• Conflicts of interest prevention
• Compliance & governance model
• IT systems & infrastructure

3.2 Policies & Procedures

Mandatory:

• Risk management
• Compliance & internal control
• AML/CFT
• Conflicts of interest
• Business continuity & cybersecurity
• Remuneration policy (AIFMD/UCITS aligned)
• Outsourcing policy
• Distribution & marketing strategy

3.3 Substance & Governance Documents

Including:

• Board composition
• Conducting Officers (minimum 2, Luxembourg-based)
• Fit & proper documentation
• Organizational chart
• Segregation of duties

3.4 Capital Documentation

• Proof of regulatory capital
• Forecasted financials
• Business planning

Step 3: CSSF Review & Questions

CSSF typically initiates:

• Several rounds of questions
• Clarifications on governance, risk, controls
• IT infrastructure reviews
• Outsourcing justifications

Step 4: Pre-Authorization Meeting

May include:

• Conducting Officers
• Risk/compliance officers
• Board members
• Key personnel

CSSF places strong emphasis on substance.

Step 5: Authorization Granted

Once the firm demonstrates:

• Sufficient substance
• Adequate capital
• Organizational robustness
• Technology & reporting readiness

You receive AIFM/UCITS authorization.

4. Capital Requirements

For AIFMs

• Minimum: €125,000
• Additional: 0.02% of AUM above €250m (capped)
• Must maintain Professional Indemnity Insurance (PII)

For UCITS ManCos

• Minimum: €125,000
• Additional capital based on AUM

Liquidity Requirements

Ongoing liquidity monitoring required.

5. Substance Requirements (Key in Luxembourg)

CSSF expects real substance:

• Conducting Officers located in Luxembourg
• Internal control functions independent
• On-site governance
• Board with Luxembourg representation
• Risk & compliance oversight
• Documented decision-making

Luxembourg has zero tolerance for “letterbox” entities.

6. Post-License Obligations: What AIFMs/ManCos Must Do Before Going Live

Just like FCA, CySEC, DFSA and others — CSSF requires post-authorization preparation:

Operational Readiness Includes:

• Risk management implementation
• Valuation framework & pricing models
• Portfolio management system setup
• Data aggregation from custodians/admins
• Compliance & AML monitoring tools
• Regulatory reporting setup
• Annex IV reporting capability (AIFMs)
• UCITS risk limits calculations (ManCos)
• Document vault + audit trail
• Governance committee setup
• Onboarding & investor KYC
• Fee models, calculation engine
• Internal registers (complaints, conflicts, breaches)

Only after these controls are operational can the firm begin managing funds.

7. Reporting Requirements: CSSF Ongoing Filings

For AIFMs

• Annex IV reporting (quarterly/semi-annual/annual)
• AIFMD risk reporting
• Leverage reporting
• Annual financial statements
• Compliance/AML reports

For UCITS ManCos

• UCITS financials
• Risk data
• KIIDs/KIIDs updates
• Depositary oversight reports

8. Technology Stack Required by CSSF-Regulated Firms

CSSF places heavy emphasis on:

• ‍Portfolio management system (PMS) ‍
• Risk management engine ‍
• Liquidity management ‍
• Performance analytics ‍
• NAV oversight tools ‍
• Trade capture & compliance ‍
• Investor onboarding & AML ‍
• Document vault ‍
• Data aggregation from custodians & fund administrators ‍
• Fee engine
• ‍Annex IV reporting data prep ‍
• Governance & internal controls

Operational tech is essential — CSSF expects strong IT governance.

9. Why Luxembourg AIFMs & ManCos Choose Reluna

Reluna provides an integrated operational platform for CSSF-regulated firms.

Reluna includes:

• Multi-custodian data aggregation
• Portfolio management system
• Performance & exposure analytics
• Investor onboarding + AML/KYC
• Document vault + audit trail
• Compliance workflows
• Fee & NAV oversight tools
• Annex IV reporting data preparation
• Multi-fund / multi-entity support
• White-labeled client/investor portal

Why this matters:

• Reduces reliance on multiple systems
• Supports Luxembourg’s strong governance expectations
• Ensures clean, reconciled data for Annex IV
• Strengthens risk and oversight functions
• Ideal for RAIF/SIF/SICAV umbrellas with multiple sub-funds

Reluna helps firms scale internationally while meeting strict CSSF requirements.

10. Luxembourg Licensing Timeline (Typical)

• Pre-Application | 1–3 months
• CSSF Review | 6–12 months
• Authorization | ~12 months
• Post-License Setup |1–3 months
• Go-Live | Month 13–16

11. Common Pitfalls Luxembourg Applicants Should Avoid

• Underestimating substance requirements
• Weak risk management framework
• Incomplete valuation policy
• Lack of IT governance documentation
• Poor outsourcing oversight
• No Annex IV reporting structure
• Inadequate operational infrastructure

12. Next Steps: Launch Your Luxembourg AIFM or UCITS ManCo Successfully

Setting up a CSSF-regulated entity requires strong governance, robust risk management, and operational excellence.

Reluna helps firms:

• Build an operationally ready infrastructure
• Implement risk, reporting, and PMS workflows
• Streamline investor onboarding
• Support multi-fund/multi-jurisdiction setups
• Prepare Annex IV and UCITS reporting data

👉 Request a Reluna demo to see how we help AIFMs and UCITS ManCos scale efficiently and compliantly.