| Newsletter : February 2020 Redomiciliation in Luxembourg for Cayman companies
Last Tuesday, the European Union has decided to include the Cayman Islands on its blacklist due to failing to provide appropriate measures in terms of tax abuse. The decision could have negative effects on Cayman structures having counterparties within the European Union. As a result, many promoters have started redomiciliating their SPV or fund to Luxembourg through a simple process which can be done within a matter of days. For instance, the Cayman company will transfer their seat of incorporation in Luxembourg in order to become an entity duly incorporated under Luxembourg law. The redomiciliation may give the fund or the SPV new advantages like the benefits of the double tax treaties; at least being established in a fully compliant environment. In order to find more about our redomiciliation services please contact us
Private equity tokenization
Tokenization is mainly associated with the process of converting some form of assets into a token that can be issued, transferred, recorded or stored on a blockchain system (Distributed Ledger). In the case of a private equity, the investor would be offered either : - to subscribe tokens which would represent a share of the private equity deal
- to subscribe tokens which are linked with the units or the shares of the private equity fund.
The tokenization of private equity fund brings various benefits such as: - Accessibility: Since the investments amounts and holding period could potentially be reduced, tokenization could broaden the investor’s base and bring more actors into the picture.
- Enhanced liquidity: Since the tokens can be traded, the investors will be able to liquidate their positions more easily than in the generic private equity setup. It might also result in easier ways to finance projects through raising capital.
- Better transparency: The token information will be display to public and can only be sold to entities having undergone a relevant KYC & AML as well as being recognize as sophisticated investors (or professional investors)
To find out more about tokenization and private equity please contact us
Securitisation of Intellectual property
Intellectual property and royalty management has become a Luxembourg specialty. Indeed Luxembourg is an extremely favorable legal and fiscal environment for artists, writers, companies, inventors and engineers to domicile their royalty income. The rationale for securitisation lies in the opportunity of obtaining the NPV (Net present value) of future income streams today, in transforming future income streams into an immediate cash flow. The SPV can issue several types of securities to finance the securitisation transaction: - Units : shares of the SPV
- Notes, Bonds issued by the SPV which yield a fixed interest rate generated by the income derived from the future flow of royalties for instance
- Certificate : asset backed securities which value and yield are variable and linked with the value of the future income stream linked to the intellectual property and the income it produces
- Token : security tokens issued on the blockchain (Distributed Ledger Technology) which are linked with the royalty stream generated by the IPRs
To find out more about this topic please request our brochure here
Hedge Fund – Artificial Intelligence
Hedge Funds are officially 70 years old, but despite their age they’re one of the most tech-driven investment setups on the market The past 5 years have come with a swathe of buzzwords and technologies, especially in the fintech space. Words like AI, Blockchain and Machine Learning have seeped into the standard discourse and the advancements they tout are actively being used (or at least tested) by many an investment company, fund or other undertaking. As such, we feel it is important to shed some light on how hedge funds came to be, what we can expect from them on the short term and what limits should be expected of the new wave of technology infusing them. Luxembourg offers a variety of regulated and non regulated structures that can be used to set up a hedge fund. These are: - SLP: Special Limited Partnership incorporated as an unregulated Alternative Investment Fund
- RAIF: Reserved Alternative Investment Fund - unregulated AIF managed by a supervised AIFM
- SIF: Specialised Investment Fund - multi-purpose regulated Vehicle for alternative investments managed by a supervised AIFM
- SICAR: Risk Capital Investment Company - regulated venture capital fund
- AMC: Actively Managed Certificate (regulated or unregulated)
For more information regarding the hedge fund solutions in Luxembourg, please ask for our new article on the topic here
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