Fiddich Review Centre
Alternative Investment

CSSF Issues Circular On UCI Administrators: What To Know? – Fund Management/ REITs

The Luxembourg Financial Sector Supervisory Authority (the
CSSF) recently published Circular 22/811 (the
Circular) on the authorisation, governance and
internal organisation of administrators of undertakings for
collective investment (UCIs).

This Circular, published on 16 May 2022, replaces Chapter D of
Circular IML 91/175 and provides detailed guidance on UCI
administration activities, other organisational requirements and,
in particular, clarifies delegation models.

In this briefing, associate Caroline Lecomte and counsel
Virginie Gonella from our Investment Funds team in Luxembourg
summarise the Circular’s key points and what they mean for fund
managers and service providers.


The Circular applies to all entities carrying out the activity
of a UCI administrator for regulated 1 and non-regulated
2 UCIs. The activity may be carried out partially, ie
the entity may perform only one of the three main functions of the
administration activity (the registrar, the NAV calculation and
accounting, or the client communication function).

Eligible entities

  • Management companies incorporated under Luxembourg Law and
    subject to Chapter 15 of the 2010 Law 3

  • Management companies incorporated under Luxembourg Law and
    subject to Chapter 16 of the 2010 Law

  • Alternative investment fund managers (AIFMs)
    authorised under Chapter 2 of the 2013 Law4

  • Foreign investment fund managers pursuing the activity of UCI
    administrator for UCIs established in Luxembourg

  • Regulated Luxembourg UCIs (for themselves only)

Certain external service providers may also perform UCI
administration activity: credit institutions, Luxembourg branches
of foreign law credit institutions (client communication only),
registrar agents, client communication agents (client communication
only) and administrative agents (NAV calculation and client
communication). 5


Where the activity of UCI administration is wholly or partially
delegated to one or more entities, the UCI itself or the investment
fund manager (IFM) must monitor the delegate(s)
and ensure coordination and supervision of the UCI administration

Administration activity

Appointment: authorisation requirements

Each UCI administrator appointment is subject to prior CSSF
authorisation, whether through a complete sectorial authorisation
or through the defined administrative procedure. Before acting as
such, it must perform a self-assessment on whether carrying out
this activity would be permitted by law.

While registrar agents, client communication agents and
administrative agents are authorised by law to perform all or some
UCI administration functions (provided they remain compliant with
sectorial legislation requirements), other entities set out in the
previous section need to apply for authorisation under this
Circular. The application file needs to be submitted in electronic
format, and must contain detailed information listed in Annex A to
the Circular.

The authorisation file needs to be kept up to date. Any
substantial changes to the initial application is subject to prior
CSSF authorisation (eg substantial changes to its operational
model), or has to be notified in advance to the CSSF (eg aspects of
delegation of critical or important operational tasks).

On an annual basis, the UCI administrator must submit to the
CSSF significant information on its business activity and
resources, using the template provided for in Annex B to the

Main functions

The UCI administration activity is split into three main

  1. registrar function – all tasks necessary for the
    maintenance of the UCI’s unit/shareholder register, reception
    and execution of orders relating to subscriptions and redemptions,
    income and liquidation proceedings’ distribution

  2. NAV calculation and accounting function – legal and fund
    management accounting services, valuation and pricing (including
    tax returns)

  3. client communication function – production and delivery
    of the confidential documents intended for investors

Only one service provider may be designated for a specific
function. In the case of multiple compartments, identical functions
must be performed by the same provider. The UCI or the IFM may
decide to perform the functions themselves, rely on delegates, or
they may appoint a third party for certain activities.

In the Circular, the CSSF has provided a minimum scope of
various tasks which need to be performed in carrying out the UCI
administration activity:

  • legal and fund management accounting services

  • customer inquiries

  • valuation, pricing, and tax returns

  • regulatory compliance monitoring, including

    • maintenance of the UCI’s unit/shareholder register

    • distributions

    • issues and redemptions

    • contract settlements

  • record keeping 6

Roles and allocation of responsibilities must be precisely
agreed between the UCI or its IFM and the UCI administrator. For
instance, compliance monitoring of the investment policy, or a part
of it, may be performed by the UCI administrator on a delegation
basis, in which case the monitoring scope and its restrictions must
be contractually agreed and non-compliance notification procedures
put in place. Notification and escalation procedures, alongside
corrective measures, need to be established for NAV breaches and
errors, for which the UCI administrator must implement detection
and assessment procedures.

The UCI administrator also needs to ensure adequate
notifications are sent to the CSSF (or another national competent
authority) by the UCI, the IFM or the UCI administrator itself. It
is also the responsibility of the UCI administrator to notify the
CSSF if it becomes aware that the UCI or its IFM do not fulfil
their respective legal, regulatory, contractual or regulatory
notification obligations.

Registrar function

This function encompasses all aspects of the maintenance of the
unit/shareholder register. The Circular lists minimum operations
which make up the registrar function (eg execution of subscriptions
and redemptions orders, their reconciliation with cash flows,
income distribution etc 7).

Execution of subscriptions and redemptions can be entrusted by
the UCI or its IFM to a foreign intermediary as an authorised
financial agent or representative, but must not restrict the
ability of the investor to deal directly with the UCI, its IFM or
the UCI administrator.

The registrar function also includes monitoring compliance with
requirements related to professional and/or well-informed
investors. For investor relations, the UCI administrator is
responsible for any oversight of data confidentiality.

NAV calculation and accounting function

Complete recording of UCI’s transactions in compliance with
applicable legal and contractual requirements as well as accounting
principles must be available at all times to the UCI administrator.
The entity in charge of the NAV calculation and accounting function
must prepare adequate valuations, calculations and publications
8 for these purposes.

The UCI administrator is in charge of the correct booking of any
entries in accordance with UCI rules, and applicable accounting and
valuation policies – it being noted that the sole compilation
of available information is insufficient; reliability of
information received has to be critically assessed and unusual
movements identified. For that purpose, the CSSF has listed minimum
control functions that the UCI administrator has to perform on top
of valuation and accounting.

Books and records need to be kept in such a manner that any
changes in balances are reconciled from one NAV date to another,
and all assets and liabilities remain identifiable at all times,
for each compartment and/or share class separately.

The UCI administrator remains in charge of the final NAV
production and validation notwithstanding any delegation.

Client communication function

This function comprises of various elements of confidential
correspondence with investors (dispatch of offering documents,
financial reports, drawing up subscription and redemption notes

As with NAV calculation and accounting, the UCI administrator
must maintain supervision over the dispatch of confidential
documentation and implement adequate corresponding control

Organisational arrangements

A written contract must be concluded between the UCI
administrator and the UCI and/or the IFM, (as applicable). In this
respect, the Circular lists minimum elements which the contract
must include (eg services, function(s) and/or task(s) provided,
rights and obligations of each party, confidentiality obligations
applicable to the parties, etc 9).

A right of access must be granted by the UCI administrator upon
simple request of the UCI, the IFM, the statutory auditor of the
UCI, the liquidator, the CSSF or any other national competent
authority of a UCI, where applicable.

Approval of new business relationships and new

When approving new business relationships or services, the UCI
administrator must follow a documented risk acceptance policy and
decision-making process, perform an adequate risk assessment and a
formalised and documented due diligence, and follow sound and
prudent management principles, promoting a sound risk culture.

Management of conflicts of interest

The UCI administrator is in charge of the establishment,
implementation and maintenance of an effective conflicts of
interest policy covering the specifics of the UCI administration
business line. The policy setting out the procedures relating to
the management of the conflicts of interest must be set up in
writing, appropriate to the organisation and scale of the business
and regularly updated.

In addition, the UCI administrator must maintain a record of the
types of activities and clients in which a conflict of interest
entailing a material risk of damage to the interests of one or more
UCIs or its investors has arisen or, in the case of an ongoing
activity, may arise. The Circular lists minimum elements which the
record must include (eg description of the conflict of interest,
identification of the persons or units concerned by the conflict of
interest, etc 10).

Relationship with the depositary

It is essential that the UCI administrator and the depositary
act independently from each other. When the functions are performed
by the same entity, a functional and hierarchical separation
between the business line should be implemented.

The UCI administrator and the depositary must make available to
each other all the relevant information to carry on their
respective duties. For this purpose, the UCI administrator and the
depositary must agree on procedures which should be documented and
formalised in an agreed-upon operating memorandum.

Access and retention of the core UCI documentation,
including in case of change of UCI administrator

The UCI administrator must keep all accounting and other
documents which constitute the core UCI documentation and which are
necessary to the proper performance of its obligations.

The UCI administrator must ensure that the essential documents
necessary for the NAV calculation, are (i) stored for a period of
10 years after the end of the relevant accounting period, and (ii)
made available upon request to the statutory auditor of the UCI and
the CSSF.

In the case of a change of the UCI administrator, the current
and future UCI administrators and the UCI or its IFM, when
applicable, must agree upon a transfer process, which should be

Human resources

The UCI administrator must at all times have sufficient
substance and resources. The staff must be sufficient in number and
skills, taking into account the volume and complexity of UCIs

ICT resources, business continuity and disaster recovery

The UCI administrator must comply with the information and
communication technology (ICT) requirements under
Luxembourg law. This implies that the UCI administrator has the
necessary and appropriate technical resources for the performance
of its activities.

Every UCI administrator must establish, implement and maintain
an adequate business and service continuity policy to ensure the
recovery of its activities and services after a disaster (within an
adequate timeframe with regard to the NAV calculation frequency)
and provide regular testing of those plans. In this context, the
UCI administrator shall define and implement data and system backup
and restoration procedures to ensure that they can be recovered as

Delegation models

One or more UCI administration tasks may be delegated to third
parties, subject to applicable sectorial legislation. It is
important to note that the delegation of tasks does not relieve the
UCI administrator of its responsibilities.

The delegation must be clearly detailed in a dedicated written
contract. The Circular lists minimum elements which must be
included in the contract (eg services, assigned function(s) and/or
task(s), rights and obligations of each party, confidentiality
obligations applicable to the parties, etc 11). In
addition, the UCI administrator must draft, implement and maintain
adequate procedures and processes to efficiently monitor the
delegated activities.

In the case of delegation of accounting function and NAV
calculation, the UCI administrator must control and validate the
NAV calculated by the delegate. In performing its general
supervisory function on its delegates, the UCI administrator must
have access to all relevant data, which must be provided with
immediate and unlimited editor access to the delegates’ related
systems, and to the essential documentation of the UCIs at all

The size of the staff performing the UCI administration must be
appropriate given, for example, the complexity and number of NAVs
administered by the UCI administrator, and must also be
proportionate to the size of the team providing support to the

When a UCI administrator intends to assign a critical or
important operational task to another party, the prior
authorisation by the CSSF is replaced by a notification. Such
notification is to be submitted at least three months before the
contemplated delegation comes into effect.


1. UCITS, Part II UCIs, SIFs and SICARs

2. UCIs established in Luxembourg that do not qualify as
regulated UCIs

3. Law of 17 December 2010 relating to undertakings for
collective investment, as amended

4. Law of 12 July 2013 on alternative investment fund
managers, as amended

5. Authorised under and defined by the Law of 5 April
1993 on the financial sector, as amended

6. This list is further detailed in point 12 of the

7. Minimum tasks set out in point 20

8. Minimum tasks set out in point 27

9. Minimum elements set out in point 38

10. Minimum elements set out in point 58

11. Minimum elements set out in point 38 and point

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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