On 2 October 2025, Luxembourg’s Chambre des Députés published Bill 8628, which implements AIFMD 2 (Directive (EU) 2024/927) and UCITS 6, into national law. The bill amends the current regulatory framework for Alternative Investment Fund Managers (AIFMs) under the UCI Law 2010 and for Undertakings for Collective Investment in Transferable Securities (UCITS) under the AIFM Law 2013, adopting EU provisions while adding Luxembourg-specific clarifications for the fund sector.  

Bill 8628: What’s new?

The reform updates Luxembourg’s framework for loan AIF origination, delegation, liquidity risk management, reporting and depositary. It ensures full alignment with the European regime while maintaining operational and structuring benefits for fund managers.  

1. Loan-Originating Alternative Investment Funds (LOFs)  

Bill 8628 introduces a harmonised EU regime for Loan-Originating Alternative Investment Funds (LOFs), imposing strict limits, including a maximum leverage cap of 175% of NAV for open-ended LOFs and 300% for closed-ended and loans originated by an AIF to any single borrower (whether a financial entity, an AIF or a UCITS) are capped at 20% of the AIF’s capital. The funds must also retain 5% of the notional value of any loan it originates and transfers (sells) to third parties.  

2. Additional Liquidity Management Tools (LMTs) 

For open-ended AIFs and UCITS, the Bill harmonises the use of liquidity management tools (LMTs) to manage potential redemptions and liquidity risks. Managers must select at least two appropriate LMTs from a harmonised list, such as redemption gates, side pockets or swing pricing. Luxembourg allows funds to use additional LMTs beyond the EU list, provided they are properly disclosed and managed.  

3. Expanded Services for Managers 

The bill expands the list of activities that AIFMs (Alternative Investment Fund Managers) and UCITS ManCos (Management Companies) can perform. Under the new framework, managers can now engage in credit servicing for AIFMs and benchmark administration for both AIFMs and UCITS ManCos. Furthermore, managers may provide ancillary services, such as IT, HR, AML and corporate services, to third parties (e.g., intermediaries, co-investment vehicles).  

4. Substance and Delegation 

While the bill seeks to strengthen delegation rules, in Luxembourg, it mainly codifies existing practices already applied by the CSSF. At least two EU‑resident individuals must be fully dedicated to the entity’s management, in line with current practice. In addition, enhanced notification and reporting on delegation arrangements are introduced to prevent AIFMs from becoming “letter‑box entities,” which means they exist in name only but delegate so many functions that they no longer have genuine oversight or decision‑making power.  

5. Depositary Services 

The bill prohibits domestic AIFs from appointing depositaries from other EU Member States, thereby ruling out cross-border depositaries for Luxembourg AIFs. However, Luxembourg depositaries may serve an AIF in another Member State, provided the host Member State permits cross-border appointments. 

Next steps

The legislative process for Bill 8628 will now follow Luxembourg’s standard parliamentary procedure, which includes consultation with the Council of State before moving to adoption by the Luxembourg Parliament. It is expected to apply from 16 April 2026, with reporting obligations starting a year later to provide time for any operational and system adaptations.  

In general, the bill aligns Luxembourg with the harmonised EU fund management framework, while introducing enhanced measures to preserve and strengthen the country’s position as a leading hub for investment funds.  

If you require further details about the bill and to successfully navigate Luxembourg’s evolving fund regulations, our experts at Bolder Group deliver tailored fund solutions to ensure compliance, operational efficiency and strategic advantage. Contact our team today to future-proof your structures under AIFMD 2 and UCITS 6.  

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