Law of 22 March 2004 on securitisation and amending
- the law of5 April 1993 on the financial sector, as amended
- the law of 23 December 1998 creating a commission for
the supervision of the financial sector, as amended
- the law of 27 July 2003 on the trust and on fiduciary
contracts the law of 4 December 1967 on income tax, as amended
- the law of 16 October 1934 on wealth tax, as amended
- the law of 12 February 1979 on value added tax, as amended
TITLE I
Definitions
Art. 1. (1) "Securitisation",
within the meaning of this law, means the transaction by
which a securitisation undertaking acquires or assumes,
directly or through another undertaking, risks relating
to claims, other assets, or obligations assumed by third
parties or inherent to all or part of the activities of
third parties and issues securities, whose value or yield
depends on such risks.
(2) "Securitisation undertakings", within the
meaning of this law, are undertakings which carry out the
securitisation in full, and undertakings which participate
in such a transaction by assuming all or part of the securitised
risks - the acquisition vehicles - , or by the issuing of
securities to ensure the fmancing thereof the issuing vehicles
and whose articles of incorporation, management regulations
or issue documents provide that they are subject to the
provisions of this law.
TITLE II
Securitisation undertakings
Chapter
1 - Securitisation companies and securitisation funds
Art. 2. Securitisation undertakings may
be set up in the form of a company or a fund managed by
a management company.
Art. 3. This law only applies to securitisation
undertakings situated in Luxembourg. For the purposes of
this law, securitisation companies which have their registered
office in Luxembourg and securitisation funds whose management
company has its registered office in Luxembourg are situated
in Luxembourg.
Section 1 - Securitisation companies
Art. 4. (1) Securitisation companies must
be set up as a public limited company (societe anonyme),
a corporate partnership limited by shares (societe en commandite
par actions), a private limited liability company (societe
a responsabilite limitee) or a co-operative company organised
as a public limited company (societe cooperative organisee
comme une societe anonyme)-
(2) Article 137 of the amended law of 10 August 1915 on
commercial companies does not apply to securitisation companies
set up as co-operative companies organised as a public limited
company.
Art. 5. The articles of incorporation of
a securitisation company may authorise the board of directors
to create one or more compartments each compartment corresponding
to a distinct part of its assets and liabilities.
Section 2 - Securitisation funds
and their management companies
Sub-section 1 - Securitisation funds
Art. 6. (1) Securitisation funds consist
of one or more co-ownerships (coproprietes) or one or more
fiduciary estates. The management regulations of the fund
shall expressly specify whether the fund is subject to the
co-ownership rules or to the trust and fiduciary rules.
(2) Securitisation funds do not have legal personality.
They are managed by a management company.
(3) Securitisation funds which consist of one or more fiduciary
estates are subject to the legislation on the trust and
on fiduciary contracts.
(4) The provisions of the civil code relating to co-ownership
in undivided shares (indivision) do not apply to securitisation
funds.
Art. 7. (1) The rights of investors in
the fund, whether such investors act as joint owners or
settlors (jiduciants), are represented by securities issued
in accordance with the management regulations.
(2) The ownership of registered securities is evidenced
by an entry in the register held for such purposes by the
management company. The transfer of such registered securities
is effected by a declaration of transfer recorded in the
register, dated and signed by the transferor and the transferee
or evidenced as set out in the management regulations. The
transfer of bearer securities is effected by mere delivery.
(3) The management regulations may also authorise the management
company to issue dematerialised securities represented by
book entries in an account held with the management company
or an authorised professional of the fmancial sector acting
on its behalf.
Art. 8. If provided for in the management
regulations, a securitisation fund may consist of several
compartments each compartment corresponding to a distinct
co-ownership or fiduciary estate.
Art. 9. Debt instruments may be issued
on behalf of the securitisation fund or one of its compartments.
Art. 10. (1) The management regulations
of a securitisation fund shall contain at least the
following provisions :
- an indication whether the fund is set up in the form of
a co-ownership or fiduciary estate, the name, object and
duration, limited or unlimited, of the securitisation fund,
- the name of the management company,
- the specific administration and management rules which
apply to it,
- the possibility for the securitisation fund to consist
of several compartments,
- the circumstances in which the fund or one of its compartments
will be in, or may be put into, liquidation,
- the respective rights and obligations of the management
company and, as the case may be, of the investors,
- the rules governing the assumption of risks and/or the
issuance of securities, the procedures for amending the
management regulations.
(2) Securitisation funds, consisting of several compartments,
may determine by separate management regulations the characteristics
of and the rules applicable to each compartment.
(3) The management regulations as well as subsequent amendments
thereto must be lodged with the trade and company registry
in accordance with the amended law of 10 August 1915 on
commercial companies.
(4) The provisions of such regulations are deemed accepted
by the investors in the securitisation fund by the mere
acquisition of securities issued by the fund.
Art. 11. Without prejudice to Article 62,
investors in a securitisation fund are only liable for the
debts of the securitisation fund up to the assets of the
fund and in proportion to their participation.
Art. 12. The securitisation fund shall
be liable only for the obligations expressly imposed upon
it by its management regulations or which it has contracted
in conformity with the latter. It shall not be liable for
the debts of the management company or of the investors.
Art. 13. (1) The liquidation of a securitisation
fund is made public by the management company within a period
of 15 days. Such publication is made through notices published
in the Memorial, Recueil des Societes et Associations and
in at least two newspapers of adequate distribution, one
of such newspapers being necessarily a Luxembourg newspaper.
(2) Once the liquidation has commenced, the issuance of
securities is prohibited under penalty of voidance, except
for the sake of the liquidation.
(3) Without prejudice to the preceding paragraph, the commencement
of the liquidation is effective against third parties only
as from the day of its publication in the Memorial, except
if the securitisation fund can establish that such third
parties had prior knowledge thereof. Third parties may however
rely upon the liquidation prior to its publication.
Sub-section 2 - Management companies
Art. 14. The management company is a commercial
company whose object is to manage securitisation funds and,
as the case may be, to act as fiduciary of funds consisting
of one or more fiduciary properties.
Art. 15. (1) The management company shall
draw up the management regulations for the securitisation
fund.
(2) Without prejudice to the powers conferred upon a fiduciary-representative,
the management company acts on behalf of the securitisation
fund and its investors vis-a-vis third parties. It acts
on their behalf in all judicial proceedings, whether as
plaintiff or defendant, without having to disclose the identity
of the investors, the sole indication that the management
company is acting in such capacity being sufficient. As
long as they are represented, the investors cannot individually
bring actions, which fall within the authority of the management
company.
Art. 16. The management company must perform
its duties in an independent manner and in the sole interest
of the securitisation fund and the investors. It may not
use the assets of the securitisation fund for its own needs
and it is liable towards the investors and third parties
for the proper performance of its duties.
Art. 17. The creditors of the management
company or of the investors have no rights of recourse
against the assets of the securitisation fund.
Art. I8. The duties of the management company
in respect of the securitisation fund shall cease :
- in the event of resignation or removal of the management
company, provided that it is replaced by another management
company, authorised, as the case may be, in accordance with
the provisions of this law;
- if the management company has been declared bankrupt,
has entered into a composition with creditors (concordat),
has obtained a suspension of payment (sursis de paiement),
has been put under court controlled management (gestion
controlee), or has been the subject of a similar proceedings
or has been put into liquidation,
- if, in the case of an authorised securitisation undertaking,
the Commission de Surveillance du Secteur Financier withdraws
the management company's authorisation ;
- in all other circumstances set out in the management regulations.
Chapter
2 - Authorised securitisation undertakings
Section 1 - Obligation and conditions
for an authorisation
Art. 19. Securitisation undertakings which
issue securities to the public on a continuous basis ("authorised
securitisation undertakings ") must be authorised by
the Commission de Surveillance du Secteur Financier (hereinafter
the "CSSF") to exercise their activities.
Art. 20. (1) A securitisation undertaking
shall be authorised only if the CSSF approves its articles
of incorporation or the management regulations of the securitisation
undertaking, and, as the case may be, authorises its management
company. Securitisation companies and management companies
of securitisation funds must have an adequate organisation
and adequate resources to exercise their activities and
to be supervised by the CSSF.
(2) The members of the administrative, management and supervisory
vehicles of a securitisation company or a management company
of an authorised securitisation undertaking, as well as
its direct or indirect shareholders which are in a position
to exercise a significant influence over the conduct of
the business of such a company must be of sufficiently good
repute and have the experience or means required for the
performance of their duties. To that end, the names of those
persons, and of every person succeeding them in office,
must be notified forthwith to the CSSF.
(3) Any change in control of the securitisation company
or the management company, any replacement of the management
company, as well as any amendment to the management regulations
or the articles of incorporation are subject to the prior
approval of the CSSF.
Art. 21. (1) Authorised securitisation
undertakings shall be entered on a list by the CSSF. Such
entry shall be tantamount to authorisation and shall be
notified to the securitisation undertaking. The said list
and any amendments made thereto shall be published by the
CSSF.
(2) The entering and the maintaining on the list referred
to in the preceding paragraph, shall be subject to compliance
with all the provisions of laws, regulations and agreements
which govern the securitisation undertaking, the operation
of its vehicles and the distribution, placing or sale of
the securities issued by the securitisation undertaking.
(3) The fact that a securitisation undertaking is entered
on the list referred to in the preceding article shall not
under any circumstance be described in any way whatsoever
as a positive assessment made by the CSSF of the quality
of the securities issued by it.
Section 2 - Supervision of authorised
undertakings
Art. 22. Authorised securitisation undertakings
must entrust the custody of their liquid assets and securities
with a credit institution established or having its registered
office in Luxembourg.
Art. 23. (1) Authorised securitisation
undertakings are supervised by the CSSF which must in particular
ascertain that they comply with the law and their obligations.
(2) The CSSF carries on its mission until the close of the
liquidation of the securitisation undertaking.
Art. 24. (1) The CSSF may request from
authorised securitisation undertakings a periodical statement
of their assets and liabilities and their operating results.
(2) It may require communication of any information or carry
out on site investigations and inspect all the documents
of a securitisation company, a management company or a credit
institution entrusted with the deposit of the assets of
an authorised securitisation undertaking, which relate to
the organisation, administration, management, or operation
of such undertaking or to the valuation of and return on
the assets, in order to verify compliance with the provisions
of this law and the provisions set out in the management
regulations or the articles of incorporation of the securitisation
undertaking, and in the agreements relating to the issuance
of securities, and the accuracy of the information it has
been provided with.
Art. 25. (1) If the CSSF fmds that an authorised
securitisation undertaking is not complying with the provisions
of this law, the management regulations, the articles of
incorporation or the agreements relating to the issuance
of securities, or that the rights attached to the securities
issued by the securitisation undertaking may be impaired,
it may summon the securitisation undertaking to remedy the
situation within a period it determines.
(2) If such summons is not complied with, the CSSF may:
render its position regarding the fmdings made under paragraph
1 public; prohibit any issuance of securities;
request the listing of the securities issued by the securitisation
undertaking to be suspended; request the presiding judge
of the chamber of the district court dealing with commercial
matters to appoint a provisional administrator for the securitisation
undertaking;
withdraw its authorisation.
Art. 26. If an authorised securitisation
undertaking or its management company does not publish the
commencement of its liquidation in accordance with Article
13, such publication is made by the CSSF at the expense
of the securitisation undertaking.
Section 3 – Decisions of the
CSSF
Art. 27. (1) Decisions of the CSSF adopted
in implementation of this law shall state the reasons on
which they are based and, unless the delay entails risks,
they shall be adopted after preparatory proceedings at which
all parties are able to state their case. They shall be
notified by registered mail or delivered by bailiff.
(2) Decisions rendered by the CSSF may be challenged in
front of the administrative court. Any action must, under
penalty of foreclosure, be filed within one month of notification
of the challenged decision. It is exempt from any stamp
or registration duties. The administrative court renders
its decision on the merits of the case.
Art. 28. The decision of the CSSF withdrawing
the name ofa securitisation undertaking from the list provided
for in Article 21 shall by operation of law, as from the
notification thereof to such undertaking, and until the
decision has become fmal, entail for such undertaking suspension
of any payment by said undertaking and prohibition for such
undertaking, under penalty of voidance, to take any measures
other than protective measures, except with the authorisation
of the supervisory commissioner.
Art. 29. (1) The CSSF shall, by operation
of law, exercise the functions of supervisory commissioner,
except if, at its request, the district court dealing with
commercial matters appoints one or more other persons as
supervisory commissioners.
(2) The application, stating the reasons on which it is
based and accompanied by supporting documents, shall be
lodged for that purpose at the registry of the district
court in the district within which the undertaking has its
registered office. The court shall give its ruling within
a short period. If it considers that it has sufficient information,
it shall immediately make an order in public session, without
hearing the parties. If it deems necessary, it shall convene
the parties by notification from the registrar within three
days from the lodgement of the application. It shall hear
the parties in chambers and give its decision in public
session.
(3) The court shall decide as to the expenses and fees of
the supervisory commissioners; it may grant them advances.
Art. 30. (1) The written authorisation
of the supervisory commissioners is required for all measures
and decisions of the undertaking and, failing such authorisation,
they shall be void. The court may, however, limit the scope
of operations subject to authorisation.
(2) The commissioners may submit for consideration to the
relevant vehicles of the undertaking any proposals which
they consider appropriate. They may attend the proceedings
of the administrative, management, executive or supervisory
vehicles of the undertaking.
Art. 31. (1) The judgment provided for
in paragraph (1) of Article 39 of this law shall terminate
the functions of the supervisory commissioner who must,
within one month after his replacement, submit to the liquidators
appointed in such judgment a report on the use of the undertaking's
assets together with the accounts and supporting documents.
(2) If the withdrawal decision is amended on appeal by the
court, the supervisory commissioner shall be deemed to have
resigned.
Chapter
3 - Liquidation of securitisation undertakings
Section 1 - Provisions common to
authorised and unauthorised securitisation undertakings
Art. 32. Securitisation undertakings shall,
after dissolution, be deemed to exist for the purpose of
their liquidation. All documents issued by a securitisation
undertaking in liquidation shall indicate that it is in
liquidation.
Art. 33. Each compartment of a securitisation
undertaking may be separately liquidated without such liquidation
resulting in the liquidation of another compartment.
Art. 34. The liquidator may bring and defend
all actions on behalf of the securitisation undertaking,
receive all payments, grant releases with or without discharge,
realise all the assets of the undertaking and reemploy the
proceeds therefrom, issue or endorse any negotiable instruments,
compound or compromise all claims.
Art. 35. Sums and assets payable to investors
who failed to present themselves at the time of the closure
of the liquidation, shall be paid to the public trust office
(Caisse de Consignation) to be held for the benefit of the
persons entitled thereto.
Art. 36. (1) The liquidators shall be responsible
both to third parties and to the securitisation undertaking
itself for the discharge of their mandate and for any faults
committed in the conduct of their activities.
(2) Legal actions against the liquidators shall lapse five
years after the date on which facts upon which such actions
are based occurred or, if fraudulently concealed, after
the discovery of such facts.
Section 2 - Provisions specific
to authorised securitisation undertakings
Sub-section 1- Voluntary liquidation ofauthorised
undertakings
Art. 37. The liquidator of an authorised
securitisation undertaking must have the necessary good
repute and professional qualifications and must be authorised
by the CSSF.
Art. 38. During the liquidation procedure,
authorised securitisation undertakings remain subject to
the supervision of the CSSF.
Sub-section 2 - Forced liquidation of authorised
undertakings
Art. 39. (1) The district court dealing
with commercial matters shall upon request from the public
prosecutor, acting ex officio or at the request of the CSSF,
pronounce the dissolution and order the liquidation of authorised
securitisation undertakings whose entry on the list provided
for in Article 21 has been defmitely refused or withdrawn.
(2) When ordering the liquidation, the court shall appoint
a bankruptcy judge (juge-commissaire) and one or more liquidators,
subject to Article 75 below.
(3) The court shall determine the method ofliquidation.
It may, at its discretion, render applicable the provisions
applicable to the liquidation in bankruptcy. The liquidation
method may be changed by a subsequent decision, either ex
officio or at the request of the liquidator( s).
(4) The judgment pronouncing the dissolution and ordering
the liquidation is provisionally enforceable.
(5) The judgments pronouncing the dissolution and ordering
the liquidation of a securitisation undertaking shall be
published in the Memorial and in two newspapers of adequate
distribution as specified by the court, of which at least
one must be a Luxembourg newspaper. Such publications are
made by the liquidator.
Art. 40. As from the date of the judgment,
all legal actions related to movable or immovable property
and all enforcement procedures over movable or immovable
property can only be pursued, commenced or exercised against
the liquidator.
The judgment ordering the liquidation suspends all seizures
effected by unsecured creditors and creditors not benefiting
from preferential rights over movable or immovable property.
Art. 41 The liquidator may not grant security
interests over the assets of the securitisation undertaking
or transfer such assets for security purposes without the
authorisation of the court. The court may grant such authorisation
to the liquidator at any time during the liquidation proceedings
in respect of all or part of the assets of the securitisation
undertaking.
Art. 42. After payment or deposit with
the public trust office (Caisse de Consignation) of sums
sufficient to pay the debts, the liquidator shall distribute
to the investors the sums or assets to which they are entitled.
Art. 43. The court may at any time request
the liquidator to deliver a report on the status of the
liquidation. It shall determine the costs and the fees of
the liquidators and may grant them advances.
Art. 44. In case of absence of or insufficiency
of assets, as determined by the bankruptcy judge, all procedural
documents shall be exempt from court and registration duties
and the costs and fees of the liquidators shall be borne
by the Treasury and liquidated as judicial costs.
Art. 45. (1) When the liquidation is completed,
the liquidator shall deliver a report to the court on the
use made of the assets of the undertaking and shall submit
accounts and evidence in support.
(2) The court shall appoint one or more independent auditors
to examine the documents. After receipt of the report from
the independent auditor, it renders its judgment on the
management by the liquidator and on the close of the liquidation.
(3) Its decision shall be published in accordance with Article
39 here above and shall also indicate:
the place designated by the court where the corporate books
and records must be kept for at least five years;
the measures taken in accordance with Article 35 with respect
to the deposit with the public trust office (Caisse de Consignation)
of sums and assets to which creditors and investors are
entitled and which could not be paid out.
Art. 46. Any legal actions against the
liquidators, in their capacity as such, lapses five years
after the publication of the close of the liquidation proceedings.
Chapter
4 - Accounting, audit, and the tax regime applicable to
securitisation undertakings
Art. 47. Securitisation companies must
comply with the provisions of Section XIII of the amended
law of 10 August 1915 on commercial companies and, as from
1st January 2005, with the provisions of Chapters II and
IV of Title II of the law of 19 December 2002 on the trade
and companies register and the accounting and the annual
accounts of companies. Their management reports must contain
all material information relating to their fmancial situation
which could affect the rights of investors.
Art. 48. (1) The accounts of a securitisation
undertaking are audited by one or more independent auditors
appointed, as the case may be, by the management vehicle
of the securitisation company or by the management company
of the securitisation fund.
(2) The independent auditors of an authorised securitisation
undertaking must be authorised by the CSSF.
(3) The independent auditors entrusted with the auditing
of the accounts of a securitisation undertaking shall inform
the management of the securitisation company or of the management
company and, as regards authorised securitisation undertakings,
also the CSSF and, as the case may be, the representative
of the investors, of any irregularities and inaccuracies
which they detect during the accomplishment of their duties.
Art. 49. The provisions of the amended
law of 10 August 1915 on commercial companies relating to
statutory auditors (commissaires) shall not apply to Luxembourg
securitisation entities.
Art. 50. Securitisation funds are subject
to the accounting and tax provisions applicable to undertakings
for collective investment provided for by the laws of 30
March 1988 and of 20 December 2002 on undertakings for collective
investment, except for the annual subscription tax which
is not due.
Art. 51. (1) By derogation from the law
of 29 December 1971 on tax levied on capital contributions
to non-commercial partnerships and commercial companies
and amending certain statutory provisions governing the
collection of registration duties, the capital contribution
duty which becomes due upon the incorporation of an undertaking
governed by this law or subsequently, in particular for
new capital contributions, or upon transformation of an
undertaking governed by this law into another undertaking
governed by this law, or upon a merger of undertakings governed
by this law, is levied as a fixed amount to be determined
for each type of taxable operation by a grand ducal regulation
but which may not exceed one thousand two hundred and fifty
euros.
(2) The capital contribution duty on contributions made
to securitisation companies, subsequent to their incorporation,
is only due if the amount of the new share capital exceeds
the amount on which the duty was levied previously.
Art. 52. (1) Agreements entered into in
the context of a securitisation transaction and all other
instruments relating to such transaction are not subject
to registration formalities, even when referred to in a
public deed or produced in court or before any other public
authority, provided that they do not have the effect to
transfer rights which must be transcribed, recorded or registered
and which relate to immoveable property located in Luxembourg,
or to aircraft, ships or riverboats recorded on a public
register in Luxembourg. However, they may be submitted for
registration, in which case they are registered at the fixed
rate.
(2) By derogation from the provisions of the decree of 24
Prairial Year XI, where instruments entered into in the
context of a securitisation transaction or other instruments
relating to such transaction are submitted for registration,
the obligation to attach to these instruments a translation
certified by a notary or by another sworn translator where
they are entered into in languages other than the official
languages does not apply if these instruments are drawn
up in English.
(3) Article 44 paragraph 1 sub d) of the law of 12 February
1979 on the value added tax is completed by the following
wording: "as well as securitisation undertakings situated
in Luxembourg".
TITLE III
Securitised risks
Chapter 1 - Assumption of risks
Art. 53. (1) Risks relating to the holding
of assets, whether movable or immovable, tangible or intangible,
as well as risks resulting from the obligations assumed
by third parties or relating to all or part of the activities
of third parties are capable of being securitised.
(2) The securitisation undertaking may assume those risks
by acquiring the assets, guaranteeing the obligations or
by committing itself in any other way.
(3) Securitisation transactions governed by this law do
not constitute activities subject to the law of6 December
1991 on the insurance sector.
Art. 54. Securitisation undertakings may
acquire and, subject to the conditions set out in Article
61 hereafter, transfer claims and other assets, existing
or future, in one or more transactions or on a continuous
basis.
Art. 55. (1) The assignment of an existing
claim to or by a securitisation undertaking becomes effective
between the parties and against third parties as from the
moment the assignment is agreed on, unless the contrary
is provided for in such agreement.
(2) A future claim which arises out of an existing or future
agreement is capable of being assigned to or by a securitisation
undertaking provided that it can be identified as being
part of the assignment at the time it comes into existence
or at any other time agreed between the parties.
(3) The assignment of a future claim is conditional upon
its coming into existence, but when the claim does come
into existence, the assignment becomes effective between
parties and against third parties as from the moment the
assignment is agreed on, unless the contrary is provided
for in such agreement, notwithstanding the opening of bankruptcy
proceedings or any other collective proceedings against
the assignor before the date on which the claim comes into
existence.
Art. 56. (1) The claim assigned to a securitisation
undertaking becomes part of its property as from the date
on which the assignment becomes effective, notwithstanding
any undertaking by the securitisation undertaking to reassign
the claim at a later date. The assignment can not be recharacterised
on grounds relating to the existence of such an undertaking.
(2) The assignment to or by a securitisation undertaking
entails, except if otherwise agreed, the transfer of the
guarantees and security interests securing such claim, and
its enforceability by operation oflaw against third parties,
without any further formalities.
(3) The assigned debtor is validly discharged from its payment
obligations by payment to the assignor as long as it has
not gained knowledge of the assignment.
(4) Article 1699 of the Civil Code does not apply to claims
assigned to a securitisation undertaking.
Art. 57. An assignment prohibited by the
agreement out of which the assigned claim arises or which
for other reasons does not comply with the provisions of
such agreement is not effective against the assigned debtor
unless:
the assigned debtor has agreed thereto;
the assignee legitimately ignored such non-compliance; the
assignment relates to a monetary claim.
Art. 58. The law governing the assigned claim determines
the assignability of such claim, the relationship between
the assignee and the debtor, the conditions under which
the assignment is effective against the debtor and whether
the debtor's obligations have been validly discharged.
The law of the State in which the assignor is located governs
the conditions under which the assignment is effective against
third parties.
Art. 59. The articles of incorporation, the management
regulations of the securitisation undertaking, an assignment
agreement or any other agreement may grant to the assignor
a right over all or part of the assets of the securitisation
undertaking which are available after payment of all other
creditors.
Chapter
2 - Management of risks
Art. 60. The securitisation undertaking
may entrust the assignor or a third party with the collection
of claims it holds as well as with any other tasks relating
to the management thereof, without such persons having to
apply for an authorisation under the legislation on the
fmancial sector.
Art. 61. (1) A securitisation undertaking
cannot assign its assets except in accordance with the provisions
laid down in its articles of incorporation or its management
regulations.
(2) In the event that the assignor or the third party to
which the collection of claims has been entrusted becomes
subject to insolvency proceedings, such as bankruptcy, controlled
management, judicial liquidation or any other proceedings
affecting the rights of creditors generally, the securitisation
undertaking is entitled to claim any sums collected on its
behalf prior to the opening of such proceedings, without
the other creditors having any rights to such amounts, and
notwithstanding any claims raised by the bankruptcy receiver,
the controlled management commissioner or the liquidator.
(3) It may not, by any means whatsoever, create security
interests over its assets or transfer its assets for guarantee
purposes, except to secure the obligations it has assumed
for their securitisation or in favour of its investors,
their fiduciary-representative or the issuing vehicle participating
in the securitisation.
Security interests and guarantees created in breach of this
Article are void by operation oflaw.
(4) Except if otherwise agreed, security interests and guarantees
shall, by operation of law, extend to the proceeds of the
assets assigned or over which security interests have been
granted, to any funds received in payment and to the assets
in which they are invested.
Without prejudice to the law of I st August 200 I on the
transfer of ownership for security purposes, Article 445
paragraph 4 of the Commercial Code does not apply to security
interests granted no later than the time of issuance of
the securities or the conclusion of the agreements secured
by such security interests, notwithstanding such security
interests being extended to new assets or claims in accordance
with this Article and the agreement creating such security
interests.
(5) The beneficiaries of pledges over claims gain possession
of such claims by entering into the agreement creating such
collateral rights. The debtors of the pledged claims are
however validly discharged from their payment obligations
by payment to the securitisation undertaking as long as
they have not gained knowledge of the pledge.
TITLE IV
Investors and creditors
Chapter 1 - Rights
of investors and creditors
Art. 62.
(1) The rights of the investors and of the creditors are
limited to the assets of the securitisation undertaking.
Where such rights relate to a compartment or have arisen
in connection with the creation, the operation or the liquidation
of a compartment, they are limited to the assets of that
compartment.
(2) The assets of a compartment are exclusively available
to satisfy the rights of investors in relation to that compartment
and the rights of creditors whose claims have arisen in
connection with the creation, the operation or the liquidation
of that compartment.
(3) As between investors, each compartment shall be treated
as a separate entity, except if otherwise provided for in
the constitutional documents.
Art. 63.
(1) If provided for in the articles of incorporation, the
management regulations or the issuance agreement, a securitisation
undertaking may issue securities whose value or yield is
linked to specific compartments, assets or risks, or whose
repayment is subject to the repayment of other instruments,
certain claims or certain categories of shares. If the acquisition
vehicle is different from the issuing vehicle, the value,
the yield and the conditions of repayment may also be linked
to the assets and the liabilities of the acquisition vehicle.
(2) Notwithstanding any provision to the contrary, the voting
rights attached to shares which do not have an equal value
is proportionate to the portion of the share capital represented
by such shares. The voting rights attached to notes and
other debt instruments are always proportionate to the portion
of the debt they represent.
Art. 64.
(1 ) The articles of incorporation, the management regulations
of a securitisation undertaking and any agreement entered
into by the securitisation undertaking may contain provisions
by which investors and creditors accept to subordinate the
maturity or the enforcement of their rights to the payment
of other investors or creditors or undertake not to seize
the assets of the securitisation undertaking nor, as the
case may be, of the issuing or acquisition vehicle, and
not to petition for bankruptcy thereof or request the opening
of any other collective or reorganisation proceedings against
them.
(2) Proceedings initiated in breach of such provisions shall
be declared inadmissible.
Art. 65.
(1 ) The conditions of issuance and of reimbursement of
securities issued by a securitisation undertaking are binding
upon the latter and upon the investors and are effective
against any other person, including in case of liquidation
of one or more compartments, bankruptcy and generally any
proceedings affecting creditors' rights generally, without
prejudice however to the rights of creditors which have
not given their consent thereto.
(2) The same applies to any specific conditions accepted
by creditors for payment of their claims. Art. 66. (1) Without
prejudice to Article 70 below, Articles 86 through 97 of
the amended law of 10 August 1915 on commercial companies
apply to holders of any debt instruments issued by a securitisation
undertaking. The issuance agreements of such instruments
may however deviate from these provisions.
(2) In case of the issuance of debt instruments by a securitisation
fund, the management company of the fund exercises the rights
and assumes the obligations of the issuing company or its
board of directors under Articles 86 through 95 of the law
referred to above.
Chapter 2 - Fiduciary-representatives
Section 1 - Rights and powers a/fiduciary-representatives
Art. 67.
The investors and the creditors of a securitisation undertaking
may entrust the management of their interests to one or
more fiduciary-representatives. This law applies only to
fiduciary-representatives having their registered office
in Luxembourg.
Art. 68.
(1) The instrument by which a fiduciary-representative accepts
its mission must defme its rights and its powers, in particular
its powers of representation, specify the groups of investors
or creditors on behalf of which it acts and provide for
a procedure for its replacement.
(2) That instrument is binding, without any other formality
being required, on all investors and creditors which have
accepted the fiduciary-representative. The subscription
or the acquisition of a security issued by a securitisation
undertaking designating a fiduciary-representative constitutes
acceptance of the fiduciary-representative and of its mission.
Art. 69.
(1) Unless otherwise provided for, investors and creditors
which have appointed a fiduciary-representative are represented
by it in all their relations with the securitisation undertaking
and third parties connected to the securitisation. As long
as they are represented, they can not individually exercise
the rights the management of which they have entrusted to
the fiduciary¬representative.
(2) Within the limits of the powers the investors and the
creditors have entrusted to it, the fiduciary-representative
may initiate on their behalf all proceedings and defend
their interests, including in judicial proceedings, without
having to disclose their identity, the sole indication that
it acts in its capacity as fiduciary-representative being
sufficient.
Art. 70.
(1) Where a securitisation undertaking issues debt instruments,
it may entrust a fiduciary¬representative with the functions
of representative of the holders of such instruments and
freely defme its powers, notwithstanding Article 88 of the
amended law of 10 August 1915 on commercial companies.
(2) Articles 86 through 97 of the amended law of 10 August
1915 on commercial companies do apply to the issue only
if the issuing agreement or the instrument of appointment
of the fiduciary ¬representative do not deviate therefrom.
Art. 71.
(1) The fiduciary-representative may also be granted by
the investors and the creditors the power to act in their
interest in a fiduciary capacity, in accordance with the
legislation on the trust and on fiduciary contracts. The
assets and rights which it acquires for the benefit of investors
and creditors form a fiduciary property separate from its
own assets and liabilities as well as from any other fiduciary
property it may hold.
(2) - The fiduciary-representative may in particular in
such capacity accept, take, hold and exercise all security
interests and guarantees and receive all payments to be
made to the investors and the creditors which have granted
such powers to it, as if it were itself the holder of the
investors' and creditors' claims, any payments made to it
constituting a valid discharge for the debtor. Articles
445, 446, 447 Paragraph 2 and 448 of the Commercial Code
do not apply to such security interests, guarantees or payments.
Art. 72.
The securitisation undertaking may assign to the fiduciary-representative,
on the terms agreed between them, all or part of its rights
and actions arising from a contract entered into with a
third party. The assignment is effective against the other
party to such contract and against all other third parties,
as from the moment in time it has been entered into and
it cannot be challenged on the basis of Articles 445, 446,
447 Paragraph 2 and 448 of the Commercial Code.
The other party to such contract is however validly discharged
by payments made to the assigning undertaking for as long
as it did not have knowledge of the assignment.
Art. 73.
Any fiduciary-representative which substitutes for itself
a third party for the exercise of the rights and actions
which have been assigned to it, is not liable for any damages
caused by such third party, unless it had not been granted
the power of substitution or it has chosen a person notoriously
incompetent or insolvent.
The assigning undertaking and, notwithstanding their representation
by the fiduciary-
representative, investors and creditors may act directly
against the substituted third party.
Art. 74.
The articles of incorporation or the internal rules of a
securitisation undertaking may authorise a fiduciary-representative
to request in Court, on serious grounds, the replacement,
on a provisional or permanent basis, of the management vehicles
of such undertaking, the management vehicles of the management
company, where applicable, or of the management company
itself.
Art. 75.
- In case of voluntary or compulsory liquidation of a securitisation
undertaking or of one of its compartments, and except if
otherwise provided for in the instrument of appointment,
the fiduciary-representative shall act as liquidator on
behalf of the investors and the creditors by whom it has
been appointed.
Art. 76 .
Unless otherwise provided for in the instrument of appointment,
the liability of the fiduciary-representative vis-a-vis
the investors and creditors on whose behalf it acts shall
be assessed as if it were a remunerated agent.
Art. 77.
(1) In case of replacement of a fiduciary-representative
all rights and actions held by it in the interest of investors
and creditors are transferred, by operation of law and without
any other formalities, to the new fiduciary-representative.
(2) The resignation of a fiduciary-representative becomes
effective only as of the appointment of a new fiduciary-representative.
Art. 78.
(1) Upon a reasoned request from a represented investor
or creditor, establishing the existence of serious grounds,
the CSSF may provisionally or permanently replace a fiduciary¬representative.
(2) Unless otherwise provided for in the instrument of appointment,
any other means of revocation or replacement are excluded.
Section 2 - Mandatory authorisation of fiduciary-representatives
Art. 79.
(1) The fiduciary-representatives subject to this law must
be authorised by the Minister with responsibility for the
CSSF.
(2) They may not exercise any activities other than their
principal activity except on an accessory and ancillary
basis.
Art. 80.
(1) The authorisation for the exercise of the activity of
a fiduciary-representative can only be granted to stock
companies having a share capital and own funds at least
equal to four hundred thousand euros.
(2) The authorisation is subject to the CSSF being informed
of the identity of the direct or indirect shareholders,
whether they are natural persons or legal entities, which
hold in the fiduciary¬representative to be authorised
a qualifying participation within the meaning of Article
18 of the law of 5 April 1993 on the fmancial sector and
of the amount of such participations.
(3) In order to obtain the authorisation, the members of
the administrative, management and supervisory vehicles
as well as the shareholders referred to in the preceding
paragraph, must demonstrate their professional repute. Such
repute shall be assessed on the basis of their judicial
records and all elements which can demonstrate that the
persons concerned are of good character and present all
guarantee showing activity beyond reproach.
(4) The persons in charge of the management must possess
adequate professional experience.
Art. 81. The application for authorisation must be addressed
in writing to the minister with responsibility for the CSSF
and must contain all other information necessary for its
assessment, and in particular precise information on the
administrative and accounting structure of the applicant.
Art. 82.
(1) The authorisation is granted after review of the compliance
with the requirements of this law by the CSSF.
(2) The decision taken on the application for authorisation
shall be reasoned and shall be notified to the applicant
within six months of the receipt of the application or,
if the application is incomplete, within six months of the
receipt of all the information necessary for the decision
to be taken. In any event, a decision shall be taken within
twelve months of the receipt of the application, failing
which the absence of a decision will be deemed equivalent
to a refusal. The decision may be challenged, within a period
of one month, under penalty of foreclosure, in the administrative
court, which decides on the merits of the case.
(3) The authorisation is granted for an unlimited period
of time.
Art. 83.
(1) Any changes in the identity of the persons who have
to meet the legal requirements of professional repute and
experience must be authorised in advance by the CSSF. For
this purpose, the CSSF may request all necessary information
on the persons who have to meet the legal requirements.
The decision of the CSSF can be challenged, within a period
of one month, under the penalty of foreclosure, in the administrative
court, which decides on the merits of the case.
(2) A new authorisation is required prior to any change
of the object, name or legal form.
Art. 84. (1) The authorisation lapses if it is not used
for an uninterrupted period exceeding twelve months.
(2) The authorisation is withdrawn if the conditions on
which it was granted are no longer met.
(3) The authorisation is withdrawn if it was obtained by
means of false declarations or by any other irregular means.
(4) The decision to withdraw the authorisation may be challenged,
within a period of one month, under penalty of forclosure,
in the administrative court which decides on the merits
of the case.
TITLE
V
Sanctions
Art. 85.
The CSSF may impose upon the directors, managers and officers
of authorised securitisation undertakings or of a fiduciary-representative,
and the liquidators in case of a voluntary liquidation of
an authorised securitisation undertaking, a fine of 125
to 12,500 euros in the event they refuse to provide the
fmancial reports and the requested information or where
such documents prove to be incomplete, inaccurate or false,
as well as in case the existence of any other serious irregularity
is establishe
TITLE VI
Amending
and transitory provisions
Chapter 1 - Amending provisions
Art. 86.
Article 13 (2) of the amended law of5 April 1993 on the
fmancial sector is completed by the following indent which
is inserted as penultimate indent:
" - to securitisation undertakings and to fiduciary-representatives
acting in connection with such an undertaking"
Art. 87. The first indent of paragraph (1) of Article
2 of the law of 23 December 1998 creating a Commission de
Surveillance du Secteur Financier is replaced by the following:
"The Commission is the competent authority for the
prudential supervision of credit institutions, professionals
of the fmancial sector within the meaning of the amended
law of 5 April 1993 on the fmancial sector, undertakings
for collective investments, pension funds in the form of
a sepcav or assep, authorised securitisation undertakings,
fiduciary-representatives acting in connection with a securitisation
transaction as well as persons running an exchange."
Art. 88.
Article 4 of the law of27 July 2003 on the trust and on
fiduciary contracts is amended as follows: "This title
only applies to fiduciary contracts where the fiduciary
is a credit institution, an investment firm, an investment
company with variable or fixed share capital, a securitisation
company, a fiduciary representative acting in the context
of a securitisation transaction, a management company of
an investment fund or a securitisation fund, a pension fund,
an insurance or a reinsurance undertaking or a national
or international public vehicle operating in the fmancial
sector."
Art. 89. The law of 4 December 1967 on
income tax is amended as follows:
a) Article 22 his is completed by the addition of a paragraph
5 which reads as follows: "(5) securities issued by
a securitisation undertaking do not benefit from the provisions
of paragraph 2 of this Article."
b) Article 25 is completed by the addition of a paragraph
3 which reads as follows: "(3) The acquisition price
of an asset acquired by a securitisation undertaking must
correspond to the estimated realisation value of such asset."
c) Article 46 is completed by a number 14 which reads as
follows: "14. the obligations assumed towards the investors
and towards any other creditors by a securitisation company."
d) Article 97 is completed by the addition of a paragraph
6 which reads as follows: "(6) The distributions and
other proceeds allotted to the investors and other creditors
of a securitisation undertaking constitute income resulting
from transferable capital within the meaning of indent 1
number 5 of this Article."
e) Article 164 his is completed by the insertion after paragraph
4 of a new paragraph 5 which reads as follows: "(5)
Securitisation undertakings are excluded from the scope
of this Article." The other paragraphs are renumbered
accordingly.
Art. 90. The first indent of paragraph
3 of the law of 16 October 1934 on wealth tax is completed
by the reinsertion of a number 4 which shall read as follows:
"4. securitisation companies."
Chapter 2 - Transitory provision
Art. 91. This law does not apply to securitisation transactions
or undertakings set up prior to its entry into force, unless
the parties involved explicitly decide otherwise by modifying
the constitutional documents of the relevant securitisation
undertaking by inserting an explicit provision to that effect.
Parliamentary documents 5199 ;
ordinary session 2002-2003 and 2003-2004
