The investment company in risk capital is a regulated efficient structure put in place to facilitate private equity and venture capital investments. No diversification rules are in place, nor lending or restrictions on leverage. SICARs may directly or indirectly invest in securities associated with risk capital with an optic of development, their launching or market listing. Note that investing in a SICAR is accessible only for well informed investors being institutional investors, professional investors or other investors conforming to being “well informed” and invest a minimum of € 125,000 and certifying the ability to understand every aspect of risk. Please refer to CSSF circular 06/241 for more details.
A SOPARFI applies to companies entitled to financial holdings. It is an incorporated organization under legal and tax-related regulations of Luxembourg, which can take the form of a limited liability company or an association limited by shares. The primary focus is to facilitate the purchase of financial holdings; at the same time the SOPARFI can perform industrial and commercial activities. Please note that a SOPARFI is not under Luxembourg CSSF regulation, and is tax exempt under the condition that the participation must be at least 10% of the share capital of the subsidiary and held for at least one year. Some types of income such as dividends and capital gains from shareholdings realised by the SOPARFI may benefit from the participation exemption regime under other conditions.
Securitization is a method, which consists in relocating assets to investors by converting their rights, through a dedicated corporation, into financial securities issued on the capital market. The CSSF defines securitization as “the transaction by which a securitization 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”.