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In brief

On 15 June 2021, the Commission de Surveillance du Secteur Financier (CSSF) published an updated version of its Q&A on the statuses of PFS-Part II with respect to the granting of loans to the public.


Key changes

  • The status of professional performing lending operations which consists of granting loans, for their own account, to the public, is governed by Article 28-4 of the law of 5 April 1993 on the financial sector, as amended (LFS) and requires a CSSF’s authorization. However, the LFS does not provide a definition of the term “public.”
  • In its update, the CSSF clarifies that a lending activity is not directed towards the public and does not fall within the scope of Article 28-4 of the LFS where the nominal value of the loan amounts to EUR 3 million at least (or the equivalent amount in another currency) and the loans are granted exclusively to professionals as defined in Article L. 010-1.2 of the Consumer Code.
  • It must be noted that a CSSF’s authorization is also not required where loans are granted to a limited circle of persons who have been determined previously. The same applies where loans are granted through a Luxembourg special purpose vehicle (SPV) and granted to a limited circle of persons who have been determined previously by the entity that holds 100% of the SPV or controls it. 
  •  In all other cases, the CSSF indicates that they will carry out an assessment on a case-by-case basis.

This clarification is welcome by the credit fund sponsor community when they use Luxembourg SPVs for their lending activity.

Author

Laurent Fessmann is the managing partner of Baker McKenzie's Luxembourg office and a member of the Firm's Global Funds Steering Committee. He started his career in 1996 as in-house counsel in a French CAC40-listed company where he worked intensively on LBO transactions, capital markets and corporate law matters. Mr. Fessmann joined a top 10 Luxembourg business law firm where he became a partner prior to founding his own law firm in 2009. He is a recognized professional in Legal 500 and Chambers. He takes part in several working groups at local market industry associations like ALFI, ABBL, LPEA and the Association of Global Custodians and is also a regulator at fund conferences such as ALFI, IBCI and regularly invited to speak on internal or bank seminars.

Author

Catherine Martougin is a partner in the Funds & Asset Management team of the Baker McKenzie Luxembourg office. She has more than 17 years' experience in business law. Prior to joining the Firm, she practiced in elite international law firms in Paris and a leading Luxembourg law firm.

Author

Jean-François Trapp co-heads the Real Estate Department and the Banking & Finance practice at Baker McKenzie Luxembourg office. He has more than 19 years' experience in Luxembourg law. Prior to joining the Firm, he was partner in a Luxembourg law firm, where he headed the Real Estate department and co-led the Banking & Finance department of the firm. In 2007, he co-founded the Luxembourg law firm Roemers Trapp Pautot, a niche firm focusing on the real estate, real assets and infrastructure sectors.

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