Luxembourg: Regulatory clarification on loan origination activities

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.


Contents

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.


Copyright © 2023 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.