Legislation proposed by Luxembourg in October to enhance the regulatory framework for alternative investment funds and UCITS aims to provide greater flexibility and clarity. The Netherlands, meanwhile, is working on the implementation of AIFMD II.
On 3 October 2025, Luxembourg submitted Bill of Law No. 8628 to Parliament to implement Directive (EU) 2024/927, also known as AIFMD II (Alternative Investment Fund Managers Directive II) and UCITS 6. This legislation aims to enhance the regulatory framework for alternative investment funds (AIFs) and undertakings for collective investment in transferable securities (UCITS).
Luxembourg: welcome on the final stretch of legal implementation
The bill introduces additional flexibilities and clarifications in the explanatory commentary, especially around:
- substance requirements
- delegation arrangements
- loan origination
- ancillary activities
- definitions critical to fund operations
The bill aligns with the EU-wide framework for loan origination by AIFS, enhancing legal certainty. It introduces restrictions on consumer lending, prohibiting AIFs from granting or servicing loans to consumers within Luxembourg.
Going forward AIFs and UCITS are now authorized to use additional liquidity management tools beyond those mandated by AIFMD II.
The bill further strengthens transparency around delegation, especially for functions outsourced outside the EU. It introduces new notification requirements and clarifies supervisory expectations.
A new exemption under Article 26 of the UCI Law removes the requirement for an independent auditor’s report for unit issues in exchange for contributions in kind, provided fair treatment of unitholders is ensured. This change is expected to boost Luxembourg’s competitiveness, particularly for UCITS and ETFs.
Under the revised framework AIFMs and UCITS management companies (ManCos) may now offer services such as:
- credit servicing
- benchmark administration
- AML, corporate, IT, and HR services for third parties, provided conflict-of-interest safeguards are in place
The bill is currently under review by the Luxembourg Parliament, i.e. subject to the legislative process and may therefore change. In any case, Luxembourg must complete the transposition of AIFMD II by 16 April 2026.
The Netherlands – busy with the implementation of AIFMD II
On 7 October 2025, slightly later than in Luxembourg, the Dutch Minister of Finance presented the bill on the implementation of AIFMD II to the Dutch parliament. Though Member State Options will be implemented (see below), in general, unlike with the implementation of other European Union directives, the Dutch legislator has chosen not to use the “top up” possibility to make the requirements in the Netherlands tighter than in other European Union member states. We think that, generally, this is good news for the Dutch legal funds market.
The Netherlands intends to make use of all three Member State options specified in AIFMD II (as set forth above: credit servicing, benchmark administration and corporate IT and HR services for portfolio management). Furthermore, funds may extend credit to consumers, but this will be regulated by the existing consumer credit provisions in the Dutch Act on the financial supervision. European Union Member States may allow the competent supervisory authority to agree, at the request of a manager of an investment fund, to the appointment of a depositary with its registered office in a European Union Member State other than in its own (home) Member State. This option is used to retain the possibility of making use of it in the future if a situation arises in the Netherlands where there are no depositaries that can effectively meet the needs of the relevant investment fund, taking into account its specific investment strategy.
What has not (yet) been done by the Dutch legislator is following up on Recital 9 of AIFMD II is to encourage ManCos that offer participation rights to retail investors (any non-professional investor, including investors who participate for a minimum of EUR 100,000) to appoint at least one independent or non-executive director. Dutch Mancos thought that this could mean that they would be obliged to install, in case of a two-tier board, a supervisory board. Apparently, the Dutch legislator will await further review of this topic by the European Commission.
In closing
In any case, both Luxembourg and the Netherlands have set the requisite steps to implementation of AIFMD II and, as far as one can see, it should be possible to effectuate the implementation into national law on time. ManCos are clearly advised to start reviewing their structures already now, especially those involving loan origination or complex delegation models, to prepare for compliance with the amended legal framework.
Jan Saalfrank is a funds partner at Pinsent Masons Luxembourg. Lous Vervuurt is a lawyer at Pinsent Masons, advising clients on financial regulation and anti-money laundering compliance. The law firm is part of Investment Officer’s expert panel.
