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Private Equity in Luxembourg Asset Management 2012 www.pwc.lu/private-equity

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Page 1: Private Equity in Luxembourg - PwC · Private Equity in Luxembourg 5 With more than 13,000 funds/units and assets under management in excess of EUR 2,212 bn, at the end …

Private Equityin Luxembourg

Asset Management

2012

www.pwc.lu/private-equity

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2 PwC Luxembourg

This publication is exclusively designed for the general information of readers and is (i) not intended to address the specific circumstances of any particular individual or entity and (ii) not necessarily comprehensive,

complete, accurate or up to date and hence cannot be relied upon to take business decisions. Consequently, PricewaterhouseCoopers, Société coopérative (“PwC Luxembourg”) does not guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the future. The reader must be aware that the information to which he/she has access is provided “as is” without any express or implied

guarantee by PwC Luxembourg.

PwC Luxembourg cannot be held liable for mistakes, omissions, or for the possible effects, results or outcome obtained further to the use of this publication or for any loss which may arise from reliance on materials

contained in it, which is issued for informative purposes only. No reader should act on or refrain from acting on the basis of any matter contained in this publication without considering and, if necessary, taking

appropriate advice in respect of his/her own particular circumstances.

PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with more than 2,100 people employed from 57 different countries. It provides audit, tax and advisory services including

management consulting, transaction, financing and regulatory advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the

Greater Region. It helps its clients create value they are looking for by giving comfort to the capital markets and providing advice through an industry focused approach.

The global PwC network is the largest provider of professional services in audit, tax and advisory. We’re a network of independent firms in 158 countries and employ close to 169,000 people. Tell us what matters to

you and find out more by visiting us at www.pwc.com and www.pwc.lu.

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Private Equity in Luxembourg 3

Table of contents

Introduction – Welcome to your guide to Private Equity in Luxembourg 4

Thought Leadership 6

Our services: from fund set-up to exit stage 12

Your market leader - Awards and recognition 14

Your PwC contacts 16

Taxation of Private Equity vehicles 22

Regulation and supervision of Private Equity vehicles 28

Listing Private Equity vehicles on the Luxembourg Stock Exchange 44

Useful contacts 46

Glossary 47

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4 PwC Luxembourg

IntroductionWelcome to your guide to Private Equity in Luxembourg

A prime location for doing businessThe Grand Duchy’s stable environment is one of the main reasons why Luxembourg is considered a prime location for doing business. In “Luxembourg, where else?” we list ten key factors that make Luxembourg distinctive: • strategic position in the heart of Europe,• neutrality, • welcoming and safe environment,• economic stability,• skilled multilingual workforce, • excellent infrastructure, • excellent logistics network, • host to top level multinational

financial and IT clusters, • flexible and open-minded authorities, and• attractive lifestyle.

The close relationship between decision makers and business has resulted in setting up and developing successfully the Luxembourg Financial centre. Indeed, at this point in time, it is ranked as one of the best in the world and accounts for around 28% of the country’s GDP and Luxembourg’s UCITS account for about 41% of the European market.

Vincent Lebrun

Tax Partner Private Equity Leader, PwC Luxembourg

The main purpose of the third edition of the Private Equity (“PE”) Brochure is to give you a general overview of the Private Equity Industry in Luxembourg. It presents the benefits of Luxembourg as a “prime location” for doing business and the value we can help you create in all your PE deals.

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With more than 13,000 funds/units and assets under management in excess of EUR 2,212 bn, at the end of May 2012, Luxembourg remains the second most important fund domicile in the world, behind the United States.

Private Equity in LuxembourgThanks to its efficient and flexible tax and legal environment, Luxembourg has become the preeminent jurisdiction for structuring PE funds and deals. In a survey conducted in June 2011 by the European Venture Capital Association (“EVCA”), Luxembourg was ranked among the most favourable jurisdictions. Historically, Luxembourg’s PE expertise was related to the “Société de participation financière” (“SOPARFI”) as an acquisition vehicle in PE deals, allowing tax structuring, legal implementation, domiciliation and administration. However, it was the adoption in 2004 of the law on “Sociétés d’Investissement en Capital à Risque” (“SICARs”) that really spurred the development of Luxembourg into a major hub for PE. According to the “Commission de Surveillance du Secteur Financier” (“CSSF”), i.e. the Luxembourg financial regulator, the

number of SICARs registered in February 2012 stood at 276, which shows that we’ve audited more funds than any other firm. The launch of Specialised Investment Funds (“SIFs”) in 2007 was a further step along the way to putting Luxembourg firmly on the map as the European jurisdiction for PE funds and structuring. CSSF figures for February 2012 counted 1,402 SIFs.

The introduction of both these vehicles, coupled with the fact that it has one of the most extensive double tax treaties network, shows that Luxembourg is highly commited to this activity in both the public and private sectors. We believe that this coherence is vital as the expertise of all players and service providers is needed to support the Grand Duchy as a PE cluster.

The impact of the crisisThe 2008 crisis continues to impact at different levels: loss of confidence, fewer assets available and a requirement to rethink the way PE deals are made. The business models are still evolving to longer pipeline preparation and shorter

execution with more complex structuring.The economy is continuing to recover from the financial crisis. In 2010, deals increased by 13% in volume and by 56% in value compared to 2009. In 2011, the European crisis had an impact on the volume.

New challenges and new opportunitiesAs a result of the financial crisis, new regulations and new requirements in terms of compliance emerged. The question of substance must be carefully monitored.New international regulations like FATCA, AIFMD, Solvency II or Dodd-Frank, and the recent Luxembourg circulars on Transfer Pricing are challenges that PE players need to assess and monitor.

The emergence of new sectors like Green Technologies, infrastructure and also the development of new deals in Eastern Europe attract PE Houses. We’ve developed highly elaborated knowledge in these new areas to be able to support the PE players to catch all the opportunities which may arise from this new environment.Our specialised department has over 100 experienced people dedicated to

the provision of cross-competency PE and Mergers and Acquisitions (“M&A”) services to clients, be they first-time funds or established players. We’ll support you in all aspects within the industry: from transaction support, tax structuring, accounting and disclosure best practice to investment portfolio valuation and audits.

Vincent LebrunTax Partner

For more information, please visit our website at:www.pwc.lu/private-equity

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Thought Leadership

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This section highlights some of the hot topics which affect or will affect the Private Equity industry.

PE Forum/PE NewslettersAs the Private Equity industry has been increasingly important to the Luxembourg business community, we’ve launched since 2009 a Private Equity Forum (including conferences and round table) to give professionals interested in the Private Equity industry the opportunity to discuss the industry challenges and to grab opportunities with experts. Our PE Forum is now gathering more than 150 people together, twice a year.

In addition, we regularly publish PE Newsletters about industry hot topics. Here is the link to read all our published PE Newsletters:http://www.pwc.lu/en/private-equity/news.jhtml

PwC NetworkWe have one of the largest networks of Private Equity and M&A tax specialists in the world. We can offer you experienced deal structuring and financing advice at all points throughout the deal cycle. Our expertise is also focused on structuring funds at each level of its life cycle. Our tax, transactions services, corporate finance, audit and regulatory professionals can support you in all aspects

of your transaction, working as a deals team. By using our experience, our international network and commercial focus we can add real financial value to transactions.

PwC’s AcademyOur training offers are practical and business-oriented, measured by participants’ ability to transfer new skills to their working place.

For each training session, we offer a participative pedagogical approach that turns the attendee into an active participant who shares the responsibility and pleasure of real learning taking place.

In addition, PwC’s Academy is committed to transforming the expertise of its local and international trainer network into dedicated training projects for our clients. Our team aims at: • exploring and analysing

your training needs,• developing innovative training

solutions that are in line with the latest developments in the market,

• taking care of all aspects of training logistics to guarantee a smooth delivery,

• providing clients with an insight into the latest developments in

training topics and formats via our interactive website.

• PwC’s Academy can also offer a wide range of training courses.

All the different aspects of Private Equity are covered including accounting, regulatory, tax.

Substance in LuxembourgA genuine and adequate substance is critical when setting up international structures.

In Luxembourg, regulated investment vehicles, by the mere need of satisfying their regulatory, reporting and compliance obligations, have to maintain an adequate level of local activity and substance in Luxembourg.

The question of substance is particularly taken into account when it comes to unregulated companies holding cross border portfolio investments that expect to benefit from DTTs and EU Directives and not to fall into foreign CFC rules (Controlled Foreign Corporation) or anti-avoidance regulation.

Over the past few years, we have noticed an emerging trend in various jurisdictions where portfolio companies are located, that tax administrations tend to challenge the actual substance of foreign holding

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companies. This has been driven by several factors, including: reluctance to globalisation, press coverage about alleged destructive behaviours of PE houses to the economy (albeit the EU Commission acknowledges that PE is good for the growth and stability of the economy, notably as shown in recent reports issued by EU institutions and declarations from EU officials).

Although many sizeable PE houses have had a significant and very long standing presence in Luxembourg, we see, nowadays, a general trend for concentration and, thus, much more visible holding activities in an integrated circle of holding companies.

So we conducted a substance survey dedicated to PE business in 2011. The survey aimed to gather, compare and share information on the level of substance of the PE Houses conducting business in Luxembourg.

We stress that Luxembourg offers a wide range of possibilities and advantages to PE houses that are determined to build up international holding structures. We could mention, for instance, the availability of a multilingual workforce familiarised with

the financial sector, social, political and monetary stability, among several other factors. For more information on substance and on the substance survey, please visit our web site. www.pwc.lu/private-equity

Foreign Account Tax Compliance Act (FATCA)The US Foreign Account Tax Compliance Act (FATCA), enacted on 18 March 2010, will have a substantial impact on certain foreign accounts held at foreign financial institutions (FFIs). This new legislation is focused on strengthening information reporting and withholding compliance for US persons that invest through or in non-US entities and will have specific significance for the private equity industry.

Dodd-Frank Wall Street Reform and Consumer Protection ActThe Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama on 21 July 2010, is one of the most complex pieces of legislation ever written. This sweeping legislation will significantly impact every aspect of the financial services sector. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act many hedge fund and private equity fund advisers

The main objective of our 2011 survey was to gather, compare and share information on the level of substance of the PE Houses conducting business in Luxembourg.

(private fund advisers) will be required to register with the Securities Exchange Commission (SEC). Financial services firms and other impacted organisations are just beginning to understand the Act’s many facets and its full impact.

Alternative Investment Fund Managers Directive (AIFMD)Member states are required to transpose the Alternative Investment Fund Managers Directive (AIFMD) in their national laws until July 2013 at the latest. The AIFMD subjects managers of alternative investment funds (AIFs) to compulsory regulation in the EU and will require significant changes to the structures, strategies and operations of fund managers and funds in the non-UCITS sphere and will also directly and materially affect those who service this industry.

Solvency IISolvency II is a regulatory project which will apply from 2013 that provides a risk-based, economic-based and principle-based framework for the supervision of insurance and reinsurance undertakings.The solvency capital requirement will be determined on the basis of the risks

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Private Equity in Luxembourg 9

of the undertakings derived from their assets and liabilities, as well as on the way in which such risks are managed.Solvency II will change the way regulatory capital is calculated and assets/liabilities are evaluated. Both aspects may have an impact on asset allocation and could generate lower allocation to investments perceived as riskier.

Under solvency II, the world of Private Equity Investment will have to manage performance, risk, capital charges and transparency requirements based on the risk appetite of the (re)insurance undertakings.

Specific knowledge on energy, ethical and biomass fundsWe strive to solve complex business issues, locally and globally, and when it comes to sustainability, we have been adapting ourselves to the concerns of our clients, including very specific ones. To meet your requirements effectively and efficiently, we’ve built a sustainability practice which offers a wide range of solutions.

We’ve developed our sustainability and climate change practice to provide you with a unique combination of financial, economic and technical skills related to sustainability.Our team, made up of financial strategy

specialists, environment/energy experts and engineers, can offer you a broad service offering, notably in PE by setting up your sustainability strategy, providing assurance on your current situation, and your future strategic decisions and reporting and monitoring.

SustainabilityPrinciples of Sustainable Development are increasingly becoming a part of Private Equity strategies. A majority of General Partners believe that questions related to Environmental, Social and Governance (ESG) issues are key factors to creating value. Whether at Fund level or at the level of the assets in their portfolio, Private Equity houses are on the forefront to recognise and make the most of the risk and opportunities created by present and future ESG challenges.

Our Sustainability Service, with a multidisciplinary team and an extensive experience, is the ideal partner to assist you in developing a comprehensive CSR strategy and increase the performance of your portfolio. We support you at each stage of the investment and holding period by sharing our expertise in ESG tools and labels like UNPRI, GRI, GHG Protocol, Bilan

Carbone and ISO26000 to make sure that you achieve the greatest cost efficiencies, the highest profitability and that you properly share it with all stakeholders.

Choosing the optimal investment vehicle - tax aspectsTaxation of a vehicle that qualifies as a Luxembourg investment fund (i.e. Part II Fund or SIF) is based on an indirect taxation on its NAV, and is thus conceptually different from the taxation of a vehicle under the SICAR law or of a SOPARFI, based on income derived. This means that an investment fund would be subject to taxation even in the case where no income is derived in a given period, whereas income based taxation would in principle only take place in the case of positive returns during a given period.

However, there is not a clear advantage of one vehicle over another, as the optimal choice would depend on the specifics of the situation and investor’s needs. But the tax features of all the described vehicles would probably allow, if properly planned, for an optimisation of the total tax leakage, not only in relation to Luxembourg taxes, but for the global investment structure.

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There are some additional tax factors to consider when choosing Luxembourg as a holding location for portfolio investments.

Access to EU Directives and to double tax treatiesLuxembourg companies subject to CIT should be entitled to benefit from the EU Directives, namely the Parent Subsidiary Directive and the council Directive 2003/49/EC of 3 June 2003 (“Interest and Royalties Directive”). Additionally, Luxembourg has an extensive double tax treaty (“DTT”) network with more than 60 treaties in place, and treaties with several other jurisdictions currently under negotiation.

Therefore, SOPARFIs and SICARs should in principle benefit from the dispositions of the EU Directives, as well as from the DTTs signed by Luxembourg. However, the SICAR should also be recognised as resident by the foreign tax administration to access the European Directives and DTTs, and, in view of the uniqueness of its tax regime, it is important to review on a case-by-case basis whether the SICAR may effectively benefit from the DTTs signed by Luxembourg and the EU directives.This should be carefully analysed from the

relevant foreign country perspective.Additionally, Luxembourg investment funds formed as investment companies (e.g. SICAVs) may also benefit from certain DTTs signed by Luxembourg, whereas investment funds formed as investment partnerships (i.e. FCPs) will generally not benefit from them, unless the unit-holders themselves are able to claim such benefits under the applicable DTT. Foreign withholding tax levied at source (as a reduced rate or at the normal rate) on exempt income received by a Luxembourg vehicle would normally not be refundable. Indeed, according to Luxembourg tax credit rules, the creditable amount is limited to the amount of Luxembourg tax that would have been levied on this income. Therefore, if such income is tax-exempt at the level of the Luxembourg vehicle, the foreign withholding tax would not be offset by any Luxembourg tax.

SICAR European Commission reviewIn February 2006, the EU Commission undertook a “request for information” procedure regarding the SICAR regime with the purpose of assessing whether it does or does not constitute an illegal State aid scheme. The Luxembourg government provided the EU Commission with answers

to the preliminary questions (offering explanations on the SICAR regime), but since then the EU Commission has not reacted and has not, to the best of our knowledge, opened any formal investigation.It is important to note that the clear and unambiguous position of the Luxembourg government is that the SICAR regime does not constitute illegal State aid.We recommend that you contact us if you want to discuss this issue.

Other considerations on the applicable Luxembourg tax frameworkThe Luxembourg tax administration has a long history of constructive dialogue with taxpayers, and has a business friendly attitude. The Luxembourg tax administration is also knowledgeable and familiar with more complex instruments and techniques used by the PE industry, notably with the use of dedicated financial instruments. The funding of the structures may therefore benefit from a great level of flexibility.

Luxembourg has an extensive double tax treaty network with more than 60 treaties in place.

There are no CFC rules in Luxembourg.

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For further information, please visit our website:www.pwc.lu/private-equity

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Accounting and Tax Compliance Services • Accounting advice to ensure proper implementation of contemplated transactions• Setting up charts of accounts, accounting procedures and policies, group accounting manuals

and group consolidation• Assistance in recordkeeping and reporting process, including accounting advisory support • Access to a dedicated tool (e-Accounts) that provides assistance with the preparation of the

annual accounts and their filing • Liaison with auditors to validate specific accounting treatment if required• Local reporting and group reporting (including IAS 12, FIN 48, FAS 109)• GAAP to GAAP translation and IFRS transition coordination• Preparation of forecasts and cash-flow, specific investors reporting and of financial information

for liquidation purposes• Preparation of an accounting due diligence• Preparation/review of Luxembourg corporate tax returns (including withholding tax returns)

and ongoing compliance work/liaison with the tax authorities• Global coordination tool (Encompass) and Tax Management Report (TMR)

Tax consulting• Tax structuring for all stakeholders during the investment

life cycle (i.e. fund set up, acquisition, refinancing, exit carry and co-investment)

• Risk management including operational diagnostic, systems and procedures review

• Tax due diligence (i.e. Buy side and Sell side)• Tax modelling for income repatriation (i.e. computation of

variable interest for debt instruments, and redemption prices)

• Advice on tax audit and challenges from tax authorities

Personal tax & Private wealth services • Tax and social security advice on cross border employment,

international assignments and changes of residences• Advice on tax optimisation of remuneration packages for

executives, PE managers, the employees of the targets and assistance in the implementation

• Wealth management tax services for executives with regards to their private assets

• Tax compliance services, covering income tax returns for individuals

Our services: from fund set-up to exit stage

Sustainability Services• Assistance in sustainability specific due diligence• Integration of ESG tools and strategies at Fund and Portfolio level

during the investment process and holding period • Support for the implementation and assurance of the UNPRI, GRI,

ISO 26000, ISO 14001, GHG Protocol and Global Compact• Development of a custom designed CSR strategy to manage

risk, seize new opportunities and create added value Regulatory services• Fund structuring, setting-up and licensing

assistance including compliance with regulatory entities’ requirements

• Exit re-domiciliation assistance• Fund migration strategy definition• Review of organisational documents (i.e. contracts) and

operating memoranda• Health checks and implementation support regarding new

regulatory requirements (e.g. AIFMD)

Corporate Structuring Services• Assistance in implementation • Assistance in restructuring operations• Corporate documentation and process• Assistance in the preparation of financing

agreements requiring a tax expertise• Implementation checks• Assistance in liquidation

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Audit• Audit of private equity structures• Private Equity Statement on Auditing Standards 70 (SAS 70)

Reports or Control Reports• SICARs, SIFs, Part II funds, Holdings,

Special Purpose Vehicles and portfolio companies• IFRS compliance review and advice on accounting questions • Contributions in kind and other document or

regulatory reviews• Review of an interim dividend, review of the allocation of

the carried interest/performance fees• Auditor of the liquidation of the company

VAT services• Identification of VAT opportunities and set-up of a VAT

strategy during the whole investment life cycle (i.e. acquisition, refinancing and exit)

• Design and improvement of internal controls and indirect tax risk management

• VAT due diligence (i.e. Buy side, Sell side)• Assessment of VAT risks• Review of invoicing flows and documentation relevant for

VAT, including agreements• Interaction with the authorities, including prevention of

litigation• VAT compliance• Tailored VAT training and workshops

Advisory services• M&A financial advisory• Processes and procedures definition• Tailored workshops regarding roles and responsibilities

regarding regulatory requirements• Assessment of business activities (e.g. risks and compliance)• Implementation of administration systems• Benchmarking of operations vs. market practice• Design re-engineering of business processes• Review of third party providers’ service level

Transfer pricing• Setting up tax efficient fund structure in line with arm’s

length principle including advice on appropriate cost base/minimum substance based functions, assets and risks

• Due diligence of Transfer Pricing matters • Audit Defence: assistance during tax audit or related party

in respective jurisdiction• Preparation of Transfer Pricing documentation in line with

OECD Transfer Pricing guidelines and Luxembourg tax law for justification of inter-company transactions including benchmarking analysis of such transactions

We’ve developed our private equity and venture capital expertise through the provision of dedicated specialists across varied business areas. Our multilingual team members can assist you in all aspects of your business: from Fund Structuring transaction support and tax structuring, to accounting and audit. We are the local market leader in terms of the audit of private equity funds and in international transaction structuring.

PwC’s Accelerator• Accelerate Venture Capital backed companies to a global

leadership position• Ability to offer a significant deal flow of investment

opportunities• Assistance to Private Equity fundraising with a geographical

diversified approach• Corporate structuring for portfolio companies• Office Facilities Services• International M&A• International development and set up• Team building and HR solutions• Exit strategies for portfolio companies• Analysis and due diligence services to PE/VC funds

Corporate Finance• Financial due diligence – Buyer/Vendor• M&A – Buy side, Sell side, assistance to

fund raising, management advisory• Valuation and valuation review

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Your market leader - Awards and recognition

Luxembourg2011

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Luxembourg2010

Global

These awards are pleasing indications that we are listening and responding to our clients’ needs, and playing a responsible role in our wider community.

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Your PwC contactsLuxembourg Private Equity Industry Core Group

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Your key contacts in tax consulting

Vincent Lebrun is a leading Luxembourg tax specialist for private equity houses on M&A transactions and Fund Structuring. On 1 July 2008, Vincent Lebrun took over the leadership on the Private Equity Industry within PwC Luxembourg. He has 12 years tax experience with PwC Luxembourg and prior to that two years with Banque Générale de Luxembourg.

Vincent Lebrun is a lawyer and holds also a Master’s degree in Tax gained in Belgium at the Solvay Business School. Vincent Lebrun has wide experience in tax structuring cross border transactions, including acquisitions, refinancings and disposals, where Luxembourg is used as a holding location. He also advises on fund structuring (including carry and co-invest structures).

Vincent LebrunTax Partner – Private Equity [email protected]+352 49 48 48-2225

For further information, please visit our website:www.pwc.lu/private-equity

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Your key contacts in tax consulting

Laurent GrençonTax Partner - VAT services for Private Equity and Real Estate [email protected]+352 49 48 48-5769

Laurent Grençon has almost 15 years of professional experience with a strong knowledge in the field of financial services where he solves VAT matters for the accounts of international clients like investment funds and asset managers as well as holding companies and private equity structures. In addition, Laurent Grençon works in close cooperation with key players of the real estate industry and develops structured solutions for the management of the VAT situation of Pan-European real estate funds. Laurent Grençon holds a Master’s degree in taxation at HEC Liège (Belgium). He is a chartered accountant in Luxembourg. Laurent Grençon regularly publishes VAT articles and speaks at industry and tax seminars. He is also an active member of the VAT working groups of various professional associations.

Begga SigurdardottirTax Partner - Private Equity Transfer [email protected]+352 49 48 48-2584

Begga Sigurdardottir is a partner focusing on transfer pricing and alternative investments. She has many years of experience in advising alternative investment managers and funds, and has recently been involved in advising on transfer pricing matters in connection with alternative investments, taking into account recent Luxembourg transfer pricing rules. She leads a team of transfer pricing specialists in Luxembourg.

Fiona MonsenTax Partner – Tax Structuring, Repatriation Planning and Due [email protected]+352 49 48 48-5707

Fiona Monsen moved to PwC Luxembourg in 2009 after having worked with PwC London. Fiona Monsen is a specialist adviser in the global M&A and Alternative Investment Industry with over 15 years of transaction experience including: investment holding structures, repatriation and remuneration planning, Initial Public Offerings, secondary market transactions, management buy outs and fund structuring including carry and co-investment.

Laurent de La MettrieTax Partner - Regulated Private Equity Structures and Hedge Funds [email protected]+352 49 48 48-2598

Laurent advises Management Companies and several Private Equity and Hedge Fund Managers with regards to international tax structuring for Investment Funds, including Hedge Funds and Private Equity structures. He also advises clients on securitisation transactions in Luxembourg. In addition, Laurent is a savings taxation expert and advises clients on matters relating to the implementation of the European Savings Directive. Laurent is also PwC Luxembourg’s IMRE tax leader.

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Your key contacts in global compliance services

Christophe LolyTax Partner - Corporate Structuring [email protected] +352 49 48 48-5726

Christophe Loly leads PwC Luxembourg Corporate Structuring Services. He is specialised in the assistance of local, operational and multinational companies. He assists them in managing their routine, during all the corporate life, from incorporation to liquidation, helping them to understand the Luxembourg framework and cope with their obligations. Christophe Loly has experience in combining tax, accounting and legal issues, to propose integrated solutions fitting the companies’ business needs.

Luc TrivaudeyTax Partner - Private Equity Accounting and Tax Compliance [email protected] +352 49 48 48-2520

Luc Trivaudey heads the Private Equity Accounting Services practice of PwC Luxembourg, which provides assistance for the preparation of annual accounts under local GAAP or IFRS, consolidation and accounting advice, as well as training on complex structuring. Luc Trivaudey is a member of the Accounting Commission working groups representing the chartered accountants organisation.

Géraldine PiatTax Partner – Private Equity Tax Compliance [email protected]+352 49 48 48-5777

Géraldine Piat leads the Private Equity tax compliance services group, which provides assistance with preparation of tax returns, computation of tax accruals and, generally, day to day tax questions that may arise. Our tax compliance group may also assist with tax due diligence, “health check” review of implemented structures and operational diagnostics.

Fabienne [email protected]+352 49 48 48-2556

Fabienne Moquet, a fully qualified lawyer, is a partner in the PwC Luxembourg Corporate Structuring Services team. Having a long experience in corporate tax consulting, she is familiar with international tax structures and instruments. She is able to assist private equity groups through the implementation process, bringing projects to life. Fabienne is experienced in working on cross border operations and coordinating solutions with other service providers, locally or internationally.

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Your key contacts in audit

Philippe DurenAudit Partner - Unregulated Private Equity Structures and [email protected] +352 49 48 48-5835

Philippe Duren specialises in Unregulated Private Equity Structures. He leads the Luxembourg Technical Team and has extensive International Financial Reporting Standards (IFRS) experience. Philippe Duren is a member of the Luxembourg Accounting Standards Commission headed by the Ministry of Justice.

Markus MeesAudit Partner - Private [email protected] +352 49 48 48-2517

Markus, Réviseur d’entreprises agréé and Wirtschaftsprüfer, specialises in Private Equity and Investment Management and has over 20 years of experience in audit in Luxembourg and Germany. Markus services various Unregulated and Regulated Private Equity clients including SICARs and SIFs. He is particularly conversant with product structuring for the German and Swiss market.

Véronique LefebvreAudit Partner - Assurance Private Equity Leader and Member of Real Estate Luxembourg Core [email protected] +352 49 48 48-2515

Véronique Lefebvre specialises in Private Equity and Unregulated Real Estate structures. She has extensive deal structuring and (IFRS) International Financing Reporting Standards experience.

Valérie TixierAudit Partner - Private Equity Funds [email protected]+352 49 48 48-5797

Valérie Tixier, Réviseur d’entreprises agréé, is specialised in Private Equity and Investment Management and has over 16 years of experience in audit. She is a member of the Private Equity and Investment Management core groups. As Private Equity Funds Leader in Luxembourg, she is responsible for Private Equity Funds development, client events, and training solutions. She is also part of Luxembourg professional associations such as Association of the Luxembourg Fund Industry (ALFI), Private Equity Committee and the Luxembourg Private Equity and Venture Capital Association (LPEA) promotion Committee and is a regular speaker in private equity related conferences or events.

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Your key contacts in corporate finance, regulatory and advisory

Jean-François KroonenCorporate Finance [email protected] +352 49 48 48-2527

Jean-François Kroonen leads a team of expert who provide financial solutions to our Private Equity clients: our M&A and Due Diligence services allow you to increase value during transactions (buy-side, sell-side, assistance to fund raising, funding restructuring, etc.). The valuation team supports you in estimating the value of PE-structured assets (equity investments, service debt, high-yield bond, mezzanine debts, CPECs, etc.). He also delivers advisory services to local custodians and administrators in the area of best practice operations and procedures for Private Equity clients servicing funds or special purpose vehicles.

Xavier BalthazarPartner - Regulatory Compliance Advisory Services (“RCAS”)[email protected] +352 49 48 48-2543

Xavier Balthazar is a partner in the FS Consultancy department, specialising in Regulatory and Compliance matters. He has worked on a number of Private Equity assignments, including assistance in the setting up of funds and operating memoranda and assistance in the creation of private equity desks at clients.

Olivier CarréAdvisory Partner - Private Equity [email protected]+352 49 48 48-2615

Olivier is a partner in the Financial Services Advisory Department of PwC Luxembourg. He has gained extensive experience in the review and design of Private Equity operational set-ups, controls and workflows. He has assisted Private Equity Managers and Service Providers on a number of assignments, including assistance in operational reviews, drafting of operating memoranda and assistance in the creation of private equity desks. He is a member of the Association of the Luxembourg Fund Industry Alternative Investment Fund Managers Directive workgroup.

Laurent RouachSustainability Partner - Sustainability and Climate [email protected]+352 49 48 48-2550

Laurent is responsible for environmental and operational assignments with a focus on the Real Estate sector. He has a strong expertise in sustainable development and carbon emission management, mainly in the area of Real Estate, sustainable building, energy and environment. After founding, at the beginning of the nineties, several active engineering companies in Luxembourg, France and Belgium, Laurent Rouach has joined PwC in 2011, as a Partner.

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Taxation of Private Equity vehicles

The choice of the vehicle is not only driven by fiscal reasons, but would result from the combined analyses with several other aspects, like regulatory, business and other non-tax aspects.

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Here is a summary of some generic differences on the tax treatment applicable to the different options for holding portfolio investments through a Luxembourg structure.

PART II FUND SIF SICAR SOPARFI

Subscription tax In principle 0.05% per annum computed on the NAV, payable and computed quarterly. It may be reduced to 0.01% or even exempt in some specific situations.

In principle 0.01% per annum, computed on its NAV, payable and computed quarterly. Some exemptions are available.

Not applicable. Not applicable.

Income tax 1 Part II Funds are not subject to income taxes in Luxembourg.

SIFs are not subject to income taxes in Luxembourg.

Subject to corporate income tax at the standard rate 2. However, income resulting from securities qualifying as risk capital do not constitute taxable income. Income deriving from liquid assets might benefit from corporate income tax exemption if said assets are not held more than 12 months.

Subject to corporate income tax at the standard rate. An exemption would normally be available to dividend income, liquidation proceeds and capital gains derived from a qualifying participation under the Luxembourg participation exemption regime (transposition of council Directive 90/435/EEC of 23 July 1990, “Parent Subsidiary Directive”)3. Luxembourg tax resident entities whose activity does not require a business licence or the approval of a supervisory authority, will be liable to a minimum EUR 1,500 CIT (increased to EUR 1,575 by the 5% contribution to the employment fund) in cases where the sum of financial assets, transferable securities and cash at banks exceeds 90% of the total balance sheet.

Notes: 1 SICARs and SOPARFIs incorporated as limited partnerships (e.g. “Societe en Commandite Simple”) are exempt from Luxembourg corporate income tax as they are deemed to be transparent for Luxembourg tax purposes. SICARs established as a limited partnership will not be considered as a permanent establishment in Luxembourg of non-resident partners and will therefore be exempt of Municipal Business tax. A SOPARFI established as a limited partnership would be subject to Municipal Business tax only in case it is deemed to perform a commercial activity in Luxembourg via a permanent establishment. However, the document will generally refer to SOPARFI in the context of the regular holding company subject to the general tax law provisions.

2 The aggregate corporate income tax rate (i.e. including Corporate Income tax and Municipal Business tax) for companies established in Luxembourg City is 28.80 % (as from 1 January 2011). 3 Participation held by a Luxembourg SOPARFI would qualify for the Luxembourg participation exemption regime in the case where the subsidiary would either be (a) a resident capital company fully liable to Luxembourg

income tax, or (b) a non-resident capital company fully liable to a tax corresponding to Luxembourg corporate tax (i.e. based on administrative practice, corporate tax must be assessed at the minimum rate of 10.5% in similar terms as in Luxembourg), or (c) a company resident in an EU member State mentioned in Article 2 of the EU Parent-Subsidiary Directive. The participation in a qualifying company needs to represent at least 10% of its total share capital or have an acquisition value of at least EUR 1.2 Mio (EUR 6 Mio for capital gains) and be held (or committed to be held) for a minimum uninterrupted period of at least twelve months. In the case where the above holding or threshold conditions are not met, only 50% of the dividend income would be tax exempt (and 50% of the connected expenses will not be tax deductible).

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PART II FUND - SIF SICAR SOPARFI

Withholding tax on distributions

No withholding tax should apply on any distributions whether paid to resident or non-resident investors. However, if constituted as a FCP, some payments may be subject to withholding tax under the EU Savings Directive when paid to EU resident individuals or some entities unless an exchange of information applies 1.

Interest and dividends allocated to investors (residents and non-residents) are not subject to any withholding tax in Luxembourg.

No withholding tax applies to liquidation proceeds or to interest payments (with some specific exceptions 1).In principle, 15% withholding tax applies to dividend payments. However, an exemption would be available under the Luxembourg participation exemption regime 2.

Non-residents capital gains taxation

Non-resident investors are not subject to tax in Luxembourg. Non-resident investors are not subject to tax in Luxembourg.

Non-resident investors are not subject to tax in Luxembourg, except in the case of speculative capital gains 3.

Notes: 1 The Directive 2003/48/EC (i.e. Savings Directive) provides for a transitional period when Luxembourg is entitled to apply a withholding tax instead of a reporting procedure. The applicable rate is currently at 20%, and to be increased up to 35% as from 1 July 2011. However, the beneficial owner may avoid the withholding tax by either authorising an exchange of information or providing a tax certificate. The withholding tax applies exclusively to interest, so dividends and capital gains are, in principle, excluded. Nevertheless, dividends and capital gains from certain investment funds could potentially be in the scope of the Savings Directive depending upon the regulatory classification and the composition of the portfolio. Therefore, in order to ascertain whether the distributions are under the scope of the Directive or not, attention must be paid in relation to several specific aspects (e.g. the entity’s portfolio, residency of the paying agent and investors). It should be stressed that it is likely that the Savings Directive will be modified in the future to include in its scope all dividends and capital gains deriving from investment funds whatever their regulatory classification provided their portfolio exceed certain thresholds in terms of debt claims.

2 Namely, the participation in the distributing Luxembourg company is held by (a) another Luxembourg fully taxable capital company, or (b) a company listed in Article 2 of the EU Parent-Subsidiary Directive (or a Luxembourg permanent establishment of such a company) or (c) a company resident in a country with which Luxembourg has concluded a double tax treaty and is fully liable to a tax corresponding to Luxembourg corporate tax (or a Luxembourg permanent establishment of such a company), or (d) a Swiss resident joint-stock company that is subject to Swiss corporate income tax without benefiting from any exemption, or (e) a joint-stock company or a cooperative society which is resident in a EEA Member State (other than a EU Member State) and is fully liable to a tax corresponding to the Luxembourg corporate income tax (or a permanent establishment of such a company). Additionally, the distributing Luxembourg company should be held (or committed to be held) for at least twelve months and the participation should represent at least 10% of the share capital or have an acquisition cost of at least EUR 1.2 Mio.

3 Where a non-resident (non-treaty protected) individual investor or a corporate investor derives income (capital gain) from the disposal of an important participation (i.e. more than 10% of the share capital) of shares/units in a Luxembourg investment fund/company, within six months of its acquisition/incorporation (or if the Luxembourg company is put into liquidation), such a capital gain would be subject to tax in Luxembourg at a maximum rate of (currently) 41.34% for individual investor, and 22.05% for a corporate investor. If the non-resident (non-treaty protected) investor is a former Luxembourg tax resident (and being non-resident for less than five years before the realisation of the income, but tax Luxembourg resident for at least 15 years) derives capital gain from the disposal over an important participation (i.e. more than 10% of the share capital) of shares/units in a Luxembourg investment fund/company, such a capital gain would be subject to tax in Luxembourg at a maximum rate of (currently) 41.34% for individual investor, and 22.05% for a corporate investor.

The aggregate corporate income tax rate (i.e. Corporate Income tax and Municipal Business tax) for companies established in Luxembourg City is 28.80%.

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PART II FUND SIF SICAR SOPARFI

Net wealth tax Exempt. Exempt. Exempt. 0.5% assessed on 1 January of each year on the basis of the estimated realisable value of their net assets (i.e., the so-called unitary value). The unitary value of a SOPARFI is determined on the basis of the balance sheet as of 31 December of the preceding year. The unitary value is set on 1 January of each year but is only assessed every three years, unless there is a difference in the unitary value representing a variation of 20% on the previous unitary value or a variation of EUR 75,000. It may be possible to create a special reserve 1. Participation that qualifies for the participation exemption regime may be exempt in the computation of the unitary value under certain conditions 2.

Registration duty EUR 75 upon incorporation and any amendments of the articles of incorporation (except for FCP).

EUR 75 upon incorporation and any amendments of the articles of incorporation (except for FCP).

EUR 75 upon incorporation and any amendments of the articles of incorporation.

EUR 75 upon incorporation and any amendments of the articles of incorporation.

VAT on purchases 3 Services rendered to Part II Funds that qualify as “management services” are exempt 4.

Services rendered to SIF that qualify as “management services” are exempt 4.

Services rendered to SICAR that qualify as “management services” are exempt 4.

Depending on their nature, transaction services rendered to SOPARFIs may be exempt.

Input VAT Recovery In specific cases. In specific cases. In specific cases. If the SOPARFI carries out an economic activity, input VAT on costs can be recovered where these costs have a direct and immediate link with the economic activity of the SOPARFI.

Notes: 1 A reduction of the net wealth tax payable is available if the taxpayer transfers retained earnings or profits in a special reserve for an amount that equals five times the amount of the net wealth tax to be reduced and the commits to block this special reserve for five years (the amount of the reserve being limited to the corporate tax liability due for that same year before tax credits).

2 Participations may be exempt from net wealth tax if such participations have been acquired for at least EUR 1.2 Mio or represent at least 10% of the subsidiary’s share capital and such subsidiary is either (a) a Luxembourg resident fully taxable capital company, (b) a non-resident capital company fully liable to a tax corresponding to Luxembourg’s corporate income tax or (c) a company residing in an EU Member State and covered by Article 2 of the Parent Subsidiary Directive. There is no holding requirement.

3 The standard VAT rate in Luxembourg is 15%. There are reduced rates for specific goods/services; in particular a 12% reduced rate applies to “control and supervision” services. 4 The concept of “management services” may include a wide range of services (e.g. accounting services, computation of the NAV, investment advice services, etc.). According to the decision of the European Court of

Justice in the Abbey National case, services of a depositary should not be considered as “management services”, but as “services of control and supervision” that are subject to VAT. Sub-contracted services may also be exempt from VAT if they are specific and essential to the management of an investment fund and if they cannot be seen as isolated types of services.

The unitary value of a SOPARFI is determined on the basis of the balance sheet as of 31 December of the preceding year.

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PART II FUND - SIF SICAR - SOPARFI

Tax compliance requirements

• Submission of quarterly tax returns in relation to subscription tax.

• Payment of the subscription tax due within 20 days after the end of the quarter (i.e. 20 April, 20 July, 20 October and 20 January).

• The tax returns encompass three taxes: Corporate Income Tax (CIT), Municipal Business Tax (MBT) and Net Wealth Tax (NWT) (no NWT return needs to be prepared for a SICAR). Tax returns for CIT and MBT must be submitted annually whereas tax returns for NWT are to be filed every three years. The deadline for the filling of the tax returns is set at 31 May of each year following the financial year under review.

• CIT, MBT and NWT are paid through four prepayments during the year: - for CIT: before 10 March, 10 June, 10 September and 10 December, - for MBT and NWT: before 10 February, 10 May, 10 August and 10 November.

The taxpayer has a 30 day period of payment after the receipt of the notice of assessment.

Tax compliance requirements - VAT

• Taxable persons carrying out taxable activities must register for VAT purposes. The registration request must be filed within 15 days as from the beginning of the taxable activity. When they do not have a right to deduct input VAT, vehicles that qualify as a taxable person for VAT purposes must nonetheless register for VAT purposes when they receive taxable services or goods from suppliers established outside Luxembourg. In this case, the VAT compliance obligations are lightened.The VAT registration process encompasses the filing of an initial VAT return with the VAT administration. On such return, the applicant has to mention general information about the entity (e.g. name, type, activity, shareholders, address, bank account number, annual turnover, among others).

• The annual turnover and the type of activity performed determine the frequency of the VAT returns the company will have to file. For a standard VAT registration, this can be summarised as follows:

(a) If the annual turnover exceeds EUR 620,000, the entity will have to file monthly VAT returns as well as an annual summary return. (b) If the annual turnover is higher than EUR 112,000 but does not exceed EUR 620,000,

the entity will have to file quarterly VAT returns as well as an annual summary return. (c) Finally, if the annual turnover does not exceed EUR 112,000, the entity should only have to file an annual VAT return.

For a simplified VAT registration, only one simplified annual VAT return must be filed per calendar year.

• With regard to the reporting obligations relating to VAT, the annual return for a calendar year should be filed: - before 1 May of the following year in the cases (a) and (b) here above. - before 1 March of the following year in the case (c) here above and simplified VAT registrations.

According to current well-established administrative tolerance, the VAT authorities grant an eight-month extension to file the annual VAT return.

• Taxable persons carrying out only VAT exempt activities that do not entitle the recovery of input VAT and who are not liable to account for VAT on services or goods received from suppliers established outside Luxembourg, are not required to register for VAT purposes.

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PART II FUND - SIF - SICAR - SOPARFI

Transfer Pricing Rules

• Transfer pricing is the price transferred between related parties in terms of goods, services, financing arrangements or intellectual property. The transfer price between related parties should be set as if a transaction was concluded with a third party. Arm’s length remunerations have to be respected based on the transactions under scope rather than based on specific industries.

• The arm’s length remuneration of a transaction depends on the assets, functions, and risks involved at the level of the Luxembourg entity. The more assets a company/fund uses, and the more risks it assumes, the higher will be the arm’s length return.

• Transfer pricing documentation requirements in Luxembourg have increased recently for funding activities financed by borrowings, further to Circular LIR N° 164/2 issued on 28 January 2011. Intra-group financing transactions have to comply with stricter substance, equity and documentation requirements. In essence, this means, that a company should have “appropriate” capital to assume the risks, amounting to, at least, either 1% of the nominal value of the granted financing or to EUR 2 million. The substance requirements involve, among others, that a majority of board members are Luxembourg residents, and that key decisions are taken in Luxembourg. The arm’s length remuneration needs to be supported by transfer pricing documentation.

• On 8 April 2011, the Luxembourg tax authorities issued an additional Circular (L.I.R. N°° 164/2 bis), clarifying the application of L.I.R 164/2. The additional Circular explains the situation of companies engaged in intra-group financing and for which a confirmation from the tax authorities has been obtained before 28 January 2011 regarding the arm’s length nature of the pricing. Such confirmation will no longer have effect as from 1 January 2012, and, consequently, a new request should be filed in this respect, in accordance with the requirements set out in L.I.R. 164/2.

• Circular N° 164/2 does not, however, apply to Management Company activities. Additional transfer pricing rules may, however, be applicable to all private equity transactions in the near future.

The Circulars L.I.R. N°164/2 bis deal with the situation of companies engaged in intra-group financing.

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Regulation and supervision of Private Equity vehicles

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Type of vehicle Need that the vehicle may fulfill:

Part II Fund • An “onshore” regulated investment fund supervised by the CSSF 1.• An investment fund which is open to “non sophisticated” investors (i.e. no competency or minimum investment requirements).• An investment fund allowing investment in any type of asset.• A vehicle that is not subject to corporate income tax.

Specialised Investment Fund (“SIF”) • An “onshore” regulated investment fund supervised by the CSSF.• An investment fund which is dedicated to institutional, professional and other well-informed investors, benefits from less demanding legal and

regulatory requirements than a Part II Fund.• An investment fund allowing investment in any type of asset. • A vehicle that is not subject to corporate income tax.

Investment Company in Risk Capital (“SICAR” - Société d’Investissement en Capital a Risque)

• An “onshore” light regulated investment company more flexible (this is not an investment fund since the SICAR is not subject to the principle of investment risk diversification) supervised by the CSSF.

• An investment company which is dedicated to institutional, professional and other well-informed investors, benefits from less stringent and regulatory requirements than a Part II Fund.

• An investment company allowing investment in any type of PE assets and which is not subject to investment risk diversification requirements.• An investment company which has features similar to a fund as (i) while it is subject to corporate income tax (but not the transparent entities)

and thus, in principle, may benefit from EU Directives and double taxation treaties “DTT”), the revenues of PE investments are excluded from the taxable basis and (ii) it can be set up with a variable capital, meaning that subscriptions and redemptions of shares in a SICAR are not subject to the formalities, quorum and majority requirements applicable to amendments of the articles of association in a company.

Regular holding company (“SOPARFI” - Société de Participation Financière)

• A Luxembourg company carrying on holding and financing activities which is not subject to the prudential supervision of a financial authority (a “non-regulated” company).

• Subject to the amended Law of 10 August 1915 on Commercial Companies, as amended (“the Company Law”)• A company which, because it is fully subject to corporate income tax, benefits from a wide access to DTT signed by Luxembourg with other countries and from

application of the EU Directives (e.g. Parent Subsidiary Directive).• A company which may, subject to certain conditions (i.e. applicability of the Luxembourg participation exemption regime) and proper structuring, benefit from

an efficient tax regime.• A company which, for the above reasons, is frequently used as an acquisition and financing vehicle for foreign offshore investment funds investing in European PE.

Note: 1 CSSF: Commission de Surveillance du Secteur Financier

We can create Private equity vehicles either as a Part II Fund of the Law of 2010, a SIF, a SICAR or under the form of holding company.

Here is a summary of the main regulatory requirements applicable to each type of private equity vehicle. The choice of the appropriate vehicle will depend on

the type of investor targeted, the type of investment as well as the flexibility you’re looking for in terms of diversification.

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Here are the specificities of each of these vehicles:

PART II FUND SIF SICAR SOPARFI

Legal framework Subject to Part II of the Law of 17 December 2010 on Undertakings for Collective Investment (the “Fund Law”).

Subject to the Law of 13 February 2007 on Specialised Investment Funds (the “SIF Law”) as amended by the law of 26 March 2012.

Subject to the Law of 15 June 2004 on investment companies in risk capital, as amended (the “SICAR Law”).

Subject to the Law of 10 August 1915 (the “Company Law”).

Legal forms • Corporate form • Corporate form • Corporate form • Corporate form

- Investment company with variable capital (SICAV):

- Investment company with variable capital (SICAV):

• S.A.1 • S.A.1

• S.C.A.2

• S.à r.l.3

• SCoSA4

• S.A.1

• S.C.A.2

• S.à r.l.3

• S.C.S.6

• SCoSA• S.A.1

• S.C.A.2

• S.à r.l.3

• S.C.S.6

• SCoSA4

- Investment company with fixed capital (SICAF):

- Investment company with fixed capital (SICAF):

• S.A.1

• S.C.A.2

• S.à r.l.3

• S.A.1

• S.C.A.2

• S.à r.l.3

• S.C.S.6

• S.N.C. 5

• Société civile 7

• SCoSA4

• Contractual form - Contractual fund (FCP 8)

with a Luxembourg management company.

• Contractual form - Contractual fund (FCP 8) with a Luxembourg

management company.

• No contractual form available. • No contractual form available.

Notes: 1 S.A.: public limited liability company 2 S.C.A.: corporate partnership limited by shares 3 S.à r.l.: private limited liability company 4 SCoSA: cooperative company organised as a public limited company 5 S.N.C.: unlimited partnership 6 S.C.S.: limited corporate partnership 7 Société civile: civil company 8 FCP: Fonds Commun de Placement

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Basics on corporate formsThe choice of the corporate form of an investment company is based on the combination of several factors like:• tax transparency of the company,• liability of shareholders,• number of shareholders and

freedom on transfer of shares,• possibility of being listed,• ease to integrate new shareholders,• strict division between managers of

the company and shareholders.

The S.A. is particularly convenient when:• roles, powers and responsibilities in the

management, i.e. directors, shareholders need to be clearly organised,

• company intends to be listed,• other investors may enter the structure,• number of investors is large

(more than 40 investors).

The S.C.A. may be interesting when:• the founding investors want to retain

total control of the management,• they have an unlimited liability, but

they cannot be dismissed from the management without their own consent.

The S.à r.l. is convenient when:• the number of shareholders is

small (less than 40 investors),• the shareholders want to preserve

a significant personal link between shareholders by limiting the transfer of shares to external investors.

The S.C.S. is convenient when:• founding shareholders want to retain

total control of the management, • a tax transparent vehicle is required.

The choice of the appropriate vehicle will depend on the type of investor targeted, the type of investment as well as the flexibility you’re looking for.

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PART II FUND SIF SICAR SOPARFI

Investors All types of investors. Well-informed investors as defined below.A well-informed investor shall be an institutional investor, a professional investor or any other investor who meets the following conditions:• He has confirmed in writing that he

adheres to the status of well-informed investor, and

• He invests a minimum of EUR 125,000 in the SIF, or

• He has been subject to an assessment made by either a credit institution within the scope of Directive 2006/48/EC, an investment firm within the scope of Directive 2004/39/EC or by a management company within the scope of Directive 2001/107/EC certifying his expertise, his experience and his knowledge in adequately appraising an investment in a SIF.

These conditions are not applicable to the directors and other persons who are involved in the management of the SIF.

Well-informed investors as defined below.A well-informed investor shall be an institutional investor, a professional investor or any other investor who meets the following conditions:• He has confirmed in writing that he

adheres to the status of well-informed investor, and

• He invests a minimum of EUR 125,000 in the company, or

• He has been subject to an assessment made by a credit institution within the scope of Directive 2006/48/EC, by an investment firm within the scope of Directive 2004/39/EC or by a management company within the scope of Directive 2001/107/EC certifying his expertise, his experience and his knowledge in adequately appraising an investment in risk capital.

These conditions are not applicable to the directors and other persons who are involved in the management of the SICAR.

All types of investors.

Type of securities that may be issued to investors

Shares/Units. • Shares/Units.• Beneficiary units.• Debt instruments.

• Shares/Units.• Beneficiary units.• Debt instruments.

• Shares/Units.• Beneficiary units.• Debt instruments.

Ongoing subscription and redemptionof shares possible

Yes, at applicable net asset value plus subscription/redemption fees (principle of “variable capital”).

Yes, at a price determined according to the offering documents (principle of “variable capital”).

Yes, at a price determined according to the offering documents (principle of “variable capital”).

Yes, although variations of share capital would potentially not be an easy process to handle (principle of “fixed capital”). But, additional flexibility would be possible through the use of share premium and increase of authorised capital.

The net asset under management in Luxembourg amounts to EUR 2,212 bn in May 2012.

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PART II FUND SIF SICAR SOPARFI

Structuring of capital calls

• SICAV: capital calls must be organised by way of capital commitments (i.e. contractual undertaking of an investor to subscribe shares of the company upon request and to fully pay them up).

• SICAF: capital calls in an S.A./S.C.A. may be organised either by way of capital commitments or through the issue of partly paid shares (to be at least paid up to 25%). An S.à r.l. cannot issue partly paid shares.

• FCP: capital calls may be organised either by way of capital commitments or through the issue of partly paid units.

Capital calls may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to at least 5%) or units.

Capital calls may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to at least 5%).

In S.A., capital calls may be organised either by way of capital commitments or through the issue of partly paid shares (to be paid up to 25%). S.à r.l. and SCoSA cannot issue partly paid shares.Shares in an S.A. that are issued in exchange for contributions other than cash (and generally referred to as “contributions in kind”) must be paid-up within a period of five years from the date of their issue and must be supported by an audit report issued by an independent auditor. However, Company Law does not lay down any maximum period for paying up cash contributions.

Minimum capital requirement, compartments and classes of shares

• Minimum capital of EUR 1.25 Mio to be reached within six months following approval of the Part II Fund by the CSSF.

• Multiple compartments authorised.• Classes of shares authorised.

• Minimum capital of EUR 1.25 Mio (including the share premium) to be reached within 12 months following approval of the SIF by the CSSF.

• Multiple compartments authorised.• Classes of shares authorised.

• Minimum capital of EUR 1 Mio (including the share premium) to be reached within 12 months following approval of the SICAR by the CSSF.

• Multiple compartments authorised.• Classes of shares authorised.

• Minimum capital for S.A./S.C.A.: EUR 31,000

• Minimum capital for S.à r.l.: EUR 12,500.

• No minimum share capital for SCoSA and S.C.S.

• Multiple compartments are not authorised but a deemed compartmentalisation may be achieved through proper structuring.

• Classes of shares authorised.

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PART II FUND SIF SICAR SOPARFI

Eligible investments and investment restrictions

• Unrestricted eligible investments (i.e. equity, debt and hybrid instruments of unlisted companies and real estate).

• Risk diversification requirements in Circular CSSF 91/75. Early approval of the investment objective and strategy by the CSSF.

Investment of up to 20% of the fund/compartment’s net assets in one issuer. It is, however, possible to set up and hold entirely a special purpose vehicle. The compliance with investment restrictions will be appreciated on the basis of the underlying assets by transparency.

• Unrestricted investments (equity, debt and hybrid instruments of unlisted companies and real estate).

• Risk diversification requirements in Circular CSSF 07/309.

Investments in similar securities of one issuer should represent up to 30% of the SIF’s assets. It is, however, possible to set up and entirely hold a special purpose vehicle. The compliance with investment restrictions will be appreciated on the basis of the underlying assets by transparency.

Investments must represent “risk capital” as defined in Circular CSSF 06/241. SICARs are not subject to risk spreading requirements (i.e. equity, debt and hybrid instruments of unlisted companies representing capital risks and venture capital).

Eligible investments unrestricted. SOPARFI are not subject to risk spreading requirements.

Distribution of dividends

Distributions to investors are not subject to restrictions other than compliance with the minimum capital requirements and the provisions of the articles of association (SICAV or SICAF) or management regulations (FCP).

Distributions to investors are not subject to restrictions other than the compliance with the minimum capital requirements and the provisions of the articles of association (SICAV or SICAF) or management regulations (FCP).

Distributions to investors are not subject to restrictions other than compliance with the minimum capital requirements and the provisions of the articles of association.

Distributions of dividends from S.A., S.C.A. and S.à r.l. must be made in accordance with Company Law, and are subject to the existence of distributable reserves (more restrictive than for Part II Funds, SIFs and SICARs). Subject to certain requirements, payment of interim dividends is also possible for S.A., and S.C.A., (in practice, interim dividends are possible for S.à r.l.).

Supervision by the CSSF

Yes. Yes (less stringent supervision than UCITS and Part II UCIs).The promoters and the asset managers do not need to require the prior approval of the CSSF.

Yes (less stringent supervision than UCITS and Part II UCIs).The promoters and the asset managers do not need to require the early approval of the CSSF.

No supervision.

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PART II FUND SIF SICAR SOPARFI

Licensing requirements

• Before starting their activities, Part II Funds must receive the CSSF’s early authorisation.

• The CSSF will pay particular attention to: - fund’s draft constitutional

documents, notably the prospectus, - identification of the promoter of the

fund (must demonstrate a good reputation, be a professional in the financial sector, be supervised in its country of residence and have sufficient financial resources),

- identification of the persons in charge of conducting the business of the fund and managing the fund (must demonstrate adequate experience for acting in such capacities),

- identification of the directors (resume, declaration of honour, extract from criminal records),

• The CSSF’s prior authorisation is required for SIFs as from 1 April 2012.

• The CSSF will pay particular attention to: - SIF’s draft constitutional documents,

notably the offering document, - identification of the persons in

charge of conducting the business of the SIF (must demonstrate adequate experience for acting in such capacities),

- identification of the directors (resume, declaration of honour, extract from criminal records),

- identification of the Luxembourg domiciled central administration and custodian which must have the relevant licenses/authorisations for acting in such capacities,

• SICARs must receive the CSSF’s early authorisation before starting their activities1.

• The CSSF will pay particular attention to: - SICAR’s draft constitutional documents,

notably the prospectus, - identification of the persons in charge of

conducting the business of the SICAR (must demonstrate adequate experience for acting in such capacities),

- identification of the Luxembourg domiciled custodian which must have the relevant licenses/authorisations for acting in such capacities,

- identification of the Luxembourg domiciled central administration which must have relevant resources and means to perform its duties (but no license is required),

- identification of the SICAR initiator and of the investment manager,

- identification of the independent auditors (e.g. letter of intent or engagement letter),

• In practice, when no commercial activity is performed towards entities outside the group, no license is required. If commercial activities are performed with third party companies, a business licence has to be obtained by the company and the current management.

• The conditions to obtain such a licence are: - good standing of the applicant, - economic knowledge of

the applicant, - fixed place of business adapted to the

nature and level of the activities to be performed.

Note: 1 A SICAR may not start its activities until it is authorised by the CSSF. However, a SOPARFI may be initially set up in order to seize investment opportunities and to avoid time constraints linked to the authorisation process. In a second stage, the SOPARFI can be converted into a SICAR.

In February 2012, there were 1,402 Specialised Investment Funds in Luxembourg.

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PART II FUND SIF SICAR SOPARFI

Licensing requirements

- identification of the Luxembourg domiciled central administration and custodian which must have the relevant licenses/authorisations for acting in such capacities,

- identification of the investment manager, which subject to the derogation must have relevant authorisations,

- identification of independent auditors (letter of intent or engagement letter).

- identification of the independent auditors,

- marketing strategy.

- business plan, - ex-ante risk analysis, - marketing strategy.

Compulsory service providers in Luxembourg

• Custodian - responsible for safekeeping the fund’s assets and certain other supervisory duties. It must be a Luxembourg bank or a Luxembourg branch of a foreign bank.

• Central administration - responsible for accounting, NAV (“Net Asset Value”) calculation, keeping of the register of the shareholders/unit holders, handling subscriptions and redemptions, communication with investors and preparation of financial statements. It must be a Luxembourg bank or a branch of a foreign bank or a professional of the financial sector with a proper licence.

• Custodian - responsible for safekeeping the fund’s assets. It must be a Luxembourg bank or a Luxembourg branch of an EU bank.

• Central administration - responsible for accounting, NAV calculation, keeping of the register of the shareholders/unit holders, handling of subscriptions and redemptions, communication with investors and preparation of financial statements. It must be a Luxembourg bank or a branch of an EU bank or a professional of the financial sector with a proper licence.

• Custodian - responsible for safekeeping SICAR assets. It must be a Luxembourg bank or the Luxembourg branch of a foreign bank.

• Statutory auditor(s) (“commissaire aux comptes”, who is an organ of the company) is required for S.A., S.C.A. and S.à r.l. with more than 25 shareholders, which do not equal or exceed two of the three following criteria listed in the paragraph below.

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Under the updated SIF regime, the CSSF reviews and authorises the draft constitutional, offering documents and approve the various intervening parties in the fund.

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PART II FUND SIF SICAR SOPARFI

Compulsory service providers in Luxembourg

• A management company subject to chapter 16 of the 2010 Law if the Part II fund is set up as an FCP (minimum capital requirements of EUR 125,000; no substance requirement).

• Investment manager must be authorised or registered for the purpose of asset management and subject to prudential supervision of a regulatory authority.

• “Réviseur d’entreprise agréé”

• A management company subject to chapter 16 of the 2010 Law if the SIF is set up as an FCP (minimum capital requirements of EUR 125,000; no substance requirement).

• Investment manager must be authorised or registered for the purpose of asset management and subject to prudential supervision of a regulatory authority (exception possible, subject to CSSF approval).

• “Réviseur d’entreprise agréé”

• Central administration responsible for accounting, NAV calculation, keeping of the register of the shareholders/unitholders, handling of subscriptions and redemptions, communication with investors and preparation of financial statements. The central administrator must be located in Luxembourg, it does not need to be a regulated entity but shall in any case demonstrate that it has the necessary human and technical resources to properly conduct its mission (outsourcing abroad is possible under certain conditions and on a case-by-case basis).Investment manager does not need to be authorised.

• “Réviseur d’entreprise agréé”

• Independent qualified auditor(s) (“réviseur d’entreprises”) is required for S.A., S.C.A. and S.à r.l. with more than 25 shareholders, which equal or exceed two of the three following criteria for two consecutive financial years: - average full time employees during the

financial year: 50, - total balance sheet of EUR 4,400,000. - net annual turnover of EUR 8,800,000

(turnover does not include interest income nor dividend income).

• Thus, a S.à r.l. with no more than 25 shareholders, which does not exceed two of the three above criteria is not subject to the legal control of its accounts by statutory or independent auditors.

• Applying the same principle, an S.A. or an S.C.A., which does not exceed two of the three above criteria, is not subject to the legal control of its accounts by an independent auditor but only by a statutory auditor.

Supervisory reporting requirements

• Monthly reporting to the CSSF (due on the 10th of the following month as per Circular CSSF 08/348).

• Annual audited report (due four months after year end).

• Long form report to be issued in accordance with the Circular CSSF 02/81. Derogations may be obtained if investors are exclusively institutional investors.

• Monthly reporting to the CSSF (due on the 10th of the following month as per Circular CSSF 08/348).

• Annual audited report (due six months after year end).

• No long form report required.

• Semi-annual reporting to the CSSF (due 45 calendar days after the reference date as per Circular CSSF 08/376 ).

• Annual audited report (due six months after year end).

• No long form report required.

Not applicable.

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PART II FUND SIF SICAR SOPARFI

Frequency of NAV calculation

At least once a month (the CSSF may however, grant derogations upon a duly justified application).

At least once a year. At least once a year. Not applicable.

Distribution of shares to investors

Public distribution may be possible in certain countries subject to compliance with local rules. Otherwise distribution will have to be limited to private placement.

Distribution limited to well-informed investors. Compliance with marketing rules in distribution countries must be ensured.

Distribution limited to well-informed investors. Compliance with marketing rules in distribution countries must be ensured.

Subject to compliance with the Prospectus and the Company Law, public offering of Securities is possible for S.A. and S.C.A.

Documents to establish accordingto laws and regulations

• Prospectus.• Articles of association (in case of a

SICAV or SICAF) or Management regulations (in case of an FCP).

• Agreements with the service providers.• Annual audited financial statements

(annually within four months of period end).

• Semi-annual non audited financial statements (annually within two months of period end).

• Long Form Report (annually within four months of period end).

• Management letter prepared by the “réviseur d’entreprise agréé”.

• Offering document (any modification of the essential elements of the offering document will be subject to CSSF early approval).

• Articles of association (in case of a SICAV or SICAF) or Management regulations (in case of an FCP).

• Agreements with the service providers.• Annual audited financial statements

(annually within six months after the year end).

• Management letter prepared by the “réviseur d’entreprise agréé”.

• Offering document.• Articles of association.• Agreements with the service providers.• Annual audited financial statements

(annually within six months of period end).• Management letter prepared by the

“réviseur d’entreprise agréé”.

• Articles of association.• Annual accounts (audited if applicable)

should be approved by the shareholders within six months following the year-end, and filed with the Trade and Companies Register within the following month (with other documents). A filing notice should be published in the Memorial. A trial balance as at closing date prepared in accordance with the standard chart of accounts will also be filed. This trial balance should only be accessible to tax authorities and statistic institution.

• Consolidated annual accounts (if applicable).

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Part II Funds, SIFs, SICARs and multiple compartmentsPart II Funds, SIFs and SICARs may be constituted with multiple compartments, each compartment corresponding to a distinct part of the assets and liabilities of the investment vehicle. The constitutional documents of the investment vehicle must expressly provide for that possibility and the applicable operational rules. The offering document or prospectus must describe the specific investment policy of each compartment.

The securities of a Part II Fund, a SIF or a SICAR with multiple compartments may be of a different value with or without indication of a par value depending on the legal form which has been chosen.

The rights and obligations of investors and of creditors concerning a compartment or which have arisen in connection with the creation, operation or liquidation of a compartment are limited to the assets of that compartment, unless a clause included in the constitutional documents provides otherwise.

For the purpose of the relations between investors, each compartment will be

deemed to be a separate entity, unless a clause included in the constitutional documents provides differently.

Each compartment of a Part II Fund, a SIF or a SICAR may be separately liquidated without such separate liquidation resulting in the liquidation of another compartment. Only the liquidation of the last remaining compartment of the investment vehicle will result in the liquidation of the vehicle.

The compartments of the Part II Funds and SIFs are, under certain conditions authorised to invest in another compartment of the same fund.

While SOPARFI can’t be divided into multiple compartments, we can apply a deemed compartmentalisation through adequate structuring. Indeed, Luxembourg holding companies may be turned into investment platform companies (i.e. MasterLuxCo concept) whereby, provided the structure and financing agreements are properly designed, several offshore or onshore funds could invest through the same holding company in different kinds of

assets. Such tax structuring is well-tested, flexible and efficient to suit private equity funds’ constraints and needs.

This structuring allows easy investments and divestments and benefits from the tax regime applicable to a SOPARFI, i.e. access to DTT, EU Parent-Subsidiary directive, no supervision and low administrative costs.

Part II Funds, SIFs and SICARs can create multiple compartments with segregated portfolios of assets and liabilities.

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PART II FUND SIF SICAR SOPARFI

Accounting principles applicable for the preparation of statutory and consolidated annual accounts

The following GAAP are available for statutory annual accounts and consolidated account:• Luxembourg GAAP with assets

valuation and value/ probable realisation value.

• IFRS.

The following GAAP are available for statutory annual accounts and consolidated account:• Luxembourg GAAP with assets valuation

and fair value.• IFRS.

The following GAAP are available for statutory annual accounts and consolidated account:• Luxembourg GAAP with assets valuation

and fair value.• IFRS.

The law of 10 December 2010 modifying the accounting law of 19 December 2002 introduced new options for SOPARFI. The following GAAP are available for statutory annual accounts and consolidated annual accounts: - Luxembourg GAAP under the historical

cost principle, - Luxembourg GAAP with fair value options

on financial instruments (assets and some liabilities) and other categories of assets,

- full IFRS as adopted by the EU (IFRS for Small and Medium Entities (“SME”) are not allowed).

Full IFRS as adopted by the EU is however, mandatory for consolidated annual accounts of companies having equity and/or debts listed on a EU regulated market.

Standard Chart of Accounts (PCN)

Out of the scope of the PCN. Out of the scope of the PCN. Out of the scope of the PCN. In the scope of the PCN only if statutory annual accounts are prepared under Luxembourg GAAP (under historical cost principle or with fair value options): a (electronic) filing of a trial balance under the format of the PCN has to be done with the filing of the annual accounts1.

Note: 1 The PCN is not applicable to the SOPARFIs as defined by the “Commission des Normes Comptables” (“CNC”) in its guidance 1-1, which are the holding companies as per the law of 31 July 1929 (regime repealed as at 31 December 2010) and the SPF. For sake of clarity, any SOPARFI incorporated under the Company Law is therefore within the scope of the PCN.

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PART II FUND SIF SICAR SOPARFI

Valuation principles for financial fixed assets

Probable realisation value, estimated in good faith.

Fair value determined in accordance with the rules set forth in the fund’s constitutive documents.

Fair value determined in accordance with the rules set forth in the articles of association.

There are four valuation principles applicable in Luxembourg for financial fixed assets: - cost less impairment in case of durable

depreciation (the most commonly used for holding companies),

- lower of cost or market value, - fair value (new option provided by

accounting law), - equity method (rarely used).

Consolidation requirements

In principle, any company having the control over one or several subsidiaries has to prepare consolidated annual accounts and a consolidated annual report. However, several exemptions exist.

Exempt by law from the requirement to prepare consolidated annual accounts.

Exempt by law from the requirement to prepare consolidated annual accounts.

In principle, any company having the control over one or several subsidiaries has to prepare consolidated annual accounts and a consolidated management report. However, several exemptions exist1:

Note: 1 The following exemptions to prepare consolidated annual accounts are foreseen for the SOPARFI.

For further information, please visit our website:www.pwc.lu/private-equity

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Exemptions from consolidation

Small groupBy way of derogation, a parent company shall be exempt from the obligation to draw up consolidated accounts and a consolidated annual report if both the balance sheet of the parent company and of the subsidiaries, which would have to be consolidated, do not, on the basis of their latest annual accounts, exceed the limit of two out of the three criteria set below:

- balance sheet total: EUR 17,500,000 - net turnover: EUR 35,000,000 - average number of full-time employees: 250 employees1.

The exemption shall not apply where one of the subsidiaries to be consolidated is a company the securities of which are admitted to the official listing on a stock exchange established in a Member State of the EU.

Upstream consolidationWhere a parent company is integrated into the consolidated structure of another company established in one of the Member States of the EU, it may be exempt from preparing consolidated annual accounts, as long as it meets certain requirements (e.g. the filing of the consolidated annual accounts of its mother company in Luxembourg).

Such exemption is also available for companies preparing their consolidated accounts in accordance with provisions similar to those included in the seventh EU Directive. In practice, US GAAP and IFRS may qualify for the exemption.

Interference with the subsidiariesThe exemption may also be granted if a Luxembourg parent company is not directly or indirectly involved in the management, administration and supervision of its subsidiaries. In practice, this exemption is rarely granted due to the restrictive legal requirements governing the eligibility for the exemption (the authorisation has to be granted by the “Administration de l’Enregistrement et des Domaines”).

CNC guidance on consolidation for private equity and venture capitalThe “Commission des Normes Comptables” (“CNC”) has defined six conditions that are deemed appropriate for companies active in the private equity or venture capital industries to meet in order for them to be able to apply the consolidation scope exclusion set out in Company Law.

This interpretation guideline shall apply for financial years beginning on or after 1 January 2009.

- The company must be held by well-informed investors; - Its activities must be restricted to investments in securities representing risk capital meaning the direct or

indirect contribution of assets to entities in view of their launch, development or listing on a stock exchange;

- Its object is to ensure for their investors the benefit of the result of the management of their assets in consideration for the risk which they incur;

- The assets of the company shall be disclosed at fair value (either on the face of the balance sheet or in the notes to the accounts);

- An exit strategy should be defined ex-ante in a document addressed to the investors which should stipulate an intent to dispose of the asset within a three to eight year time period;

- Any event or commitment which may have a significant impact on the financial situation (e.g. guarantees, pledge, debts covenants, etc.) should be appropriately disclosed in the accounts.

The responsibility for not preparing consolidated accounts rests with the managers or the board of directors. So, it is advisable for management to assess carefully, on a case-by-case basis, that the conditions are fully compliant with the law and that the absence of consolidation is indeed in the best interest of the company and of its internal and external stakeholders.

Note: 1 The calculation is effected based on the average number of the employees during the financial year, and expressed in the full time equivalent.

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Listing Private Equity vehicles on the Luxembourg Stock Exchange

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Reasons for listing a PE vehicle in Luxembourg

Why list a PE vehicle?• Give institutional investors the opportunity to buy eligible products

(e.g. UCITS funds, insurance companies and pension funds).• Enhance issuer’s visibility and transparency. • Provide additional investors trust as regards products valuation. • Increase liquidity for the products. • Benefit from tax advantages. • Grant access to additional funds for future growth. • Get financing via the offer of shares to the public.• Increase the liquidity of the shares of the vehicle.• Raise the visibility of the vehicle with other customers, providers, etc.

Why list in Luxembourg?• The stable and secure public finance and tax environment.• Benefits from confirmed triple AAA long term credit rating and high level of reputation.• Long history and important experience in the domiciliation and the administration of

investment funds.• European leader for registration of funds distributed on a pan-European basis. • Due to the straightforward and inexpensive listing formality, it can be done within

a short timeframe. • The change of status by moving from an offshore centre to a regulated onshore centre, such

as Luxembourg, enhances the distribution to a broader range of customers, both of an institutional background, high net-worth individuals and retail investors.

• The existence of a permanent base centre permits eligibility for investments in the context of various jurisdictions.

Did you know that? Luxembourg’s Euro MTF was the first European exchange regulated market, created in 2009 with an offering value of EUR 1,575 Mio.The money raised on Luxembourg’s Euro MTF market contributed to 57 % of the total raised on Europe’s exchange regulated markets. Luxembourg attracted 73 % of all international IPO by value and 54 % by volume with its Euro MTF market hosting all 21 of its international IPO. 483 issuers from more than eleven different countries list 7,445 lines of Undertakings for Collective Investments (UCIs).

Main regulations applicable to the two markets

The Luxembourg Stock Exchange Market: an EU regulated market• Prospectus Directive 2003/71/EC.• Market Abuse Directive 2003/6/EC.• Transparency Directive 2004/109/EC.• MiFID Directive 2004/39/EC.• Rules and regulations of the Luxembourg Stock Exchange.• The ten Principles of Corporate Governance of the Luxembourg Stock.

The Euro-Multilateral Trading Facility: an exchange regulated market• Market Abuse Directive 2003/6/EC partially applicable.• MiFID Directive 2004/39/EC.• Rules and regulations of the Luxembourg Stock Exchange.

The Luxembourg Stock Exchange boasts vast experience in listing Luxembourg domiciled vehicles. Recent changes in regulation have made the Luxembourg Stock Exchange a highly attractive listing place for offshore vehicles as well as Luxembourg domiciled PE vehicles.

The transparent approach and short communication lines with the Luxembourg financial authorities create an efficient business environment.

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Useful contacts

Association of the Luxembourg Fund Industry12, rue Erasme, L-1468 Luxembourg P.O. Box 206, L-2012 Luxembourg Tel.: +352 22 30 26-1Fax: +352 22 30 93E-mail: [email protected] www.alfi.lu

The Luxembourg Bankers’ Association12, rue Erasme, L-1468 Luxembourg P.O. Box 13, L-2010 LuxembourgTel.: +352 46 36 60-1Fax: +352 46 09 21E-mail: [email protected] www.abbl.lu

Luxembourg Private Equity & Venture Capital AssociationBâtiment Président Park8, rue Albert Borschette, Luxembourg L-1246 E-mail: [email protected]

Commission de Surveillance du Secteur Financier - CSSF 110, route d’Arlon, L-2991 LuxembourgTel.: +352 26 25 1-1Fax: +352 26 25-1601E-mail : [email protected] www.cssf.lu

Société de la Bourse de Luxembourg11, avenue de la Porte-Neuve, L-2227 LuxembourgTel.: +352 47 79 36-1Fax: +352 47 32 98E-mail: [email protected] www.bourse.lu

PwC’s Academy400 rte d’Esch, 1471 LuxembourgTel.: +352 49 48 48 4040E-mail: [email protected]

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Glossary

CSSF Commission de Surveillance du Secteur Financier (commission for the supervision of the financial sector)

DTT Double Taxation Treaties

SME Small and Medium Entities

PCN Plan Comptable Normalisé

Euro MTF Multilateral Trading Facility

FCP Fonds Commun de Placement (contractual fund)

IAS International Accounting Standards

IFRS International Financial Reporting Standards

MiFID Markets in Financial Instruments Directive

Mio Million

M&A Mergers & Acquisitions

NAV Net Asset Value

NYSE New York Stock Exchange

S.A. Société Anonyme (publicly limited company)

S.à r.l. Société à Responsabilité Limitée (limited liability company)

S.C.A. Société en Commandite par Actions (partnership limited by shares)

S.C.S. Société en Commandite Simple (limited partnership)

SCoSA Société Cooperative Organisée sous forme de Société Anonyme (cooperative company organised as a public limited company)

SICAF Société d’Investissement à Capital Fixe (investment company with fixed capital)

SICAR Société d’Investissement en Capital à Risque (investment company with risk capital)

SICAV Société d’Investissement à Capital Variable (investment company with variable capital)

SIF Specialised Investment Fund governed by the Law of 13 February 2007

Part II Funds Funds governed by Part II of the Law of 17 December 2002

VAT Value Added Tax

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www.pwc.lu/private-equity

© 2012 PricewaterhouseCoopers, Société coopérative. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers, Société coopérative Luxembourg, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.