S E T T I N G U PA N A LT E R N AT I V E

I N V E S T M E N T V E H I C L EI N L U X E M B O U R G

Luxembourg,a favorable environment

for your investment vehicle

• I d e a l l y l o c a t e d a n d agateway to the Europeanmarket .

• With highly skil led multi-cultural and multi l ingualprofessionals.

• Benefiting from polit icaland economic stability.

And more specifically

• Ranked 1s t investment fund center in Europeand 2n d in the world.

• A unique concentration of investment fund i n d u s t r y e x p e r t s i n a l l a s p e c t s o f p r o d u c t development.

• Offers a f lexible and secured legal environ-m e n t f o r p r o m o t e r s , a s s e t m a n a g e r s a n d investors.

• Prox imi ty wi th the regulator and leg is la tor ensuring a constructive and innovative businessfriendly approach.

• With an attractive tax regime for alternativeinvestment vehicles and a broad network ofdouble tax treaties.

Distribution of investmentfund assets in Euro area

LUXEMBOURG

3 5% 3,679.3 EUR billions

GERMANY1 8%

IRELAND1 7%

FRANCE1 2%

THE NETHERLANDS8%

OTHERS1 0%

Ref : European Central Bank, June 2016

Ove r v i ew o f t h e ma i n L u x embou r g a l t e r n a t i v e i n v e s tmen t v e h i c l e s

NON-REGULATED VEHICLES

SOPARFIPARTNERSHIP

SECURITIZATIONREGULATED VEHICLES

UCI - PART IISIFSICAR

RAIF

Choosing a regulated or a non-regulated vehicle?Regulated vehicles may be more attractive to investors as they offer additional pro-tection, being subject to supervision by the Luxembourg financial authority (CSSF) both atimplementation and on an on-going basis.

As a consequence of regulatory requirements, regulated vehicles will have lengthier implementation and operational processes and wil l support addit ional functioningcosts compared to the non-regulated solutions.

However, their non-regulated counterparts come with unbeatable time to market and flex-ibility, but less investors’ protection.

Your targeted group of investors should therefore be your main driver when optingfor the regulated or non-regulated route.

Why having to choose between flexibility and security?Luxembourg is welcoming the RAIF!

Introduced in July 2016, the Reserved Alternative Investment Fund (RAIF) might justbe the perfect investment fund solution, providing a relevant balance between the reg-ulated and non-regulated options.

With this new type of alternative investment funds (AIF), fund initiators and authorized alternative fund managers (AIFM) may set up an investment fund having substantially thesame characteristics and flexibil it ies as the already well-established specialized in-vestment fund (SIF) or investment company in risk capital (SICAR) but without requir-ing approval and ongoing supervision from the Luxembourg regulator.

With unbeatable time to market and benefiting from indirect supervision through its authorized AIFM – thus allowing distribution under the EU marketing passport of theAIFM – the RAIF has a very promising future.

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 2

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 3

M a i n A l t e r n a t i v e I n v e s t m e n t S o l u t i o n s

SOPARF I

The SOPARFI is the tradit ionals o l u t i o n f o r p r i v a t e e q u i t y investments.

I t is a standard Luxembourgcompany taking the form of apartnership l imited by shares(SCA), a public l imited company(SA) or a private limited company(SARL) with a dedicated primaryactivity in holding f inancial(such as l isted and non-l istedequity) and non-financial (suchas real estate) assets. Althougha ful ly taxable structure, theSOPARFI benefits from exemptionson dividends, capital gains andliquidation proceeds and is alsoe l i g i b l e t o d o u b l e t a x t r e a t ybenefits.

Key features:

• No investor eligibil ity requirements

• No investment restrictions

• No diversification requirements

• Managed by a sole manager, a managementbody or a general partner

• Fully taxable but exemptions on dividends, capital gains and liquidation proceeds

• Eligible to double tax treaty benefits

• No supervision by the Luxembourg f inancialregulator

NON -REGULATED V EH I C L ES

SOPARFIPARTNERSHIP

SECURITIZATION

UCI - PART IISIFSICAR

RAIF

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 4

COMBINED STRUCTURE

A Combined structure consisting of a Partnership holding participations in one ormore SOPARFI(s) may be usefully implemented.

It allows a full f lexibil ity at the Partnership level for organizing the terms governinge.g. the investments, rights of investors and governance, and benefits from the un-derlying tax opaque entities (SOPARFI) with its applicable tax regime and eligibil ityto double tax treaties.

It also allows the segregation of different investment pools by using the respectiveSOPARFIs as dedicated compartments.

PARTNERSHIP

T h e P a r t n e r s h i p i s t h e n o n -regulated solution elected forbeing highly f lexible (terms ofthe partnership are freely deter-mined between investors in thepartnership agreement) and taxtransparent and, as such, notsubject to taxes. Investors aretreated as i f they directly heldthe investments for tax purposes.

In a Partnership, the ownershipis divided between limited partnerswho have a l imited liabil ity andone or more general partners,acting usually as manager(s) ,with unlimited liability – althoughitself usually set up as a local orforeign limited liability company.

Key features:

• No investor eligibil ity requirements

• No investment restrictions

• No diversification requirements

• M a n a g e d b y a g e n e r a l p a r t n e r o r a n o t h e r appointed manager

• High flexibility in setting the terms of the part-nership

• Simplified accounting and publication require-ments

• Tax transparent

• No supervision by the Luxembourg f inancialregulator

SOPARFI

PARTNERSHIPSECURITIZATION

UCI - PART IISIFSICAR

RAIF

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 5

SECURIT IZAT ION

L u x e m b o u r g l a w a l l o w s t h e securit ization of al l types ofrisks and makes it accessible toall types of investors.

A securitization vehicle wil l beflexible, tax neutral and usuallynot subject to supervision bythe Luxembourg financial regu-lator (if not issuing to the publicon a continuous basis).

Key features:

• No investor eligibil ity requirements

• Limited to securitization transactions

• No diversification requirements

• F i n a n c e d t h r o u g h t h e i s s u e o f e q u i t y / d e b t instruments

• Managed by a sole manager, a managementbody or a general partner

• Segregation of assets via mult iple compart-ments possible

• Independent auditor required

• Tax neutrality

• No supervision by the Luxembourg f inancialregulator (under conditions)

SOPARFIPARTNERSHIP

SECURITIZATIONUCI - PART IISIFSICAR

RAIF

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 6

REGULATED V EH I C L ES

SIF

The Special ized InvestmentFund (SIF) offers an increasedinvestors’ protection with initialapproval and ongoing supervisionb y t h e L u x e m b o u r g f i n a n c i a lregulator, mandatory appointmentof a depositary and independentauditors.

A SIF may invest in all types ofassets, provided that they complywith minimum diversificationrules , and is restr icted to“wel l- informed” investors, i .e .inst i tut ional , profess ional or quali f ied investors investing a minimum of EUR 125,000 orcertified by a banking institutionor a management company.

It benefits from a tax exemptstatus, only subject to a yearlysubscription tax of 0.01% of itsnet assets.

Key features:

• Legal form: company (with f ixed of variable capital), partnership or contractual form (FCP)

• Subscribed share capital to reach EUR1,250,000 within 12 months of creation

• L i m i t e d t o “ w e l l - i n f o r m e d ” i n v e s t o r s ( i . e . i n s t i t u t i o n a l , p r o f e s s i o n a l o r q u a l i f i e d investors)

• No investment restrictions

• Diversif ication requirement: 30% rule (ramp-up period possible)

• A n a u t h o r i z e d m a n a g e r ( A I F M ) m u s t b e appo in ted if total assets exceeds certainthresholds

• Segregation of assets via mult iple compart-ments possible

• Open or closed ended

• Mandatory independent audit and depositary

• Tax exempt status (but yearly subscription tax of 0.01%)

• Restricted el igibi l i ty to double tax treaty benefits

• Superv ised by the Luxembourg f inanc ia lregulator

SOPARFIPARTNERSHIP

SECURITIZATION

UCI - PART II

SIFSICAR

RAIF

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 7

SICAR

The SICAR is a regu la ted and fiscally efficient structure specif-ically designed for risk capitalinvestments, i .e. investments inall types of assets provided thatthey are considered as oppor-tunist ic or high r isk with the intention to develop them.

A SICAR may invest in only oneasset and is restricted to “well-informed” investors.

Key features:

• Legal form: company (with f ixed or variable capital) or partnership

• Subscribed share capital to reach EUR1,000,000 within 12 months of creation

• Limited to “well-informed” investors (i.e. insti-tutional, professional or qualified investors)

• Restricted to risk capital investments

• No diversification requirements

• An authorized manager (AIFM) must be appointedif total assets exceed certain thresholds

• Segregation of assets via mult iple compart-ments possible

• Open or closed ended

• Mandatory independent audit and depositary

• Fully taxable but exemption on income and gains from risk capital

• S u p e r v i s e d b y t h e L u x e m b o u r g f i n a n c i a lregulator

SOPARFIPARTNERSHIP

SECURITIZATION

UCI - PART IISIF

SICARRAIF

SEM I - R EGULATED V EH I C L E

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 8

RAIF

As mentioned above, a RAIF is anon-regulated vehicle subjectto indirect supervision of theLuxembourg financial regulatort h r o u g h i t s f u l l y a u t h o r i z e d a l t e r n a t i v e i n v e s t m e n t f u n dmanager (AIFM).

Its features mirror either theSIF or the SICAR and may thusbe implemented for all types ofinvestment strategies.

Specif ic transformation rulesapply to the RAIF, which mightfor instance evolves into a fullyregulated structure. As such,the RAIF might also be seen asan incubator.

Key features:

• S u b s c r i b e d s h a r e c a p i t a l t o r e a c h E U R1,250,000 within 12 months of creation

• Limited to “well-informed” investors (i.e. insti-tutional, professional or qualified investors)

• Mirroring either SIF or SICAR features

• Mandatory independent audit and depositary

• Semi-regulated, i .e. no direct supervision butmanaged by a fully authorized European basedAIFM

SOPARFIPARTNERSHIP

SECURITIZATION

UCI - PART IISIFSICAR

RAIF

K e y c o n s i d e r a t i o n sw h e n s e l e c t i n gy o u r L u x e m b o u r g i n v e s t m e n t v e h i c l e

* Subject to exceptions

Ba s i c O p e r a t i o n a l F e a t u r e s

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 9

NON-REGULATED SEMI-REGULATED REGULATED

SOPARFI PARTNERSHIPCOMBINED SECURITIZATION RAIF SIF SICARSTRUCTURE

Investor eligibility No No No No

Well-informed Well-informed Well-informed requirements investors investors investors

• All if SIFEligible investments All All All All • Risk capital only All Risk capital only

if SICAR

Risk diversification No No No No

• Yes if SIF Yes (30%) No

requirements • No if SICAR

SegregatedNo No Yes Yes Yes Yes Yes

Compartments

B a s i c I n v e s tmen t F e a t u r e s

NON-REGULATED SEMI-REGULATED REGULATED

SOPARFI PARTNERSHIPCOMBINED

SECURITIZATION RAIF SIF SICARSTRUCTURE

Setup time3 - 6 2 - 4 3 - 6 3 - 6 3 - 6 2 - 4 2 - 4

Weeks Weeks Weeks Weeks Weeks Months Months

Setup cost + + + + + + + + +

Depositary No No No No Yes Yes Yes

Independent auditors No* No* No* Yes Yes Yes Yes

Supervisory fees None None None None* None Yes Yes

AIFM Optional* Optional* Optional* None Required Required* Required*

Investor’s protection Low Low Low Low Medium High High

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 0

Ba s i c Ta x Tr e a tmen t a s o f 0 1 / 0 1 / 2 0 1 7

NON-REGULATED SEMI-REGULATED REGULATED

TAXES* SOPARFI PARTNERSHIP SECURITIZATION RAIF SIF SICAR

CORPORATE INCOME TAX 20.33% n/a 20.33% n/a 20.33%

Exemptions*Dividend income � � �

Capital gains realized by the company � � �

MUNICIPAL BUSINESS TAX (ICC)6.75% 6.75% 6.75%

in Luxembourgn/a

in Luxembourgn/a

in Luxembourg

Exemptions*Dividend income � � �

Capital gains realized by the company � � �

LIQUIDATION PROCEEDS n/a n/a n/a n/a n/a

NET WEALTH TAX** 0.5% n/a 0.5% n/aFixed

minimum onlyExemptions* Qualifying participations � �

TAX ON PAID DIVIDENDS 15% n/a n/a n/a n/a

Exemptions*Qualifying parent companies �

Application of double tax treaty �

VALUE-ADDED TAX 17% 17% 17% 17% 17%Exemptions* Management services to AIF*** � � � � �

SUBSCRIPTION TAX n/a n/a n/a 0,01% n/a(Net Assets)

* Subject to conditions** Subject to a fixed minimum*** Alternative Investment Fund under AIFM regulation

Basedeither on

SIF / SICARtax regime

A b o u tF E LT E N & A s s o c i é s

Our C l i en t Se rv ice Ph i losophyWe aim at adapting our offer to our clients’ needs and therefore developed severallevels of involvement, ranging from:

• An “all-inclusive approach” – We assist you in all aspects of your project and leadits implementation, from the selection of relevant service providers to the launchof the investment vehicle or closing of the transaction. We may also continue ourinvolvement on an ongoing basis by monitoring the daily operations of the structurein place.

• The “standard approach” – We assist you in the legal aspects of your project, set-ting up the relevant legal structure and preparing relevant legal documentation.

• The “compliance approach” – Working closely with your in-house legal counsel,we ensure compliance of the contemplated structure and review your legal docu-mentation at the l ight of the most recent legal and tax developments and thereforeprovide you with the necessary legal comfort for all your projects.

Based on the relevant approach for your projects and your needs, we endeavor tofind the most appropriate bil l ing arrangements, whether agreeing on a flat fee, ded-icated hourly rates and/or success fees.

In all our involvements, we commit to efficiency, responsiveness and transparencyso that you look at us not only as reliable and competent legal advisors but also astrue business partners.

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 1

With over 20 years of service, FELTEN & Associés is a ful l service corporate law f irm located in Luxembourg, one of the most important financial centers worldwide. FELTEN &Associés is a human-sized firm with a multi l ingual team in which partners and associatelawyers with substantial experience, tax experts, paralegal assistants and off icers co-operate closely.

The firm provides independent legal and tax services, both at an advisory and l it igationlevel, to private, professional and institutional clients in daily operations as well as in complexbusiness transactions, both domestic and international, and may rely on the resources ofwell-known international co-operation networks.

The firm is notably member of the Multi law Network which is ranking in the highest Elitecategory for law firm networks since 2015 and enjoys a steady growth.

S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 2

O u r D e d i c a t e dTe a m

Bernard FELTENPartner

Tel: (+352) 45 77 45-1bfelten@feltenlawyers.com

Aurélien Chris HOLLARDSenior Associate

Tel: (+352) 45 77 45-216ahollard@feltenlawyers.com

Julie MASSONLegal Advisor

Tel: (+352) 45 77 45-208jmasson@feltenlawyers.com

Sarra MOUHLILegal Advisor

Tel: (+352) 45 77 45-217smouhli@feltenlawyers.com

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S E T T I N G U P A N A LT E R N AT I V E I N V E S T M E N T V E H I C L E I N L U X E M B O U R G 1 3

GENEVERue de la Cité, 27CH-1204 Genève

Tel: (+41) 225 520 775Fax: (+41) 225 520 776

LUXEMBOURGRue J.P. Brasseur, 2L-1258 Luxembourg

Tel: (+352) 45 77 45-1Fax: (+352) 45 75 05

www.feltenlawyers.com