The purpose of a SICAR is to facilitate fundraising and to allow investments in risk-bearing capital. It has a simplified status under Luxembourg company law and is subject to limited regulatory supervision and favorable tax rules.
A SICAR is a proven structure, as can be illustrated by the purchase of the Luxembourg based global internet communications company ‘Skype Technologies’ by ‘eBay’. As both parties made use of a SICAR.
A structure that is specially suitable for all venture and risk capital investments, including both traditional and alternative investment products
No investment restrictions and leverage rules
No distribution restrictions apart from the ‘well informed’ investor stipulation
Access to Luxembourg’s taxation treaties
A favorable regulatory regime
Total flexibility: The SICAR law permits a wide range of asset class such as real estate development, start-up financing, project financing. There is no principle of risk spreading, and there are no limitations regarding the eligible assets or the style of investment.
Broader sphere of investors: By including institutional, professional and ‘well informed’ investors the SICAR law allows corporations, private banks, pension funds as well as family offices and private individuals to invest in a Sicar.
Who is allowed to invest in a SICAR ?
SICAR’s are reserved for well-informed investors who are able to understand and assess the risks associated with investments in such a fund. A well-informed investor means either an institutional investor, a professional investor, or any other investor who has declared in writing that he is an informed investor and either invests a minimum of € 125,000 or has an appraisal from a bank, an investment firm or a management company certifying that the investor has the appropriate expertise, experience and knowledge to adequately understand the investment in the SICAR.
The SICAR regulations combine flexible corporate and tax treatment with light legislation restrictions of the law, for instance regarding to:
- The concept of a well-informed or qualified investor, therefore, a SICAR is also open to private investors
- The absence of any specific risk-diversification requirements
- No required authorization by the Commission de Surveillance du Secteur Financier (CSSF) for the investment manager or any requirements regarding the manager's financial standing or status
There is a light regime for the supervision of a SICAR’s legal and contractual obligations. A SICAR is not subject to prior authorization. An authorization file must be submitted to the CSSF within the month following on the establishment. A SICAR is required to publish a prospectus and an annual report with respect to its investment policy and performance. The annual financial statements must be approved by a Luxembourg independent auditor.
Considerations based on tax regulations:
The SICAR is subject to income tax on their worldwide profits and is considered a “resident” of Luxembourg. In principle, a SICAR established in corporate form is covered by the EU Directives and should be entitled to benefit from the provisions of the tax treaties concluded by Luxembourg. This means income or gains (i.e. any type of profits or losses) is exempt from tax
No withholding tax on dividends distributed
Income that is not connected with investments in risk-bearing capital (e.g. interest earned on bank deposits, management fees, etc.) is subject to 29% income tax
Stock Exchange Listing
SICARs may be listed on the Luxembourg Stock Exchange.