CSSF Circular 25/901: reinforced guidance for Luxembourg funds — and a benchmark for RAIFs
In force since 19 December 2025, Circular 25/901 issued by the CSSF consolidates and modernises the prudential expectations for SIFs, SICARs and Part II UCIs (including compartments). It replaces several legacy texts with a single, clearer reference and aligns supervisory practice with today’s market realities.
The CSSF also published a companion “Compilation of key concepts and terms” to standardise the vocabulary used for alternative funds (investment policy, strategies/asset classes, methods and subscription/redemption models) and to make supervisory exchanges more efficient.
In practice, sponsors will feel the impact in several areas. Risk-spreading is framed through investor-calibrated concentration thresholds: a 25% baseline cap towards one entity/person for products marketed to unsophisticated retail investors; generally, 50% for well-informed/professional investors, with infrastructure strategies tolerated up to 70%. A look-through approach is expected when intermediary vehicles are used. Borrowing is clearer; retail investors should, in principle, keep borrowing for investment purposes within a 70% baseline, while professional or Well-informed investors, their limits are caped at the discretion of the fund. The Circular formalises ramp-up guidance (often up to one year for liquid strategies and up to four years for illiquid/private strategies, with potential limited extensions).
Although RAIFs are not directly in scope, the Circular is expected to drive RAIF market standards. Executive analysis anticipates that RAIF Offering Memorandums will mirror the Circular’s disclosure depth (limit calculation basis, SPV look-through, maximum borrowing and liquidity tools); that temporary bridge financing fully covered by commitments is generally not treated as “borrowing”; and that for RAIF–SICAR-like strategies the Circular’s risk-capital logic (value-creation, specific risk; ABS, CDOs and hedge funds generally not eligible) will guide eligibility assessments. This reinforces Luxembourg’s offering to investors, clarity where investors demand it, flexibility where strategies need it, and provides a stable, well-supervised platform to raise and deploy capital confidently.
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