The Luxembourg Parliament has approved (in a first vote on February 12, 2026 and being dispensed of  a second vote by the Council of State on February 25) Bill No. 8628, which transposes the EU Directive 2024/927 (AIFMD II) into national legislation. This new framework introduces significant updates to the regulation of Alternative Investment Fund Managers (AIFMs) and UCITS (Undertakings for Collective Investment in Transferable Securities), with a focus on enhancing market stability and investor protection within the EU.

Key Updates Under AIFMD II:

• Loan Origination: AIFs are now explicitly authorized to grant loans, creating a harmonized legal environment for this activity across the EU. This change presents an opportunity for Luxembourg to expand its role in the private debt market by offering new investment strategies based on standardized rules.

• Liquidity Management Requirements (LMTs): AIFMs will be required to adopt at least two liquidity management tools from an approved list, ensuring that funds are better prepared to manage liquidity risks.

• Delegation Rules Strengthened: The law introduces more stringent requirements to disclose detailed information regarding the delegation and sub-delegation of functions to third parties. This harmonization between AIFMD and UCITS delegation frameworks aims to increase transparency and regulatory oversight.

• Cross-Border Services & Marketing The reform enhances cooperation between national competent authorities and clarifies procedures for Cross-border management, Cross-border marketing and Supervisory information exchange

• Depository Passport: A new provision allows AIFs from certain EU member states facing limited competition in depository services to choose a depository located in another EU country.