Introduced by the Law of 15 June 2004 in Luxembourg, the société d’investissement en capital à risque (SICAR) is an investment company in risk capital, which is an investment fund that was constructed for investments in private equity and venture capital.
The intention for introducing the SICAR was to introduce a vehicle that could withstand the specific structural needs of private equity and venture capital projects while benefiting from a light regulatory regime and still being subject to the permanent supervision of the Commission de Surveillance du Secteur Financier (CSSF). In general, the SICAR regime provides a great deal of corporate flexibility along with favorable tax treatment.
Features of a Luxembourg SICAR
| SICAR | A SICAR is a vehicle with the primary subject of investing in risk-bearing assets to the benefit of qualified investors. It can be use for private equity and venture capital transactions, and indirect real estate investment. |
| Applicable legislation | SICARs are subject to the Luxembourg Law of 15 June 2004 (SICAR Law), which was modified in October 2008 and by the Law of 12 July 2013 on Alternative Investment Fund Managers (AIFM Law) |
| Eligible investors | a SICAR is restricted to well-informed investors, (institutional investors, professional investors, and other investors who must comply with specific requirements) who can be natural persons or legal entities. |
| Eligible assets | A SICAR may invest its assets in securities representing risk capital |
| Risk diversification | Not required |
| Legal Form | A SICAR can be established in any of the following legal forms: • A public limited company (société anonyme or S.A.) • A private limited liability company (société à responsabilité limitée or S.à r.l.) • A partnership limited by shares (société en commandite par action or S.C.A.) • A cooperative company organised as a public limited liability company (société cooperative organisée comme une or ScoS.A.) • Limited partnership (société en commandite simple or S.C.S. and société en commandite simple à capital variable or S.C.S. à capital variable). |
| Segregated compartments | Yes, the prospectus of a SICAR may permit the set up of multiple compartments. |
| Capital requirements | A SICAR require a minimum subscribed share capital of € 1 million, which must be reached within 12 months of the company being authorised. |
| Net asset value (NAV) calculation and redemption policy | Not required |
| Tax regime | SICARs created under a form of a capital company are subject to general company taxes in Luxembourg at normal rates (Corporate Income Tax, Municipal Business Tax and solidarity surcharge stands presently at 24.94 % in Luxembourg) Any income emerged from securities as well as any income from the sale, contribution or liquidation thereof are fully exempt. SICARs are also exempt from net wealth tax, subscription tax, and withholding tax on dividends /interests and capital gain |
| Double tax treaty and access to EU Parent-Subsidiary Directive | SICARs, from a Luxembourg viewpoint, benefit from the EU Parent-Subsidiary Directive and the double tax treaties concluded by Luxembourg as they are fully taxable corporations. |
| Authorisation and supervision by the CSSF | As regulated vehicle, a SICAR is under the supervision of the CSSF. |
| Possibility of listing | a SICAR is permitted to list its shares on the Stock Exchange only under specific conditions |
| European passport | No (unless it falls under the scope of the full AIFMD regime) |
| Required Luxembourg service providers | Independent auditor Central Administration & Registrar Depositary |
Being a regulated and fiscally efficient structure designed for private equity and venture capital investments, the SICAR is an interesting vehicle in Luxembourg and abroad.
Damalion experts help international investors, venture capitalists and private equity firms to set up and manage their SICAR in Luxembourg. Please contact your Damalion expert now.
