The Luxembourg AIFM regime: registered, authorised and third-party routes

The AIFM question tends to arrive late in a Luxembourg fund project, after the wrapper and the launch date have been chosen. It should come first, because it decides who manages the fund, which operating rules apply and whether European marketing rights are available.

The starting point is a classification, not a legal form. A vehicle is an alternative investment fund, or AIF, if it raises capital from a number of investors and invests that capital under a defined policy for their benefit, unless an exclusion applies. The test looks at what the vehicle does, which is why an unregulated SCSp can be an AIF just as easily as a regulated fund. The main rules are in the Law of 12 July 2013 on alternative investment fund managers.

The AIFM’s role

An AIFM is responsible for portfolio management and risk management, and it sits at the centre of the rules on valuation, conflicts, delegation, reporting and, where applicable, the depositary. The manager can be internal or external. An internal AIFM is the fund itself when its legal form permits self-management, but an SCSp has no legal personality and cannot follow that route, so it needs an external manager alongside its general partner.

Delegation does not shift that responsibility. An authorised AIFM may appoint investment advisers or delegate defined functions, yet it must retain oversight and cannot become a letter-box entity. The CSSF FAQ on the AIFM Law explains how the supervisor reads that boundary, which matters most for a sponsor who expects to keep de facto control of investment decisions.

Registration below the thresholds

Article 3 of the AIFM Law provides a lighter registration regime for smaller managers. The thresholds apply to the total assets managed by the AIFM, not to each fund separately, and that aggregation is what a sponsor with several vehicles has to watch.

Portfolio managed by the AIFM	Registration threshold
Portfolios including assets acquired through leverage	Up to EUR 100 million
Only unleveraged AIFs with no redemption rights for 5 years after initial investment	Up to EUR 500 million

A registered manager must register with the CSSF and provide the required information on its funds, assets and exposures. It does not receive the European marketing passport and does not enter the full operating regime applicable to an authorised AIFM. The trade-off is therefore real, lighter obligations against narrower distribution.

The higher threshold is narrow. Every AIF in the calculation must be unleveraged and must meet the five-year redemption condition, so one leveraged vehicle in the portfolio is enough to bring the manager back to the EUR 100 million test. A manager close to either threshold must monitor aggregate assets, because growth across several vehicles can change its status without any new fund being launched.

Full authorisation

An AIFM above the relevant threshold needs full authorisation, and a smaller manager may opt into the full regime, typically in order to use the passport. The CSSF authorisation page identifies the legal conditions and application route.

Capital is the visible condition. An external authorised AIFM must have initial capital of at least EUR 125,000, and the minimum for an internally managed AIF is EUR 300,000. Additional own funds equal to 0.02% of the amount by which assets under management exceed EUR 250 million are required, subject to the statutory cap and guarantee option, and professional liability risk must be covered through additional own funds or suitable insurance.

The less visible condition is organisation, and it is the one that takes time. The CSSF reviews the people directing the business, governance, risk management, valuation, delegation, conflicts, compliance and reporting. The legal minimum capital is therefore only one part of the file, and not the part that requires the most preparation.

The third-party AIFM route

A sponsor does not need to build its own authorised management company. It may appoint an existing authorised external AIFM, which is commonly described as the third-party AIFM route.

The fund remains governed through its own documents, general partner and service providers, but the regulated management functions sit with the appointed AIFM. The division of responsibilities must be clear in the limited partnership agreement, the management agreement and the delegation arrangements, because portfolio input from the sponsor does not displace the AIFM’s decision-making and oversight duties.

A third-party appointment avoids a separate authorisation project, but it creates an external dependency. Strategy fit, delegated functions, reporting flows, fees charged to the fund and termination arrangements all need to be assessed before launch rather than after.

Product choice and marketing

The selected fund wrapper can remove the choice altogether. A RAIF must appoint an external authorised AIFM under the RAIF Law, so a registered sub-threshold manager cannot manage it, whatever its size.

A plain AIF structured as an SCSp may use a registered manager while the conditions remain satisfied. Marketing then follows the national rules of each target jurisdiction, because the AIFMD passport is unavailable without full authorisation. An authorised AIFM, by contrast, can use the European passport for eligible professional-investor marketing after completing the required notification process. Distribution ambitions, not only assets under management, therefore drive the choice, and the comparison between a RAIF and a plain SCSp turns largely on that point.

AIFMD II from April 2026

The Law of 3 March 2026 transposed Directive (EU) 2024/927, known as AIFMD II. It changed parts of the regime for delegation, loan origination, supervisory reporting and the services that an AIFM may provide.

The most immediate operational change concerns open-ended AIFs. The CSSF communication of 18 March 2026 states that authorised AIFMs managing these funds must select at least two liquidity-management tools from the statutory list, apart from the specific money-market-fund exception, and the requirements took effect on 16 April 2026.

The impact depends on the strategy. A closed-ended private equity fund does not face the same liquidity issue as an open-ended real estate fund, while a loan-originating AIF must review the dedicated AIFMD II rules. Existing documents and operating procedures therefore need a strategy-specific review rather than a generic amendment.

Conclusion

The sequence is straightforward. First classify the vehicle. Then calculate aggregate assets under management and check the product law, because a RAIF and any above-threshold structure require an authorised manager while a registered AIFM can fit a sub-threshold plain AIF. The final choice between an in-house and a third-party AIFM depends on governance, distribution and the functions that the sponsor can actually support.