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LUXEMBOURG EU Savings Directive - Publication of the law to implement the automatic exchange of information on savings income under the current EU Savings Directive Background On 27 November 2014, the Luxembourg Parliament voted the law making the automatic exchange of in- formation for interest payments within the EU man- datory as from 1 January 2015 (within the frame of the EU Savings Directive or “EUSD”). Currently, when there is a Luxembourg paying agent, account holders can opt for either the ex- change of information or the application of with- holding tax (WHT) at a rate of 35% on interest income covered by the EUSD. The tax withheld is then transferred anonymously by the Luxembourg paying agent to the Luxembourg tax authorities, which then transfer the tax to the tax authorities of the country of residence of the investors. During a European Council meeting held on 20 March 2014, the Luxembourg government committed to make the automatic exchange of information mandatory for all account holders and therefore to terminate the option to apply an optional WHT instead. What’s in there? On 27 November 2014, the law of 25 November 2014 was published in the Official journal of Lux- embourg (“Mémorial”). According to the law, as from 1 January 2015, Luxembourg will apply the automatic exchange of information on interest payments made by a paying agent established in Luxembourg to individuals res- ident in another EU Member State. The paying agent shall then report the following information regarding the beneficial owner of the payment: « Identity and residence of the beneficial owner;

Cross-shareholdings In view of the criticism expressed against the re- quirement of structural independence between the management company/investment company and the depositary, ESMA opts for functional independ- ence (option 2) in its final advice, considering that structural independence might imply important re- structuring and other costs for the industry in many European jurisdictions. On the basis of suggestions made during the consultation, ESMA saw merit in introducing two additional arrangements to be put in place in or- der to safeguard functional independence: (1) the management company/investment company shall demonstrate to its competent authority that it is satisfied that the appointment of the depositary is in the sole interests of the UCITS and the investors of the UCITS, in particular by comparing the relative merits of appointing the depositary versus another depositary which is not linked to the management company/investment company; (2) the link between the management company/investment company and the depositary shall be disclosed to investors. The requirement to have some independent mem- bers within the management body/supervisory function has been kept in ESMA’s final advice. As regards their number, ESMA opted for the possibil- ity to choose between one third or two members, whichever is the lesser. Moreover, in its final advice ESMA provides a definition of the notion of an ‘inde- pendent director’. Finally, ESMA recognises that while the obligation to ‘act independently’ may be fulfilled through a series of measures ensuring functional independence be- tween the parties, it is also possible to achieve this outcome through the structural independence of the parties (i.e. in line with option 1). ESMA’S FINAL TECHNICAL ADVICE IS AVAILABLE HERE. What’s next? On the basis of the technical advice provided by ESMA, the European Commission will adopt the del- egated acts required by the UCITS V Directive.

« Account number of the beneficial owner or, where there is none, identification of the debt claim giv- ing rise to the interest; « otal amount of the interest payment or similar income. Paying agents will have to disclose this information by March 20 of the year following the year in which the payment of interest has been made. If commu- nication is late or inaccurate, the paying agent may incur a maximum administrative penalty of 0.5% of the amount that should have been communicated. The Luxembourg tax authorities then automatically transmit that information to the competent authority of the Member State where the recipient is estab- lished. Communication should be done at least once a year and no later than 30 June following the end of the calendar year. The first information exchange will take place in early 2016 with respect to interest payments made in 2015. Money Market Funds - CSSF implements ESMA’s opinion on CESR money market fund guidelines Background On 22 August 2014, ESMA published an opinion (the “Opinion”) on the CESR guidelines on a common definition of European money market funds (the “Guidelines”). The Guidelines were adopted in May 2010 in response to the 2008 crisis, when the mar- ket events highlighted the need for better co-ordi- nation in relation to and an improved understanding of the categorisation of money market funds. In accordance with Article 5(b)(1) of EU Regulation N° 1060/2009 (as modified by the EU Regulation N° 462/2013 on 21 May 2013), whereby the Eu- ropean Supervisory Authorities (the “ESA’s”) are empowered to review and remove, if necessary, all references to credit ratings in guidelines and recommendations when they may lead to a sole or mechanistic reliance on these credit ratings, ESMA issued the Opinion stating that the Guidelines do THE PUBLISHED LAW IS AVAILABLE HERE. The law of 25 November 2014 entered into force on 1 January 2015.

« Name and address of the paying agent;

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