CSSF Circular 25/901 — the single framework for SIFs, SICARs and Part II UCIs

On 19 December 2025 the CSSF published Circular CSSF 25/901 (full text, EN PDF), collapsing four legacy texts into one thematically structured circular covering specialised investment funds (SIFs), investment companies in risk capital (SICARs) and Part II UCIs. It entered into force the same day. The headline for operators: concentration limits now scale with the investor type the fund may be marketed to — 25% per position for funds open to unsophisticated retail, 50% for funds reserved to well-informed or professional investors — and borrowing for investment purposes is capped at 70% only where retail can get in (Circular 25/901, points 8, 11 and 32). Alongside it, the CSSF published a companion Compilation of key concepts and terms for non-UCITS/non-MMF funds, which it says it will update on a regular basis (CSSF press release, Dec 2025).

Existing funds are grandfathered: the circular "does not call into question the rules adopted by the funds or compartments authorised by the CSSF before the date of entry into force" (point 50). But every new fund, and every new compartment of an existing umbrella, lands on the new framework — so the practical work starts with your next authorisation file, not your existing book.

What it replaces — and where each piece went

Repeal wording: Circular 25/901, points 51–52. Legacy limits: 02/80 and 07/309 primary texts.

Who is in scope

The circular applies to all SIFs, SICARs and Part II UCIs, and to each compartment of an umbrella, and it addresses "all the persons involved in the functioning and control of these funds" — so directors (dirigeants), AIFMs, and the control functions, not just the vehicle (points 1 and addressee block). Four carve-outs, at point 2:

• Funds or compartments authorised as ELTIFs;
• MMFs;
• EuVECA / EuSEF-labelled funds;
• Closed-ended funds or compartments authorised before 19 December 2025 — these are outside the circular entirely, not merely grandfathered.

RAIFs are not in scope — they are not CSSF-authorised, so the circular does not bind them by its terms. In practice, expect the risk-spreading interpretation (for ordinary RAIFs) and the risk-capital criteria (for risk-capital RAIFs) to be read across, since the RAIF Law borrows both concepts from the SIF and SICAR Laws — law-firm commentary reads it the same way (Dechert).

What changes in practice

1. The limit set is driven by what your documents permit, not who actually holds units

The 25% regime applies to funds "whose securities may be marketed to unsophisticated retail investors" (point 8); the 50% regime to funds "reserved for well-informed investors or professional investors" (point 11). A Part II prospectus that technically leaves retail eligibility open puts the fund on the stricter set even if the register is 100% institutional. The ops decision at the next authorisation or prospectus update: restrict eligibility and take the wider limits, or keep retail access and run the 25%/70% book.

New limits: Circular 25/901, points 8, 11 and 32. The CSSF may grant further derogations on "duly motivated justification" and may equally impose additional restrictions for specific policies (point 12). The calculation basis is assets or commitments to subscribe — a different basis needs to be justified to and accepted by the CSSF (point 7): your compliance monitoring needs to know which one the sales document picked.

2. Borrowing: the 70% cap has edges worth knowing

The cap bites only on borrowing for investment purposes in retail-marketable funds. Two carve-outs do real work in practice: temporary borrowing fully covered by undrawn capital commitments is generally not counted as borrowing (your sub line stays out of the number), and neither, in principle, is a debt security whose income is linked to portfolio performance (point 33). All of this sits on top of — not instead of — AIFMD leverage calculation (point 34). Ops task: classify each facility (investment vs bridge vs commitment-covered) and keep the evidence, because the sales document must state the maximum borrowing limit whenever the fund intends to borrow (point 46).

3. Ramp-up and wind-down are now codified — with clocks

The sales document may switch the investment limits off during ramp-up: up to 12 months from first subscription for UCITS-eligible-asset strategies, up to 4 years for private-investment strategies, with a further extension (in principle one year) only where duly justified to and accepted by the CSSF (point 15). Limits may also be switched off in wind-down for private strategies (point 16). If your PPM's ramp-up language is vague, the next visa round is where it gets pinned to these clocks. SICARs, which have no statutory risk-spreading duty, may still write limits into their documents and use the same ramp-up/wind-down mechanics (points 13 and 18).

4. Redemption mechanics must be spelled out — including what happens to the unexecuted part

For open-ended funds the sales document must now state: redemption frequency, notice and settlement periods, the liquidity management tools available with a description of how they work and when they activate, how orders are executed, and — the one most older prospectuses are silent on — the treatment of the unexecuted part of gated redemption orders: cancelled or carried forward, with what priority over new orders, and at which NAV (points 43–44). Cross-check this disclosure against the LMT selections you are making for AIFMD II — they need to tell the same story. Point 45 also confirms that a private-assets policy can justify a less-than-monthly redemption frequency, and that redemption and subscription frequencies need not match.

5. SICARs: the exit strategy moves into the sales document

Risk capital keeps its two-part test — development intent plus a specific risk beyond market risk — but the CSSF now expects the authorisation file to describe compliance for every new compartment, and the sales document to include the risk-capital criteria, a non-exhaustive list of intended divestment routes and the expected holding period (points 23–26). Eligibility is clarified rather than revolutionised: loan origination, mezzanine, bridge, distressed debt (where the aim is value through restructuring) and secondary purchases are in; ABS/CDOs in principle out; hedge funds generally out; commodities and real estate only indirectly, with risk-capital character at the target level (point 27). Where the SICAR invests through intermediary vehicles, it must be able to show incoming cash is actually deployed into risk capital (point 27, last bullet).

6. Retail + private assets = mandatory warnings

A retail-marketable fund investing significantly in private investments must carry a high-risk warning, and if investors can be locked in beyond ten years, a suitability warning on top (point 47). Life extensions are capped at one year a time, three times, and only if the constitutive documents provide for it (point 49) — check your LPA boilerplate before assuming a fourth extension is a formality.

Key dates

To verify

Changelog