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6. Multiple CompartmentsLike a securitisation vehicle or a SIF, the SICARcan have multiple compartments therebyallowing for segregation of assets and risks.Each compartment may have its owninvestment policy, and may be liquidatedindependently of the others or of the SICARitself.7. CapitalisationSICARs must be capitalised with at least €1million, which must be reached within 12 monthsof the CSSF's authorisation. In-kind capitalcontributions are permissible. However, theSICAR can elect in its Articles of Incorporationto have a variable share capital equal to netasset value (SICAV). In this event, none of thetypical formalities of publication is required eachtime the share capital is increased. Moreover,there are no “thin capitalization” criteria for theSICAR requiring a minimum debt-to-equity ratio.8. Regulation and ReportingAs mentioned above, SICARs are regulated bythe CSSF, which specifically authorises theiractivities. The SICAR must have its registeredoffice and central administration in Luxembourg.Once the CSSF approves the application, theSICAR is entered on a list of such approvedvehicles. And once on such list, the SICAR can,in principle, be listed on the Luxembourg StockExchange, if it is in the form of an S.A. orS.C.A.. However, to comply with the SICAR law,it will need to ensure that only eligible investorsacquire the shares.The SICAR has various reporting requirementsto the CSSF and to the investors, includingannual reports on the valuation of its assets(which is based on fair value), and an updatedoffering circular every time there is an issuanceof additional securities. The SICAR must alsoappoint an independent auditor (réviseurd'entreprises) for the annual accounts, as wellas a custodian, which must be a credit institutionin Luxembourg or the Luxembourg branch of anEU credit institution.9. TaxationThere are two regimes for taxing SICARs,depending on whether the SICAR takes theform of a capital company (public limitedcompany, etc.) or a limited partnership (S.C.S.or S.C.S.P.), which is considered as a lookthroughentity for tax purposes. If a capitalcompany, the income of the SICAR (if any) will,in principle, be subject to corporate andmunicipal tax at a combined rate of 29.22%.However, with the following availableexemptions, the SICAR is effectively exemptfrom tax in Luxembourg. It will also be able totake advantage of the vast network of doubletaxation treaties that Luxembourg has enteredinto, which provides opportunities for taxplanning. Moreover, the SICAR is exempt inLuxembourg from corporate income tax, networth tax, and municipal business tax onincome from transferable securities as well ason income from their sale or liquidation,including dividends, interest, and capital gains.Finally, any income arising from funds awaitinginvestment in risk capital is also exempt fromtax.If in the form of a limited partnership (s.c.s.) orspecial limited partnership (s.c.s.p.), the SICARis not liable for corporate or municipal businesstax or net worth tax, as it is consideredtransparent, and all income is deemed taxabledirectly at the shareholder level. However, thisapplies to the s.c.s.p. in respect of MBT only tothe extent that any general partner that is aLuxembourg company holds less that 5% of thepartnership interests of the s.c.s.p.Shareholders can, in principle, themselves takeadvantage of the double taxation treatyprovisions between their countries of fiscalresidence and the domicile of the portfoliocompany.Regardless of the form of business organisationthe SICAR opts for, it will be exempt fromsubscription tax. The SICAR is, however, liablefor a minimum annual fee of €3,000 to theCSSF.10. Applicability of AIFMSICARs, as typical alternative investmentvehicles, fall within the scope of the AIFM Law.However, if the entirety of the shares of theSICAR is held by a single shareholder, thensuch SICAR should not be considered an“alternative investment fund” for purposes of theAIFM Law. If a self-managed SICAR is an AIFMfor purposes of the AIFM Law, its initial capitalmust be € 300,000. (For more informationregarding the AIFM Law, See F., infra.)D. SPECIALISED INVESTMENT FUNDWith the Luxembourg law on SpecialisedInvestment Funds (the “SIF Law”), which cameinto effect on 13 February 2007, theLuxembourg legislators responded to thedemands of the investment community andcreated a legal framework for lightly-regulatedinvestment fund vehicles for all types ofalternative investment fund products, includinghedge funds, private equity and real estatefunds.1. Eligible InvestorsLike the SICAR law, the SIF Law limits thescope of eligible investors to sophisticatedinvestors. In addition to institutional andprofessional investors, the law deems asophisticated investor any person who confirms8