New CNC guidance on consolidation rules for alternative investments structures
On 2 December 2025, the Luxembourg Accounting Standards Board (CNC) issued a Q&A clarifying the application of the article 1711-8 (3) point 3 of the Luxembourg law on commercial companies. The guidance addresses the conditions under which companies operating in the alternative investments sector can benefit from an exemption or exclusion from preparing consolidated financial statements and a consolidated management report.
Specifically, the law allows certain subsidiaries to be excluded from consolidated financial statements if the shares are held exclusively for subsequent resale. Furthermore, a parent company may be exempt from preparing consolidated financial statements if all its subsidiaries qualify for this exclusion (article 1711-9 (2) of the Luxembourg law on commercial companies).
Published by: 10/12/2025 | Reading time: 3 minutes
Scope & Conditions
The Q&A defines the scope of alternative investments structures. It includes companies active in private equity, venture capital, real estate, infrastructure, private debt and other alternative investment strategies that generally meet the characteristics of investment entities under IFRS 10.
To qualify for the exemption or exclusion, the following four conditions must all be met:
1. Documented exit strategy
The company must demonstrate a genuine intention to dispose of the subsidiary with a capital gain from day one. A divestment plan must be documented in writing and should define a holding period. The CNC considers reasonable that investments should generally not exceed 10 years and may exceptionally extend up to 15 years under extraordinary market conditions.
2. Exclusion of all subsidiaries held for resale
The decision to apply the exclusion must cover all subsidiaries held for resale, except those providing investment related-services, which should be consolidated unless immaterial. The decision must be serious and documented as part of the exit strategy.
3. Disclosure of fair value in the notes
The fair value of subsidiaries held for resale must be disclosed in the notes to the annual accounts. The CNC recommends using generally accepted valuation methods (e.g. IPEV guidelines). Disclosure of fair value can be presented by investment category.
4. Disclosure of significant events, guarantees, or uncertainties
The notes to annual accounts should include information on significant events, guarantees and uncertainties at the subsidiary level that may impact the going concern of the parent company.
Cascade structures and minority investors
The CNC clarifies that any Luxembourg company controlled by a company operating in the alternative investment sector may also apply this exclusion and exemption, provided that the four conditions above are met by the parent company. In this case, shareholders or partners holding at least 10% (for public limited companies or partnership limited by shares) or 20% (for private limited companies and other forms) must not have requested the preparation of consolidated financial statements by six months before year-end.
In such a case, the company cannot rely on any of the sub-group consolidation exemptions (art. 1711-5, 1711-6 and 1711-7 of the Luxembourg law on commercial companies) if the subsidiaries are measured at fair value and disclosed in the annual accounts of its parent company.
Effective Date
This new guidance applies to any financial year for which the deadline for filing the standalone annual accounts with the Luxembourg Trade and Companies Register has not yet passed.
The previous guidance CNC 09/002 “PE-exemption” is officially withdrawn.
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