CNC issues updated guidance on the consolidation exemption: Key implications for alternative investment structures 

Key takeaways

The CNC’s updated guidance significantly tightens the conditions for using the consolidation exemption, requiring clearer evidence that subsidiaries are genuinely held for disposal.
• Managers must now maintain documented exit strategies, reassess holding periods, and provide fair value and risk disclosures in the notes to the annual accounts.
• Structures with investments held for more than 10 years, cascade arrangements, or service entities will need particular attention to ensure continued eligibility.
• The new framework applies immediately to financial years for which the filing deadline has not yet expired, meaning preparation for upcoming reporting cycles should begin now.
• Many Luxembourg SPVs will need to update their governance, valuation processes and reporting documentation. Early coordination with advisers and auditors is advisable to avoid unexpected consolidation requirements.

On 18 December 2025, the Luxembourg Commission des normes comptables (CNC) issued Q&A CNC 25/036, providing updated guidance on the application of Article 1711-8(3)(3°) of the Luxembourg law of 10 August 1915 on commercial companies (LSC). The provision enables a parent company to exclude a subsidiary from consolidation where the participation is held exclusively with a view to its disposal. The Q&A replaces and withdraws the CNC’s 2009 opinion 09/002.  

The CNC publication is available here in French : https://cnc.lu/publication-du-qa-cnc-25-036-portant-interpretation-de-larticle-1711-8-para-3-point-3-lsc/ 

Entities concerned

The guidance targets Luxembourg investment structures whose activity consists in raising capital from investisseurs avertis and deploying it through investments intended to be realised at a gain. This includes private equity, venture capital, private debt, infrastructure and similar alternative investment strategies. Entities holding participations for long-term operational, industrial or strategic purposes fall outside the scope. The approach broadly reflects the profile of entities covered by the former CNC 09/002 and aligns with the characteristics typically associated with IFRS 10 investment entities.  

Conditions for applying the exemption

The CNC recalls that the exemption under Article 1711-8(3)(3°) LSC, and the corresponding relief from preparing consolidated accounts under Article 1711-9(2) LSC, may only be relied upon where all conditions set out in the Q&A are met. 

• Documented exit strategy

A genuine intention to dispose of the subsidiary must exist at the date of acquisition and be documented in a coherent exit strategy. The CNC indicates that, in practice, holding periods beyond 10 years should remain exceptional and should not exceed 15 years, save in justified circumstances. Periodic reassessment is expected whenever material developments occur.  

•  Consistent application across relevant subsidiaries

Where the exemption is invoked, it should be applied consistently to all subsidiaries held for disposal. 

Service entities supporting the investment activity may need to remain within the consolidation scope unless another exclusion ground applies. 

•  Disclosure of fair value information

Although investments cannot necessarily be measured at fair value in the balance sheet under the amended Law of 19 December 2002 on the Trade and Companies Register and on the accounting and annual accounts of undertakings, the CNC considers fair value to be the relevant metric for users of the accounts. Accordingly, entities applying the exemption should disclose the fair value of each participation held for disposal in the notes to the annual accounts, based on recognised valuation approaches.  

•  Disclosure of significant events or risks 

The notes should also provide information on any material events, guarantees or uncertainties at subsidiary level that could affect the parent’s going-concern assessment, liquidity or solvency. 

Application to cascade structures

Luxembourg entities controlled exclusively by an eligible investment entity may also rely on the exemption, provided the parent itself satisfies the conditions and minority shareholders have not requested consolidated accounts within the statutory timeframe. In such cases, the entity cannot rely on subgroup consolidation exemptions when the parent presents the participation at fair value.  

Entry into effect and withdrawal of previous opinion

The Q&A applies to any financial year for which the filing deadline has not yet expired. Opinion CNC 09/002 is formally withdrawn.  

The updated Q&A provides a clearer framework for investment structures relying on an exit-driven model for which consolidated financial statements may be of limited relevance. The CNC places emphasis on timely documentation, consistency of approach and transparency in the notes, factors which should be considered in the annual reporting cycle.  

Should you wish to examine how this new guidance interacts with your existing arrangements, our Investment Management team would be pleased to provide further support.