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Special limited partnership (société en commandite spéciale) introduced under Luxembourg’s AIFM

October 2012 - Finance. Legal Developments by Chevalier & Sciales .

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As part of the legislation transposing the European Union's Alternative Investment Fund Managers Directive into national law, the Luxembourg authorities have seized the opportunity to make the country's fund region more attractive to promoters and managers of funds employing alternative strategies and/or aimed at sophisticated investors - in particular of private equity, venture capital and real estate vehicles. The legislation introduces into national law a new regime to be known as the société en commandite special, or special limited partnership, along with the updating of the existing société en commandite simple, or standard limited partnership. The grand duchy also offers the société en commandite par actions, or partnership limited by shares.

Whereas the standard limited partnership has a legal personality of its own distinct from that of its limited partners, the special limited partnership does not have legal personality and is designed to resemble as closely as possible the English limited partnership regime.

The changes are designed to make Luxembourg, which already has a substantial private equity sector comprising the management, domiciliation and servicing of both funds and transaction vehicles, even more attracting for fund structuring in particular, at a time when regulatory changes (including the introduction of the AIFM Directive) are prompting alternative fund houses to consider onshore domiciles and jurisdictions with experience in regulated alternative funds.

Being able to offer vehicles equivalent to those traditionally available in offshore jurisdictions will reinforce the country's appeal to leading private equity and private equity real estate houses as well as private and institutional investors that are used to and comfortable with Anglo-Saxon-type limited partnership structures.

The revision and expansion of the grand duchy's limited partnership offering involves amendments to various pieces of legislation, notable its 1915 commercial companies law, but also the statutes governing the Risk Capital Investment Company (Sicars) and Specialised Investment Fund (SIFs) regimes, which will henceforth be open to partnership structures.

The article, entitled Special limited partnership introduced under Luxembourg's AIFMD legislation, can be found by clicking the link below "download". It details the origins of the grand duchy's decision to update and expand its limited partnership offerings and provides an overview of the various legislative changes this involves.

The draft bill of law incorporating the limited partnership provisions was submitted to the Chamber of Deputies by Finance Minister Luc Frieden on August 24 and is expected to become law before the end of 2012. We will keep you updated over the coming weeks and months about the progress of the legislation through parliament. In the meantime, please contact us if you would like to discuss in greater detail elements any issues regarding the Luxembourg limited partnership regime and the opportunities it may present for your business.

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