Luxembourg Société en Commandite par Actions (SCA) for fund structuring and RAIFs

Luxembourg remains a jurisdiction of choice for international investors, fund sponsors, family offices, and asset managers due to its robust legal framework, investor-friendly policies, and broad range of corporate and fund structures. One of the most versatile legal forms available is the Société en Commandite par Actions (SCA), or Partnership Limited by Shares. This hybrid corporate structure offers a blend of limited liability and centralized management, making it particularly well-suited for investment platforms and for structuring Reserved Alternative Investment Funds (RAIFs).

Legal Framework Governing the Société en Commandite par Actions (SCA)

The Luxembourg SCA is governed by multiple legal texts. Its foundation lies in the Law of 10 August 1915 on Commercial Companies, as amended (commonly referred to as the “Company Law”). The rules specific to SCAs are contained in Articles 320 to 341 of the Company Law.

When used as the legal form for an investment fund, particularly a RAIF, the SCA must also comply with the provisions of:

• The Law of 23 July 2016 on Reserved Alternative Investment Funds (RAIF Law).

• The Law of 12 July 2013 on Alternative Investment Fund Managers (AIFM Law), which transposes Directive 2011/61/EU (AIFMD) into Luxembourg law.

These legal instruments create a flexible and secure framework that appeals to both fund initiators and investors seeking limited liability and professional management.

Core Characteristics of the Société en Commandite par Actions (SCA)

A Partnership Limited by Shares is a commercial company that consists of two categories of partners:

1. One or more General Partners (Actionnaires commandités) who bear unlimited, joint, and several liability for the debts and obligations of the company.

2. Limited Shareholders (Actionnaires commanditaires) whose liability is limited to their investment in the capital.

This dual-structure allows for a clear separation between the management and the investors. Typically, the General Partner (GP) is a management company or special purpose vehicle that exercises control, while the limited shareholders remain passive investors with exposure to the fund’s performance.

Unlike a traditional partnership, the SCA is a corporate entity with legal personality, and as such, it can own assets, enter into contracts, and sue or be sued in its own name.

Use of SCA in RAIF Structuring

The Reserved Alternative Investment Fund (RAIF) is a fund regime introduced by the 2016 RAIF Law. It is not subject to direct supervision by the Commission de Surveillance du Secteur Financier (CSSF), provided that it appoints an authorized Alternative Investment Fund Manager (AIFM). The RAIF can adopt several legal forms, and the SCA is one of the preferred options when the sponsor seeks a corporate-type vehicle.

Using an SCA as the legal form for a RAIF offers several advantages:

• The SCA allows issuance of shares to limited investors, facilitating capital raising.

• The General Partner, usually controlled by the AIFM, manages the fund, ensuring centralized decision-making.

• The fund benefits from the RAIF regime, including faster time-to-market and fewer regulatory hurdles.

• Investors enjoy limited liability, and the RAIF-SCA structure provides familiar corporate governance to institutional investors.

This makes the RAIF-SCA particularly attractive for private equity, infrastructure, real estate, and debt funds targeting professional and institutional investors across the European Union.

Capital and Contributions

In line with the Company Law, the SCA must have a minimum share capital of €30,000, which must be fully subscribed at the time of incorporation. At least 25% of the capital must be paid up upon formation. Contributions can be made in cash or in kind, and shares may be nominative or dematerialized, depending on the articles of association.

Unlike partnerships such as the SCS (Société en Commandite Simple) or the SCSp (Société en Commandite Spéciale), the SCA issues shares, making it easier to structure equity-based investment schemes and to handle entry and exit of investors.

Governance and Management Structure

The management of an SCA is typically vested in the General Partner(s), who act on behalf of the company and bind it in all matters. The General Partner can also appoint a Board of Directors, depending on the constitutional documents.

Limited shareholders do not participate in the day-to-day management but exercise rights through general meetings, such as approving the annual accounts or amending the articles of association.

One of the most attractive aspects of this structure is that the General Partner retains control, which ensures stable management, while the capital is raised from investors who assume no management responsibility.

Reporting and Regulatory Obligations

As a commercial company, the SCA is required to prepare and file annual financial statements in accordance with Luxembourg Generally Accepted Accounting Principles (Lux GAAP) or International Financial Reporting Standards (IFRS).

RAIFs structured as SCAs must also prepare a semi-annual report and an annual report, as required under AIFMD regulations. These documents must be made available to investors and competent authorities and are critical for transparency and compliance.

In addition, the SCA must be registered with the Registre de Commerce et des Sociétés (RCS) and its constitutional documents are published in the Recueil Electronique des Sociétés et Associations (RESA).

Taxation of the Lluxembourg Société en Commandite par Actions (SCA)

Unless qualifying for special tax regimes, the SCA is considered a fully taxable entity under Luxembourg tax law. This includes:

• Corporate income tax (CIT): 17% (plus solidarity surcharges)

• Municipal business tax: Approximately 6.75% in Luxembourg City

• Net wealth tax (NWT): Generally 0.5% on net assets above €500,000

However, if the SCA is used as a RAIF-SICAV-SCA investing in risk capital, it may benefit from:

• Exemption from corporate income and wealth taxes

• A fixed subscription tax of 0.01% per annum, with a minimum of €4,815

• Access to EU tax directives and double tax treaties if not treated as transparent

Tax structuring should be carefully coordinated with Luxembourg counsel and auditors to ensure compliance and optimization.

Advantages for Investors and Fund Sponsors

The Luxembourg SCA offers a compelling combination of features for international investors and fund managers. Among its key advantages are:

• A clear separation of management and ownership

• Corporate personality and limited liability for shareholders

• Share-based participation, facilitating investment structuring

• Compatibility with the RAIF regime, allowing fast and efficient fund launches

• Full alignment with the AIFMD framework, ensuring EU-wide marketing passport

The Société en Commandite par Actions (SCA) is a flexible and robust vehicle for structuring investments in Luxembourg. Its hybrid nature, combining corporate governance with partnership principles, makes it particularly well-suited for Reserved Alternative Investment Funds and other professional investment platforms.

For fund promoters seeking a reliable and investor-friendly vehicle, especially when centralizing control under a General Partner while offering shares to limited investors, the SCA provides both legal security and operational agility. When properly structured under the RAIF regime, it offers a fast track to market with significant tax and regulatory advantages.

Please contact your Damalion expert now.

This communication is provided for informational purposes only. It does not constitute legal or tax advice. Investors and promoters should consult qualified lawyer before structuring their investments from Luxembourg.

Luxembourg’s Société en Commandite par Actions (SCA) inside a RAIF: when and how to use it

The partnership limited by shares (SCA) blends corporate permanence with sponsor control. Within a Reserved Alternative Investment Fund (RAIF), this form can align board authority, investor protections and deal pacing. Below we explain where SCA fits among other RAIF legal forms, how governance and service providers interlock, what tax touchpoints to consider, and the practical steps to launch.

Why would a sponsor select SCA for a RAIF?

Choosing SCA is rarely cosmetic; it is a deliberate governance choice that balances control, continuity and investor comfort.

• Control with accountability: a general partner (managing partner) steers strategy; shareholders participate economically with clear voting limits.
• Corporate look & feel: a share capital structure can ease certain listings, security packages or board committees.
• Fit for sponsor-led models: works well when the lead sponsor seeks durable influence across vintages or sub-funds.
• RAIF speed: no product pre-approval; with AIFM and depositary appointed, go-to-market can be quicker than fully supervised products.

How does SCA compare to other RAIF legal forms?

Context matters. The matrix below lets you contrast governance and practical use cases side by side.

If you are comparing fund platforms more broadly, see our guide to private equity structuring in Luxembourg and our overview of Luxembourg parallel funds for multi-vehicle deployments.

What does governance look like in an SCA-RAIF?

An SCA works only if roles are precise and documented. Here is how responsibilities usually align in practice.

• Managing partner (general partner): strategic direction and sponsor alignment; oversight of delegation to the AIFM.
• AIFM (alternative investment fund manager): portfolio and risk management; ensures valuation, liquidity and conflict policies are applied.
• Depositary: safekeeping, ownership verification and cash flow monitoring.
• Administrator: NAV calculation, investor register and periodic reports.
• Auditor: annual financial statements and valuation policy assurance.
• Advisory committees: optional investor committee with a clear charter and non-binding recommendations.

Which tax touchpoints should sponsors anticipate?

Tax analysis depends on the RAIF’s legal form, the investment chain and source countries. Early alignment avoids friction later.

• Fund layer: depending on structuring, a subscription levy on net asset value may apply; transparency differs by legal form.
• Holding/SPV layer: participation exemption tests, treaty access, beneficial-owner assessment and substance demonstration.
• Financing: interest limitation rules, anti-hybrid constraints and transfer pricing for arm’s-length leverage.
• Distributions and waterfalls: describe investor economics in plain language (hurdle, catch-up, carried interest, give-back mechanism) without unexplained acronyms.

How do you launch an SCA-RAIF (step by step)?

A predictable sequence shortens time-to-market and keeps banks, service providers and investors aligned.

1. Define strategy and investor profile: asset class, fund size, geography, currency policy and reporting cadence.
2. Confirm SCA fit: document why sponsor control via a managing partner is required compared with SA/Sàrl/SCSp.
3. Appoint core providers: AIFM, depositary, administrator, auditor and legal/tax advisors.
4. Draft fund documentation: RAIF regulation, offering documents, valuation policy and clear distribution mechanics.
5. Onboard investors and open accounts: subscriptions, KYC/AML, source-of-funds evidence and custody/cash accounts.
6. Operate and report: capital calls, investments, NAV, investor reports and AIFMD filings.

FAQs about using SCA within a RAIF

These concise answers reflect the points that most often arise in our kick-off sessions with sponsors and LPs.

When is SCA preferable to SCSp for a RAIF?

Choose SCA when you want corporate share capital and board committees with a managing partner retaining control; choose SCSp for maximum contractual flexibility in a partnership model.

Does an SCA-RAIF always require an AIFM and a depositary?

Yes. AIFM appointment is mandatory and a depositary must be in place for custody and oversight.

Can we use an umbrella with sub-funds under an SCA-RAIF?

Yes. Compartments can isolate strategies by region, asset class or currency under one umbrella.

How do investor committees interact with a managing partner?

Committees generally have an advisory remit defined in a charter; decision-making remains with the managing partner and AIFM per delegation.

What slows down onboarding most often?

Unclear ownership chains, insufficient local substance, incomplete KYC/AML packs and valuation policies that do not match the assets.

Can digital or hard-to-value assets be included?

Yes, where custody, valuation methodologies and risk controls are clearly defined and accepted by the depositary and auditor.

How do we describe investor economics without jargon?

Spell out the minimum return target, the catch-up path, the carried-interest rate and any give-back obligation—avoid unexplained abbreviations.

Is an SCA compatible with parallel or master–feeder setups?

Yes. Coordinate allocation, conflicts and disclosures across vehicles. See our parallel funds overview and the steps to launch a master–feeder.

References: CSSF — Luxembourg regulator · ESMA