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:
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The Law of 23 July 2016 on Reserved Alternative Investment Funds (RAIF Law).
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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:
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One or more General Partners (Actionnaires commandités) who bear unlimited, joint, and several liability for the debts and obligations of the company.
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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:
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The SCA allows issuance of shares to limited investors, facilitating capital raising.
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The General Partner, usually controlled by the AIFM, manages the fund, ensuring centralized decision-making.
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The fund benefits from the RAIF regime, including faster time-to-market and fewer regulatory hurdles.
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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:
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Corporate income tax (CIT): 17% (plus solidarity surcharges)
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Municipal business tax: Approximately 6.75% in Luxembourg City
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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:
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Exemption from corporate income and wealth taxes
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A fixed subscription tax of 0.01% per annum, with a minimum of €4,815
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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:
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A clear separation of management and ownership
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Corporate personality and limited liability for shareholders
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Share-based participation, facilitating investment structuring
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Compatibility with the RAIF regime, allowing fast and efficient fund launches
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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.
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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.