Luxembourg is a small country by size, but a big one by its importance for the investment industry, as it is the largest domicile for investment funds in Europe and the second largest worldwide after the United States.
It is a renowned international financial centre offering a full range of investment vehicles: regulated, indirectly regulated and unregulated. Regulated investment funds are supervised by the Commission de Surveillance du Secteur Financie (CSSF); in this article, however, we will be looking at unregulated vehicles, which are not subject to CSSF supervision. Note that where such a vehicle qualifies as an alternative investment fund (AIF), its manager may nevertheless fall within the scope of the Luxembourg AIFM Law of 12 July 2013.
Unregulated investment vehicles
There are various types of unregulated investment vehicles in Luxembourg, mainly governed by the Law on commercial companies of 10 August 1915, as amended:
S.A. (société anonyme – public limited liability company)
This is suitable for a large group (unlimited number) of shareholders/investors, even if they do not know each other, as it is the only form listed here that may offer its shares to the public.
SAS (société par actions simplifiée – simplified joint stock company)
Similar in structure to the S.A., but it may not offer its shares to the public; it is therefore suitable for private arrangements where the founders wish to organise governance with maximum contractual freedom.
S.à r.l. (société à responsabilité limitée – private limited liability company)
This type is suitable for a limited number of shareholders/investors (maximum 100) and is managed by one or more managers, chosen from amongst the shareholders or from outside.
SCA (société en commandite par actions – partnership limited by shares)
This form can accommodate an unlimited number of shareholders/investors and may even be listed; its defining feature is that it is managed by its general partner(s) bearing unlimited liability, which makes it popular where founders wish to retain control over management.
SNC (société en nom collectif – general partnership), SCS (société en commandite simple – limited partnership), SCSp (société en commandite spéciale – special limited partnership)
These are suitable for a small group (of at least two) of partners/investors who know each other and want the vehicle to be managed by someone amongst them – in the case of the SCS and SCSp, by the general partner. Unlike the SCS, the SCSp has no legal personality, which, together with its contractual flexibility, has made it the most widely used unregulated fund vehicle in Luxembourg.
Planning to set up an investment fund? Want to learn more about the different investment vehicles in Luxembourg? Drop us an email (office@bensonformations.com) or give us a call (+44 20 3974 1244) at any time.
