The Luxembourg SCSP (Société en commandite spéciale or SCSP) : main features of the special limited partnership

An SCSp is formed by a contract for a specified or indefinite duration. It involves one or more general partners (GP), who have unlimited and joint liability for the SCSp’s obligations, and one or more limited partners (LP), whose liability is restricted to their investment in the partnership. This investment is represented by partnership interests. Unless stated otherwise in the agreement, a general partner can also be a limited partner, as long as there is always at least one general partner and one limited partner who are distinct legal entities.

1. Creation of the SCSp

An SCSp is established either through a notarial deed or a private instrument (the limited partnership agreement or LPA). An extract of this deed or instrument must be filed with the Luxembourg trade and companies register (Registre de Commerce et des Sociétés, the RCS) within one month. This extract must also be published in the Luxembourg official gazette (Recueil Electronique des Sociétés et Associations). The extract must include the following information:

• A precise designation of the general partner(s);
• The corporate name, purpose, and location of the limited partnership’s registered office;
• The identity of the manager(s) and their signatory powers;
• The date of the formation of the limited partnership and, if applicable, the termination date. As the LPA is not published in full, it allows confidentiality of most of the LPA’s content. The SCSp does not have a separate legal personality from that of its members.

Practical tip: Given that the LPA must be established in two original copies, it must be executed either in wet ink or through two sets of documents bearing electronic signatures.

2. Consequences of the Absence of Legal Personality of the SCSp

Although deprived of legal personality, the SCSp retains some features applicable to companies having legal personality making it a hybrid entity in that respect.

• The SCSp has a registered office: The domicile of an SCSp is located at the seat of its central administration, which is deemed to match the place of its registered office as set out in the partnership agreement.
• The SCSp holds its own assets: The assets contributed to the SCSp or held by the SCSp are registered in the name of the SCSp and not in the name of its partners or managers. The assets contributed to the SCSp are exclusively reserved for the creditors whose claims have arisen in connection with the creation, operation, or liquidation of the SCSp. The assets of the SCSp are only available to satisfy the rights of creditors of the SCSp, to the exclusion of personal creditors of partners of the SCSp.
• The SCSp can be subject to legal proceedings: An SCSp is represented by its manager(s) in legal proceedings, and litigation materials can be served on behalf of or against an SCSp.

3. The Rules Applicable to the SCSp are mainly Contractual

The legal regime applicable to the SCSp is minimal. With the exception of a few limited compulsory legal provisions, the drafting of the LPA is governed by contractual freedom and is highly flexible. The LPA will notably govern the management of the SCSp, the rules applicable to distributions, redemption, and transfer of the partnership interests. SCSps are not subject to minimum capital requirements and are not required to approve their accounts annually (contrary to most of the other companies or partnerships incorporated under another legal form).

Practical tip: Although an SCSp is not required to draw up annual accounts, it is required to keep books and records.

4. Management of the SCSp

The management of an SCSp is entrusted to one or more managers, who may be, but are not necessarily, the GP. Accordingly, the GP has the right to manage the Partnership but is not obliged to do so. Consequently, the LPs are prohibited from carrying out any act of management of the SCSp vis-à-vis third parties (but they can provide advice internally). If they do, they will be held jointly and severally liable vis-à-vis third parties for the obligations of the SCSp. Management rules will be provided for in the LPA.

5. Voting Rights of the Partners

The LPA can freely organize the voting rights of partners. For example, some partnership interests may have multiple, limited, or no voting rights regarding specific decisions, and voting "per head" may be used. If the LPA does not specify, the voting rights are proportional to the partnership interests held by each partner.

The following decisions shall fall within the competence of the partners:

• Amendment of the corporate object;
• Change of nationality;
• Transformation of the SCSp into another form of commercial company;
• Dissolution/liquidation of the SCSp.

6. Liability of the Partners

The GP of an SCSp, whether or not they act as a manager, is indefinitely and jointly liable for all the partnership's obligations. The liability of an LP is limited to the amount invested or committed to invest in the partnership, as long as the LP does not engage in managing the SCSp with respect to third parties. The prohibition on LPs from interfering in the management of the SCSp pertains only to acts of external management, meaning actions carried out on behalf of the SCSp with third parties. This prohibition does not extend to internal activities within the SCSp.