Luxembourg AIFM Law Proposal: Multi-Compartment Structures for SCS and SCSp Funds

Executive Summary:

• The Luxembourg Government has submitted a bill to amend the Alternative Investment Fund Managers (AIFM) Law, which would permit SCS and SCSp investment funds to operate as umbrella structures with multiple compartments.  

• The amendments would create additional structuring options to Luxembourg’s existing dedicated investment funds, such as a RAIF, SIF, SICAR, or Part II UCI.  

• Benefits of the new proposal include no risk diversification requirement or professional investor restriction, potentially leading to a reduction in structuring, administration, and maintenance costs.  

Luxembourg has proposed amendments to the AIFM Law that would expand the structuring options available to alternative investment funds. If adopted, the reforms would allow qualifying SCS and SCSp vehicles to operate as umbrella structures with multiple legally segregated compartments.   

This would give qualifying partnerships access to compartmentalisation without requiring them to adopt a dedicated fund regime such as a RAIF, SIF, SICAR, or Part II UCI.  

What is the new Luxembourg AIFM proposal?

On 30 July 2026, the Luxembourg Government submitted a bill that would allow common limited partnerships (sociétés en commandite simple, or SCS) and special limited partnerships (sociétés en commandite spéciale, or SCSp) qualifying as alternative investment funds to operate as umbrella structures with multiple compartments. 

Umbrella structures are currently associated with Luxembourg's dedicated investment fund regimes. Under the proposal, qualifying partnership vehicles could also establish multiple compartments, with the assets and liabilities of each compartment segregated from those of the others, subject to the bill's conditions. 

Why is Luxembourg Expanding Access to Multi-Compartment Structures?

The latest proposal is part of an ongoing effort from Luxembourg to improve its fund structuring offering and maintain its competitiveness as a leading fund domicile. Extending compartment structures to allow SCS and SCSps will provide fund managers with more choice when structuring alternative investment vehicles.  

The reform will make Luxembourg a more attractive alternative to other overseas vehicles that have already implemented multi-compartment segregation.  

What are the Eligibility Requirements for SCS and SCSp Structures?

Alternative investment funds, such as an SCS or SCSp, will be allowed to establish multiple compartments, subject to: 

• Appointing an alternative investment fund manager based in Luxembourg or another EU Member State and complying with the AIFM Law. 

• The umbrella structure must be clearly established inside the fund’s constitutional documents. 

• Each compartment must have an investment policy before investor capital is committed.  

• Existing investor disclosure requirements under the AIFM Law still apply.  

The bill remains subject to the Luxembourg legislative process. Its final scope, conditions and effective date may therefore change before adoption.

What are the Advantages for Fund Managers?

• Access to multi-compartment structures without a reserved investment fund regime 

The proposal would allow SCS and SCSp funds to create segregated compartments without opting for a dedicated regime such as a RAIF, SIF, SICAR or Part II UCI. For suitable strategies, this could offer a more flexible and potentially more cost-efficient structuring route, depending on the fund's regulatory profile and operating model. 

• No risk diversification requirement 

Unlike certain existing Luxembourg fund regimes, the proposed compartment framework would not impose a risk-diversification requirement. This could make it suitable for concentrated investment strategies, subject to the fund's investment policy, investor disclosures and other applicable requirements. 

• No professional investor limitation 

Compartments can be created without the notion of professional investors that applies to the existing Luxembourg funds. This may increase the range of investors able to use these structures.  

• Operational efficiency 

Managing multiple investment strategies within a single umbrella structure can streamline fund administration and potentially reduce structuring, administrative, and maintenance costs.

Ensure Compliance and Optimise Your Luxembourg Fund Structures with Bolder

Bolder provides governance, compliance and corporate services to help fund managers assess and respond to developments affecting Luxembourg alternative investment funds. Our specialists can support the review of operating models, governance arrangements and service requirements in light of proposed changes to the AIFM Law. 

Whether you are assessing AIFMD II requirements or considering how the proposed multi-compartment framework could affect an SCS or SCSp vehicle, our specialists can help you evaluate the governance, compliance and operational implications. Get in touch with our Bolder experts to discuss your Luxembourg fund structure.