Partnerships are vehicles of choice for the asset management industry, especially in the field of private equity, real estate, debt and other 'illiquid' strategies.

Luxembourg law has known partnerships since the implementation of the Law of 10 August 1915 on commercial companies ("Company Law"), and to some extent since the enactment of the first Commercial Code in 1807.

Notwithstanding this historical existence of partnerships in Luxembourg's legal system, the domestic regime lacked a certain amount of flexibility available to partnerships in other jurisdictions that was key to their success in the asset management industry.

In 2013, Luxembourg seized the opportunity of the implementation of the Alternative Investment Fund Managers Directive ("AIFMD") to increase its attractiveness as a leading investment fund centre and to boost the attractiveness of its partnerships.

Luxembourg lawmakers thoroughly amended and modernised the limited partnership and sought to align the regime of local partnerships with those of competing jurisdictions, thus expanding the structuring possibilities of investment vehicles electing for the partnership regime, mainly to respond to the needs of the asset management industry.

The new Luxembourg Partnership, whilst sticking to its original principles, now embraces the flexible nature of Anglo-Saxon types of partnerships, with only a few variations. This new approach has allowed asset managers to set up private funds benefiting from the AIFMD marketing passport in a format that they are more familiar with and which allows full interaction with other vehicles of their product range (e.g. Delaware feeder of parallel funds for the US market).

Managers looking to set up their fund in Luxembourg can now choose between three types of partnerships: two are based on the Anglo-Saxon models, the Common Limited Partnership ("SCS" or société en commandite simple) and the Special Limited Partnership ("SCSp" or société en commandite spéciale), and one is based on the more continental type of partnership, the Partnership Limited by Shares ("SCA" or société en commandite par actions).

The purpose of this Memorandum is to describe the principal features of the different Luxembourg partnerships (while focusing mainly on the SCS and the SCSp), and the regulatory options under which they may be set up. Unless provided otherwise, reference to "Partnerships" in this Memorandum1 should be understood as an indistinct reference to the SCA, SCS and SCSp.

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1. Except in Chapter III where the term "Partnerships" will refer only to SCS and SCSp

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