SCA in Luxembourg: Partnership Limited by Shares Explained
Mickaël LOC
Corporate Law Expert ·
SCA in Luxembourg: Partnership Limited by Shares Explained
The SCA in Luxembourg is a partnership limited by shares that combines two categories of partners: the general partners, who have unlimited liability and manage the structure, and the limited partners, whose liability is limited to their contributions. It is particularly used in private equity structures where managers wish to retain operational control even when investors hold the majority of the capital.
Dual structure: general and limited partners
- General partners: partners with unlimited liability, managers of the company, cannot transfer their interest without unanimous consent
- Limited partners: shareholders with limited liability, without management power, holders of freely transferable shares
- Minimum capital: €30,000, represented by shares
Benefits of the SCA in private equity
The SCA allows managers (general partners) to retain operational control of the structure even when investors (limited partners) hold the majority of the capital. It is a preferred tool for open-ended collective investment funds and carried interest structures.
Obligations and governance
The SCA must have a supervisory board composed of at least 3 limited partners. The general partners manage the company without being bound by decisions of the supervisory board, except for acts exceeding ordinary management powers.
Is the SCA right for your structure? Our corporate law experts advise you on the relevance of this vehicle for your investment strategy.
Frequently Asked Questions
What is the difference between a SCA and a SCS?
The SCA issues shares (like a capital company) and requires a minimum capital of €30,000. It has a supervisory board. The SCS does not issue shares, has no minimum capital, and operates closer to a partnership.
Why is the SCA used in private equity?
The SCA allows managers (general partners) to retain operational control even when investors (limited partners) hold a majority of the capital. It therefore offers a clear separation between those who manage and those who fund, which is ideal for GP/LP structures.
What is the liability of limited partners in a SCA?
Limited partners have liability limited to their contributions, as in a standard capital company. They cannot interfere in the management of the company, on pain of incurring unlimited liability.
Is a notary mandatory to set up a SCA?
Yes, setting up a SCA requires a notarial deed, as it qualifies as a joint-stock company subject to the rules applicable to SAs.
Can a SCA be used as an investment fund vehicle?
Yes, the SCA is frequently used as a Luxembourg alternative fund vehicle (RAIF, SIF). Its structure can accommodate many limited partners while keeping firm control in the hands of the managing general partner.
