Every Luxembourg SCSp needs at least one general partner, usually called the GP. The GP carries unlimited liability for the SCSp’s obligations. Management and representation are organised by the limited partnership agreement and entrusted to one or more managers, who may or may not be partners. Limited partners retain limited liability if they stay within the legal framework for their role.
The GP is therefore more than a signature company. Its legal form, ownership, decision-making process and interest in the fund must fit the limited partnership agreement and the wider regulatory structure.
The GP’s legal role
The Law of 10 August 1915 gives the SCSp contractual flexibility. The limited partnership agreement can define investment powers, reserved matters, transfers, the appointment of managers, and removal or replacement of the GP. That flexibility does not change the basic split between the partners.
The appointed manager or managers manage and bind the SCSp. A GP can hold that mandate, but the agreement may appoint another person. A limited partner may exercise the rights permitted by law and the agreement without becoming the external face of management. The agreement should therefore distinguish manager decisions, GP rights and investor consent rights.
The GP also bears unlimited liability for partnership debts. This is why most institutional structures use a company rather than an individual as GP.
Why a corporate GP is common
A corporate GP places the unlimited partnership liability in a separate legal person. The company itself remains fully liable as GP, but its shareholders normally benefit from the liability rules of the chosen corporate form.
Two forms appear most often.
| Corporate form | Statutory minimum capital | Governance outline |
|---|---|---|
| SARL | EUR 12,000 | One or more managers |
| SA | EUR 30,000 | Board structure, with monistic or dualistic governance available |
A SARL often suits a closely held sponsor. An SA can fit a broader ownership or governance model. The choice is not determined by the SCSp Law alone. Transfer restrictions, financing, board organisation and investor expectations also matter.
A separate GP company does not block every claim against an individual. Personal guarantees, directors’ duties and liability for a person’s own conduct remain separate questions.
The GP interest and the 5% rule
The SCSp is transparent for Luxembourg corporate income tax purposes. Municipal business tax requires a separate analysis of its activity and of the statutory commercial-imprint rule.
ACD Circular L.I.R. 14/4 explains that a capital-company GP holding at least 5% can cause the partnership to be treated as carrying on a commercial business under Article 14 LIR. Below 5%, that specific deeming rule does not apply.
The threshold is not a complete tax exemption. For a non-AIF SCSp, the actual activity remains a separate test, so the investment policy, trading pattern and other facts can still produce commercial income. An SCSp that qualifies as an AIF is deemed not to exercise an actual commercial activity under Article 14(1) LIR. It must nevertheless test the separate commercial-imprint rule, and a capital-company GP interest of at least 5% triggers that rule.
The GP’s stake, voting rights and economic rights should therefore be reviewed together. Carried interest or other profit rights are not automatically best held by the GP. Their legal and tax treatment depends on the instruments used and on the fund’s economics.
The GP and the AIFM are different roles
When the GP is also an appointed manager, it manages the partnership under company law. That mandate remains different from the AIFM’s regulated portfolio-management and risk-management functions when the SCSp qualifies as an alternative investment fund.
An SCSp has no legal personality and cannot be an internally managed AIF. It must use an external AIFM. A corporate GP can perform that role only if it is itself registered or authorised under the AIFM Law for the mandate concerned.
The alternative is to appoint a separate AIFM. The GP then retains its partner rights and any management or signing powers granted by the limited partnership agreement, while the AIFM carries the regulated functions. The limited partnership agreement and management agreement must describe the split consistently.
A RAIF makes this point stricter. It must have an external authorised AIFM under the RAIF Law. A merely registered GP cannot manage a RAIF.
Governance in practice
The GP should be able to show how decisions are prepared, challenged and recorded. This does not create a general requirement for a majority of Luxembourg-resident managers. It does mean that the formal board cannot be disconnected from the decisions attributed to it.
Conflicts need particular attention. The sponsor may own the GP, advise the AIFM, receive fees from portfolio companies and participate in carried interest. The partnership agreement can allocate approval rights, but the actual process must follow that allocation.
The GP company also has its own accounting, tax and company-law obligations. Its expenses and income must be separated from those of the SCSp. Amounts paid by the fund should follow the agreements and be recorded in the correct entity.
Removal and continuity
The limited partnership agreement usually defines when investors can remove the GP, whether a cause event is required and how a successor is appointed. Those clauses are central because removing a GP that is also a manager can affect signing authority, regulatory appointments and the sponsor’s economic rights at the same time.
The agreement should also address temporary incapacity and the period between removal and replacement. A change of GP can require updates to the RCS filing, bank mandates, service-provider records and AIFM documentation. The legal mechanism and the operating transition should therefore be designed together.
Conclusion
The GP supplies the SCSp’s unlimited partner. If it is also appointed manager, it performs the company-law management and representation role. A corporate GP can contain the partnership exposure at entity level, but its form and governance still need a real purpose. The GP’s interest must be tested against the 5% commercial-imprint rule, and any company-law management role must remain distinct from the regulated role of the AIFM.
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Frequently Asked Questions
Can an individual be the general partner of a Luxembourg SCSp?
Yes. The general partner has unlimited liability for the SCSp's obligations, so a separate Luxembourg company is commonly used. A corporate GP contains that exposure at company level, but it does not remove personal guarantees or liability for a person's own conduct.
Which corporate form can be used for the GP?
A SARL is common and has statutory minimum capital of EUR 12,000. An SA has statutory minimum capital of EUR 30,000 and offers a different governance and transfer framework. The choice depends on ownership, decision-making and investor requirements.
What does the 5% GP threshold mean?
A capital-company GP holding at least 5% gives the SCSp a statutory commercial imprint for tax purposes. Keeping the interest below 5% prevents that specific rule from applying. For a non-AIF SCSp, its actual activity remains a separate test. An SCSp that qualifies as an AIF is deemed not to carry on an actual commercial activity under Article 14(1), but it must still test the 5% imprint.
Can the GP also be the AIFM?
A corporate GP can do so if it is separately registered or authorised for the relevant mandate. An SCSp cannot be an internally managed AIF because it has no legal personality. A RAIF must appoint an external authorised AIFM, whether that manager is the corporate GP or another entity.
Must Luxembourg residents form a majority of the GP board?
No general rule imposes a resident majority on every GP. The company must still be directed and administered consistently with its legal, regulatory and tax position. The appropriate board composition depends on the structure and any AIFM or investor requirements.
