Luxembourg extends compartmentalisation options to unregulated fund partnerships

On 30 July 2026, the Luxembourg government submitted bill of law 8814 to Parliament. The bill amends the law of 12 July 2013 on alternative investment fund managers (AIFM Law) and introduces new rules applicable to multiple-compartment alternative investment funds (AIFs).

Under current Luxembourg law, a société en commandite simple (SCS) or a société en commandite spéciale (SCSp) may only adopt a multi-compartment structure with segregated compartments if it is governed by one of the Luxembourg fund product laws (i.e. the SICAR Law, SIF Law, RAIF Law and UCI Law). Each of these product laws, however, brings additional regulatory constraints such as risk-spreading requirements.

The bill of law fills this gap by allowing limited partnerships qualifying as AIFs to be structured as multi-compartment vehicles without being subject to product laws, provided they are managed by an authorised alternative investment fund manager (AIFM). The proposed amendments to the AIFM Law are modelled on the RAIF Law, which is itself largely inspired by the SIF Law.

Key points to note

Scope and eligibility

The new regime is available exclusively to Luxembourg AIFs structured as an SCS or SCSp and managed by either (i) a Luxembourg authorised AIFM or (ii) an AIFM authorised in another Member State under the AIFMD.

Statutory ring-fencing

The bill of law introduces robust ring-fencing rules. The rights of investors and creditors in respect of a compartment are limited by law to the assets of that specific compartment.

Constitutive documents and investment policy

The use of the multi-compartment structure and the terms thereof must be expressly provided for in the AIF’s constitutive documents. Importantly, the bill of law does not require an offering document, preserving the existing flexibility under the AIFMD as long as mandatory disclosures pursuant to Article 23 of the AIFMD are ensured.

Separate liquidation of compartments

Each compartment may be liquidated separately without triggering the liquidation of the other compartments or of the AIF itself. Only the liquidation of the last remaining compartment leads to the liquidation of the AIF as a whole.

Cross-compartment investments

Subject to conditions set out in the constitutive documents, one compartment may subscribe for, acquire, or hold interests issued by one or more other compartments of the same AIF. Two safeguards apply: (i) the target compartment may not in turn invest in the investing compartment (no circular investment), and (ii) any voting rights attached to the relevant interests are suspended for as long as they are held by the investing compartment.

Reporting

A separate annual report may be drawn up for each compartment, provided it includes, in addition to compartment-specific information, aggregated data covering all compartments.

Next steps

The bill of law is now subject to the legislative process and may therefore change. We understand that the parliamentary vote on the bill of law is expected to take place before the end of 2026.

Author: Julien Robert