Luxembourg’s proposed Article 28bis lets authorised-AIFM-managed SCSp/SCS funds create ring-fenced compartments without adopting a fund product law.
A new structuring option for Luxembourg partnership AIFs
On 30 July 2026, a draft law was published to amend the Luxembourg law of 12 July 2013 on alternative investment fund managers (the "AIFM Law"). The proposed amendment introduces a new Article 28bis, which creates a statutory compartmentalisation regime for Luxembourg common limited partnerships (sociétés en commandite simple, "SCS") and special limited partnerships (sociétés en commandite spéciale, "SCSp") that qualify as alternative investment funds ("AIFs"). Until now, statutory compartmentalisation has been available only to alternative investment funds established under one of Luxembourg’s dedicated fund product laws - the SIF, RAIF, SICAR or Part 2 UCI regimes. Article 28bis changes that position by allowing partnership AIFs managed by a fully authorised AIFM to set up ring-fenced compartments.
Scope and eligibility
It is proposed that the new regime be inserted into the AIFM Law rather than the Luxembourg law of 10 August 1915 on commercial companies (the "1915 Law"). Its placement already defines its boundaries: Article 28bis will apply only where an SCS or SCSp qualifies as an AIF and is managed by a fully authorised AIFM. Structures falling outside the AIF definition - such as certain co-investment or carried interest vehicles - cannot rely on the new provision. Similarly, partnerships managed by sub-threshold AIFMs remain outside its scope.
Practical significance - freedom from fund product law constraints
SIFs, Part 2 UCIs, SICARs and RAIFs are subject to risk-spreading requirements, borrowing restrictions and minimum net asset thresholds, most recently consolidated by CSSF Circular 25/901 of 19 December 2025.
A plain, unregulated AIF governed solely by the AIFM Law and the 1915 Law is not subject to these product-law constraints and therefore benefits from greater structural flexibility. Article 28bis will mean that such an AIF can now also benefit from statutory compartmentalisation - previously one of the main reasons for selecting a fund product law.
The proposed provision also interacts with the existing patrimonial segregation framework. Article 320-2 of the 1915 Law already grants the SCSp its own patrimony, protected against the personal creditors of, among others, the limited partners, the general partner, the AIFM and the depositary. Article 28bis does not replace that regime; instead, it builds upon it by allowing the SCSp’s asset pool to be subdivided into statutorily ring-fenced compartments. In practice, sponsors obtain the legal certainty previously reserved to SCSps established under the fund product laws, while retaining the flexibility of a plain SCSp governed solely by the AIFM Law.
The draft law refrains from imposing any compulsory prospectus or placement memorandum. The existing latitude under the AIFM Law regarding how and where investor disclosures are made is therefore retained. Each compartment may have its own annual report, on condition that the report also contains consolidated figures covering every compartment of the vehicle, in line with the approach already permitted for RAIFs and SIFs.
The new framework is expected to considerably broaden the structuring possibilities open to managers wishing to launch multi-compartment SCS or SCSp AIFs in Luxembourg.
Impact of the reform
Article 28bis will recalibrate the relationship between the AIFM Law and the fund product laws for partnership AIFs. Until the proposed amendment, compartmentalisation was reserved to vehicles established under the SIF, RAIF, SICAR or Part 2 UCI regimes.
The RAIF, governed by the Luxembourg law of 23 July 2016 on reserved alternative investment funds (the "RAIF Law"), was the most common choice, largely because it offered access to compartmentalisation under Article 49 of the RAIF Law (modelled on Article 71 of the Luxembourg law of 13 February 2007 on specialised investment funds (the "SIF Law") without prior CSSF authorisation. By transplanting the core compartment mechanics into the AIFM Law itself, Article 28bis will eliminate what was, for many partnership-based fund launches, the single decisive factor in favour of the RAIF.
That said, the RAIF remains indispensable for certain vehicle types. Opaque corporate AIFs – in particular sociétés anonymes (SA) and sociétés en commandite par actions (SCA) structured as SICAVs – continue to depend on the RAIF regime mainly to access the applicable RAIF tax framework and for the variable nature of the capital. For those vehicles, Article 28bis is immaterial. Where the reform does produce tangible savings is in the partnership segment: sponsors that previously adopted the RAIF solely for compartmentalisation purposes will no longer inherit the regulatory overlay that comes with a fund product law – namely risk-spreading requirements, borrowing restrictions and minimum net asset thresholds. .
Going forward, the election of a fund product law for SCS or SCSp AIFs will therefore be driven by considerations such as risk-diversification obligations, regulatory labelling, or the need for a formal issuing document, rather than by the compartmentalisation question.
Next steps and timeline
The draft law No. 8814 was published on 30 July 2026 and is now subject to the ordinary Luxembourg legislative process, including review by the Conseil d’Etat and debate in the Luxembourg Parliament (Chambre des Députés).
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