On 30 July 2026, the Luxembourg government submitted Bill of Law n° 8814 (the "Bill") to Parliament. The Bill proposes a targeted amendment to the law of 12 July 2013 on alternative investment fund managers (the "AIFM Law"). Its principal purpose is to permit certain Luxembourg alternative investment funds ("AIFs") established as a société en commandite simple ("SCS") or a société en commandite spéciale ("SCSp") to operate with statutory compartments without being subject to one of Luxembourg's fund product laws.
Background: The Gap in the Current Framework
Under current Luxembourg legislation, the ability to create umbrella structures comprising one or more legally segregated compartments is reserved to investment funds established under one of the Luxembourg product regimes — namely the UCI Law (Part II), the SIF Law, the SICAR Law, and the RAIF Law. Each of these regimes provides for the possibility to set-up statutory segregation of assets and liabilities between compartments, such that each compartment is responsible only for its own debts and liabilities.
However, fund managers seeking the maximum contractual flexibility afforded by an unregulated SCS or SCSp, have been unable to benefit from statutory umbrella structures if not operated under one of the aforementioned Luxembourg product regimes. While contractual allocation mechanisms may be included in the limited partnership agreements, those mechanisms do not provide the same statutory framework as a product-law umbrella structure, which the Bill addresses directly.
The Proposed Amendment: Article 28bis of the AIFM Law
The Bill introduces a new Article 28bis (FIA à compartiments multiples) into Chapter 5 of the AIFM Law. The new article is modelled on Article 49 of the RAIF Law, which is itself largely inspired by the SIF Law, which key features are as follows:
Scope and Eligibility
The new regime is available exclusively to Luxembourg AIFs established in the form of an SCS or SCSp and managed by either (i) a Luxembourg authorised AIFM or (ii) an AIFM authorised in another EU Member State under Directive 2011/61/EU on alternative investment fund managers ("AIFMD").
Statutory Ring-Fencing
The Bill introduces robust ring-fencing rules. The rights of investors and creditors in respect of a given compartment would be limited by law to the assets of that specific compartment, unless the constitutional document provides otherwise. This provides full legal segregation of assets and liabilities between compartments, consistent with the position under the existing product regimes.
Constitutional 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. The specific investment policy of each compartment must be disclosed to investors in accordance with Article 21 of the AIFM Law. Importantly, the Bill does not require a formal offering document, preserving the existing flexibility under the AIFMD as long as mandatory disclosures pursuant to Article 23 of the AIFMD are ensured.
Liquidation
Each compartment may be liquidated separately without causing the liquidation of any other compartment. The liquidation of the last remaining compartment will result in the liquidation of the Luxembourg AIF itself.
Cross-Investment Between Compartments
A compartment of a Luxembourg AIF may, subject to certain conditions, invest in one or more other compartments of the same Luxembourg AIF.
Key Advantages for Fund Managers
The Bill offers several practical advantages for fund structuring:
- Greater competitiveness of the Luxembourg fund toolbox: SCS and SCSp AIFs will be able to adopt a multi-compartment structure without any product law constraints.
- Enhanced structural flexibility: where existing product laws impose specific legal framework (e.g., risk-spreading requirements), the new regime provides a tailored alternative with full legal compartment isolation.
- No offering document required: the Bill does not impose an obligation to produce a formal offering document.
- No minimum capital requirement: unlike the SIF or RAIF regimes, the new framework imposes no minimum regulatory capital.
Legislative Outlook
The Bill is now subject to the standard legislative process, and then is subject to potential amendments during this process.
Conclusion
The Bill represents a significant and welcome development for the Luxembourg funds industry. By extending statutory compartmentalisation to unregulated SCS and SCSp AIFs managed by an authorised AIFM, the proposed amendment would materially enhance the attractiveness of these vehicles and bring them more closely in line with the structuring options available under the existing product frameworks. Fund managers and their advisors should monitor the Bill's progress through Parliament and begin assessing its potential impact on current and future fund structures.
Authors: Arnaud Julien, Partner; Marc Hirtz, Counsel; Frank Noesen, Senior Associate and Stella Rante, Associate.
