Luxembourg is poised to expand the structuring options for alternative investment funds by allowing certain unregulated partnership AIFs to use statutory umbrella compartments for the first time. The change could reduce one of the main reasons sponsors have historically chosen the RAIF regime, write Sebastiaan Hooghiemstra and Marco Loria of Loyens & Loeff.
On 30 June 2026, a draft bill was published to amend the Luxembourg law of 12 July 2013 on alternative investment fund managers (the “AIFM Law”). The draft bill introduces a new Article 28bis into the AIFM Law, introducing a statutory compartmentalization regime for Luxembourg common and special limited partnerships (“SCS” and “SCSp”) qualifying as alternative investment funds (“AIFs”) for the first time.
Although concise, the new provision meaningfully reshuffles the balance between the Luxembourg fund product laws (the “Fund Product Laws”), namely SIFs, RAIFs, SICARs and Part 2 UCIs, and the “plain” unregulated AIF governed solely by the AIFM Law and the Luxembourg law of 10 August 1915 on commercial companies (the “1915 Law”). In particular, by making statutory compartments available to SCSp/SCS AIFs managed by an authorized AIFM without requiring a Fund Product Law, the proposal removes one of the principal structural advantages historically associated with the RAIF.
Scope: Authorized AIFMs and AIFs only
Article 28bis will be introduced into the AIFM Law rather than the 1915 Law. Its location already defines its scope: the new statutory compartmentalization regime is available only where an SCS or SCSp qualifies as an AIF. Accordingly, structures falling outside the AIF definition, such as certain co-investment or carried interest vehicles, cannot rely on the new regime.
Furthermore, the current draft bill limits the regime to SCSs and SCSps managed by fully authorized AIFMs. Structures managed by sub-threshold AIFMs therefore remain outside its scope.
This follows directly from the fact that Article 28bis is introduced into the AIFM Law, which regulates authorized AIFMs and the AIFs they manage.
A compartment regime without a dedicated fund product law
Until now, statutory compartmentalization has been reserved for vehicles governed by one of the Fund Product Laws. Accordingly, an SCS/SCSp with AIF status wishing to benefit from a statutory umbrella regime needed to adopt the RAIF regime.
The proposed Article 28bis changes that position.
Furthermore, SCSps are already subject to the debated patrimonial regime under Article 320-2 of the 1915 Law, which grants the SCSp, as a whole, a distinct pool of assets notwithstanding the absence of legal personality. Article 28bis builds upon that framework by allowing this asset pool to be subdivided into statutorily ring-fenced compartments without requiring any regulatory “quality label”. As a result, a SCSp managed by an authorized AIFM may operate as an umbrella fund with statutory compartment segregation without becoming a SIF, RAIF, Part 2 UCI or SICAR.
The practical significance of the proposal is considerable. SIFs, Part 2 UCIs, SICARs and RAIFs (which borrow the SIF/SICAR investment policy concepts) remain subject to risk-spreading requirements, borrowing restrictions and minimum net asset requirements, recently consolidated by CSSF Circular 25/901 of 19 December 2025. By contrast, a plain unregulated AIF is not subject to these product-law constraints and therefore benefits from greater structural flexibility.
What changes is that such an AIF can now also benefit from statutory compartmentalization, previously one of the principal reasons for selecting a Fund Product Law wrapper. For concentrated or single-asset strategies, this materially expands the Luxembourg structuring toolbox.
A narrower role for the RAIF
The introduction of Article 28bis narrows the RAIF’s comparative advantage for unregulated SCS/SCSp funds to the “RAIF quality label” itself.
This development continues an existing trend. In substance, the RAIF has always functioned as a SIF-based product law without prior CSSF authorization, and its distinct contribution to the Luxembourg fund toolbox has gradually become narrower than in jurisdictions, such as the Netherlands, where legal forms for AIFs are governed primarily by ordinary private law and the AIFMD operates as a regulatory overlay rather than through a dedicated fund product law. Article 28bis moves Luxembourg’s SCS/SCSp AIFs one step closer to that model.
The RAIF nevertheless remains particularly relevant for opaque corporate vehicles, such as SA- and SCA-SICAVs, which require the RAIF regime not only as a statutory basis for compartments but also to establish open-ended AIFs (by derogating from the ordinary share buyback regime) and to benefit from the applicable tax framework.
In addition, Article 28bis removes one establishment cost for partnership structures that previously adopted the RAIF regime solely to obtain statutory compartments. An SCS or SCSp AIF with compartments may be established by a private deed, whereas a SCSp/SCS-SICAV RAIF continues to require the intervention of a Luxembourg notary.
Interaction with the patrimonial segregation regime
Article 320-2 of the 1915 Law already grants the SCSp its own patrimony, protected against the personal creditors of, amongst others, the limited partners, the general partner, the AIFM and the depositary.
The proposed Article 28bis does not replace that regime. Its wording refers to compartments as distinct parts of the fund’s patrimony, thereby presupposing that such patrimony already exists. The better reading is therefore that the two regimes are cumulative: Article 320-2 establishes the patrimony, while Article 28bis subdivides it into statutorily ring-fenced compartments.
For a single-compartment structure, the practical outcome is likely to be broadly comparable to that of a standalone SCSp relying solely on Article 320-2. The legal route, however, differs, even if the economic substance largely converges where one compartment holds all assets. The incremental protection introduced by Article 28bis only becomes meaningful where multiple compartments exist and statutory segregation between those compartments would otherwise be unavailable.
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.
Private wealth SCS/SCSp structures?
The introduction of Article 28bis is unlikely to displace the RAIF and the Part 2 UCI as the preferred Luxembourg product wrappers for funds distributed to retail investors and HNWIs.
For this market segment, corporate vehicles continue to align better with distribution practices and regulatory expectations, including equal treatment of investors within a share class and the limited liability up to the amount of capital committed (for ELTIF labelled funds). Accordingly, SA- and SCA-based RAIFs and Part 2 UCIs, with or without the ELTIF label, are likely to remain the preferred structures.
In short
Article 28bis is a targeted amendment that leaves the SCSp’s patrimonial foundations untouched and does not affect sub-threshold AIFMs or partnerships falling outside the AIF framework.
Within its proper scope, however, it removes one of the principal reasons for routing a fund that is managed by an authorized AIFM through a Luxembourg Fund Product Law solely to obtain a compartmentalized umbrella structure. In doing so, it further narrows the RAIF’s comparative advantage and moves the SCSp one step closer to an AIFM Law-only, legal-form-neutral structuring toolbox.
Sebastiaan Hooghiemstra is a senior associate in the investment management practice group of Loyens & Loeff Luxembourg. Marco Loria is a senior associate in the investment management practice group of Loyens & Loeff Luxembourg. The law firm is a knowledge partner of Investment Officer.
