Why does this matter to European Alternatives Managers ?
- LLP derive from the same ultimate source as limited partnerships of the Anglo-American, common law type.
- The LLP offers a highly sophisticated and flexible contractual regime. Combined with the Limited Partnership offers an unparalleled investment platform suited to the respective commitments of both promoters and investors.
- The purpose of this modernizing Luxembourg legislation is adopt a best-in-class solution in each case from the other models available internationally.
- Combined with the distribution passport introduced by the EU Alternative Investment Fund Managers Directive (AIFMD), the modernization of limited partnerships tailored to Private Equity / Real estate investment is underline Luxembourg's attributes as a leading fund domicile for European private equity and real estate funds.
Advantages of the Luxembourg Limited Partnership
- Accounting: The LLP will have to prepare accounts for investors, either due to specific legal requirements for regulated LLP or as stated in the LPA. Luxembourg GAAP or IFRS or even other GAAP can be used. The GAAP can be chosen based on any requirements from investors defined in the LPA.
- Security: The LLP may be regarded as a “four-wheel-drive” vehicle which can be used in both regulated and unregulated investment structures.
- A unregulated LLP will mainly be governed by Corporate Company law and, in the case that it falls within the scope of the AIFMD, will additionally be able to comply with it.
- A regulated LLP will be subject to the specific regulations applicable to the chosen regulated vehicle, such as the SIF law or the SICAR law. As a result, regulated LLP will be subject to the approval and supervision of the Commission de Surveillance du Secteur Financier (CSSF) and will benefit from the attractive features of the SIF/SICAR regime, such as the possibility of having fully segregated portfolios (umbrella structure with compartments).
- Valuation: For regulated LLP, unless otherwise stated in the Limited Partnership Agreement, the fair value shall be used as a valuation policy. For the unregulated entities the valuation policy is to be defined by the GAAP used or in the Limited Partnership Agreement. Examples of valuation policies include (non-exhaustive list): - Fair value, defined as the arm length realisable value of the securities/assets; - Historical cost less impairment; - Lower of cost or fair market value.
- Rapidity: The Limited Partnership Agreement (“LPA”) may be concluded under the form of a private deed, thus not requiring the intervention of a notary. In line with Luxembourg corporate law principles, the LLP is immediately effective as of the date of the LPA, without being delayed in any way by registration or publication requirements.
- Confidentiality: the law fully protects the anonymity of the limited partners and their respective contributions which are not subject to publication. Confidentiality is therefore fully guaranteed.
Why Delegate the Management of your LLP to MC Square ?
- The Advantages of an Unregulated fund combined with the security of the supervision from a fully regulated management company :
- Managed by MC Square, your LLP will be indirectly regulated by the CSSF. The Limited Partners (“LP”) benefit from the supervision of our the risk management team. We insure all investments are compliant with the LLP partnership agreement.
- In the limit of the law and the investment restrictions in place, MC Square’s goal is to implement the general partner’s strategies. You don’t need to set up your own management company, we execute your investments and manage your fund on a daily basis.An LLP is not designed for retail investors but for sophisticated investors looking for maximum flexibility. Through MC Square AIFM license, your fund can be registered for distribution in all EU Member States which considerably accelerated the process of distributing and marketing a fund and reduced related costs.
- We are unbiased in our approach and the advice we give. We leverage the expertise of external service providers and experts where required. We assist in the preparation and analysis of requests for proposal (RFP) for service providers, ensuring the selection of the most suitable partner for your strategy and product structure.