Invest through a Special Limited Partnership (SLP)
A Special Limited Partnership, or SLP, is a type of partnership that requires at least one general partner (GP) and limited partner (LP).
What is Special Limited Partnership?
Since it lacks a legal identity, the special limited partnership is a unique sort of partnership that is unique from others.
Its benefits stem from its transparency as well as from its flexibility and simplicity. Foreign investors in Luxembourg favor this type of partnership above others.
The SLP is made up of one or more limited partners and at least one general partner. The partner can also simultaneously hold the positions of GP and LP. The responsibility of the LP is restrained to the amount of their contributed participation interest, but the GP is jointly liable for any commitments made by the enterprise on their own assets and property. Any obligation assumed by the SLP in connection with its incorporation, ongoing operations, or liquidation shall be regarded in this regard as a promise by the SLP.
A GP might but is not obliged to act as a manager of the SLP. Instead, an LP can act as manager, director, or agent of a manager of the SLP. In addition, the management of the SLP can be delegated by the GPs to an alternative investment fund manager.
How can investing through an SLP benefit you?
Investors who wish to make and enjoy profits in Luxembourg carefully weigh the advantages that this type of organization offers. Some benefits of a special limited partnership are listed below:
- The special limited partnership is far less expensive than other investment vehicles on the market.
- As a result of its lack of legal personality, an SLP in Luxembourg can be flexible to some extent.
- Another significant benefit associated with special limited partnerships is confidentiality. The limited partners’ identities are kept a secret.
Also, creating an SLP is not complicated in Luxembourg, so operations can get started rather quickly.
How to invest through an SLP?
Shares of ownership make up the capital of an SLP. However, there is no minimum capital requirement.
Nonetheless, the quantity of the share capital or the value of the payments made by each GP or LP must be specified in the partnership agreement.
Risks and advantages
In summary, the advantages of such a structure are:
- it takes only a few weeks to set it up;
- no regulatory authorization in advance is required;
- the number of investors is not limited.
While LPs are only allowed a small amount of management participation, GPs have unrestricted personal liability. The ownership may be more challenging to hand over than with other corporations, which is another drawback.