What a club deal is
A club deal is a market term, not a legal form. The CSSF describes it as a form of financing operation carried out in collaboration with several investors that are not necessarily funds, based on a written agreement negotiated at arm's length that sets out the contributions, commitments and the distribution of income, usually with one lead investor or arranger (CSSF compilation of key concepts, 19 December 2025, para. 61). Typical targets are a company, a real-estate asset, an infrastructure project or a loan.
Neither the AIFMD nor the Luxembourg AIFM law mentions club deals. Joint ventures appear only in a recital of the AIFMD, which according to the European Commission cannot add an exemption to the Directive. A club deal is therefore outside the fund rules only if its vehicle does not meet the definition of an AIF.
When a vehicle is an AIF
An AIF is a collective investment undertaking that raises capital from a number of investors to invest it in accordance with a defined investment policy for the benefit of those investors, and that is not a UCITS (AIFM law Article 1(39); AIFMD Article 4(1)(a)). The ESMA guidelines on key concepts of the AIFMD break this down: a collective investment undertaking has no general commercial or industrial purpose, pools capital raised from investors for a pooled return, and its investors as a group have no day-to-day discretion or control; it raises capital, from a number of investors, under a defined investment policy (ESMA/2013/611). Luxembourg has declared to ESMA that it applies these guidelines.
A vehicle is an AIF only if all elements are present (para. 4). The CSSF expects each vehicle to assess this itself; the assessment is the responsibility of its management body (CSSF FAQ on the AIFM law, v24, Q1.A). A club deal is built so that at least one element is clearly missing — in practice, the investors' control and the absence of an investment policy.
Control by the investors
Day-to-day discretion or control means a direct and ongoing power of decision, whether exercised or not, over operational matters of the daily management of the vehicle's assets — substantially more than voting at general meetings on mergers, liquidation, the board, the auditor or the accounts (ESMA/2013/611, section II). It must lie with the investors as a group: if only one or some of them have it, the vehicle can still be an AIF (para. 12(c)).
In practice, the investors decide together on the acquisition, the financing, the business plan and budget, material contracts and the exit, for example in an investors' committee in which every investor sits. A lead investor or an arranger may prepare and execute, but not decide alone. Veto rights on a short list of reserved matters were proposed to ESMA as sufficient control and were not taken over in the guidelines (ESMA/2013/600, feedback statement).
Investors and the family carve-out
Raising capital means taking direct or indirect steps, by the vehicle or someone acting for it, to obtain commitments from one or more investors — once or repeatedly, in cash or in kind (ESMA/2013/611, paras 13–14). A vehicle that is not legally prevented from admitting more than one investor counts as having a number of investors, and a club with several investors always has (para. 17).
Capital is not raised where the vehicle is set up exclusively to invest the private wealth of a pre-existing family group — spouses or partners, relatives in direct line, siblings, uncles, aunts, first cousins and dependants, as a group that existed before the vehicle (paras 15, section II; AIFMD recital 7). As soon as one investor from outside the family joins, capital is raised for everyone (para. 16). Investing with friends or business partners therefore needs the other tests.
No investment policy, one identified deal
A defined investment policy is one fixed at the latest when the investors' commitments become binding, set out in the vehicle's documents, enforceable by the investors and containing investment guidelines such as asset classes, limits, strategies, regions or leverage (ESMA/2013/611, para. 20). A fund raises money first and lets a manager invest it within that policy.
A club deal works the other way round: the target is identified before the investors commit, and each further investment needs their decision. Giving a manager full discretion does not avoid the AIF rules either; the guidelines treat this as circumvention (para. 22). Holding companies are excluded from the AIFM law, but only where they pursue a business strategy through their subsidiaries and are not set up mainly to generate returns for their investors by selling them (AIFM law Articles 2(2)(a), 1(62)) — a deal vehicle built for an exit rarely fits.
The vehicle: partnership or Soparfi
The unregulated special limited partnership (SCSp) has at least one general partner with unlimited liability and one or more limited partners, and no legal personality. The partnership agreement governs contributions, decisions, transfers and distributions; the law fills gaps only where it is silent. Only an extract is published, the limited partners do not appear in the trade register and the accounts are not public (Law of 10 August 1915, Articles 320-1 to 320-9; RCS law Articles 76–77). The common limited partnership (SCS) works the same way with legal personality.
The Soparfi is a fully taxable company, usually a private limited company (S.à r.l.: 1 to 100 partners, share capital of at least EUR 12,000, payable within 12 months since the Law of 18 May 2026, transfers to outsiders only with the approval of three quarters of the shares) or a public limited company (SA: capital of at least EUR 30,000, one quarter paid up) (Articles 710-4 to 710-12, 420-1). Which vehicle fits depends on the investors' tax position at home, on how much the agreement must regulate, and on privacy.
The investors' agreement
The agreement is where a club deal is won or lost: who commits how much and when, what happens if an investor does not fund, which decisions need unanimity or a majority, how deadlocks are resolved, what information each investor receives, transfer restrictions such as pre-emption, tag-along, drag-along and lock-up, the exit, and the order of distributions. In an SCSp it is the partnership agreement itself; in a Soparfi a shareholders' agreement next to the articles.
Voting agreements between shareholders of an S.à r.l. or SA are valid, but not where they conflict with the law or the company's interest or bind shareholders to vote as the company's organs instruct (Articles 450-2, 710-20). In an SCSp, partners receive the information that the partnership agreement provides (Article 320-6), so information rights must be written in. If a lead investor or arranger is paid a fee or a promote, it is agreed at arm's length and disclosed to all.
Tax in brief
An SCSp or SCS is transparent: no corporate income tax, no net wealth tax and no withholding tax on distributions; each investor is taxed at home. Two points need care. If a capital company acting as general partner holds 5% or more of the partnership interests, the partnership is deemed commercial, pays municipal business tax (6.75% in Luxembourg City) and gives foreign investors a permanent establishment in Luxembourg (LIR Article 14 no. 4); the administrative relief for AIF partnerships does not help a club deal, so the general partner stays below 5% and the activity passive (Circular L.I.R. n° 14/4). And if associated foreign investors holding 50% or more treat the partnership as a taxable company, it can become taxable in Luxembourg on income not taxed elsewhere; investors acting together count as one, and the exception for investment funds is not open to a club deal (LIR Article 168quater; Circular L.I.R. n° 168quater/2, 12 August 2025).
A Soparfi pays 23.87% in Luxembourg City in 2026, with dividends and gains from qualifying participations exempt (10% or EUR 1.2 million for dividends, EUR 6 million for gains, held for 12 months), 15% withholding tax on its dividends unless an exemption applies, and a minimum net wealth tax (LIR Articles 166, 147–148, 174). Management services supplied to a non-AIF vehicle bear 17% VAT, because the VAT exemption covers funds only; there is no subscription tax. The carried interest rules of the Law of 3 February 2026 apply to AIFs only.
Offering, registration and privacy
The AIFMD marketing rules do not apply to a vehicle that is not an AIF. If shares or other transferable securities are offered, the Prospectus Regulation applies unless an exemption fits — for example an offer only to qualified investors, to fewer than 150 persons per Member State other than qualified investors, or of at least EUR 100,000 per investor (Regulation (EU) 2017/1129, Article 1(4)). Whether interests in an SCSp are transferable securities depends on the transfer restrictions in the agreement.
Every vehicle — SCSp, SCS, S.à r.l., SA — registers its beneficial owners with the register of beneficial owners (RBE) within one month of any change (Law of 13 January 2019). Access to the register has been restricted since 2022 to authorities, professionals and persons with a legitimate interest. A vehicle domiciled with a third party needs a written domiciliation agreement with a regulated professional (Law of 31 May 1999).
When a club deal becomes a fund
The line is crossed when the investors no longer decide: a sponsor collects commitments for a strategy, the documents fix an investment policy, the manager chooses the investments, or an outside investor joins a family vehicle. The vehicle is then an AIF and needs one AIFM. Below EUR 100 million (or EUR 500 million without leverage and without redemption rights for five years) a manager registered with the CSSF is enough, without an EU marketing passport; above, an authorised AIFM is required (AIFM law Article 3).
Planned in time, the switch is manageable: the partnership continues as an unregulated SCSp with an AIFM, or the vehicle becomes a RAIF, which needs an authorised AIFM (RAIF law Article 4). Crossing the line unnoticed is the expensive case. We review the status whenever investors, the investment or the management change.
-poster-00001.jpg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)