11.1 Key features of the Luxembourg SCSp

BOX 11.1

Key features of the Luxembourg SCSp

• Despite not having its own legal personality, a société en commandite spéciale (SCSp) can own assets and has become a popular legal form for setting up carried interest structures such as private equity firms. • An SCSp agreement, rather than general corporate law, details the decision-making and economic rights of the various partners. • Limited partners are, in practice, passive investors whose liability is limited to the amount invested in the SCSp; they cannot be managers or part of the management board of the SCSp but may supervise the partnership through an advisory or supervisory board. • General partners have unlimited liability, can (but do not have to) manage the partnership, and

may have other rights such as the approval of accounts. • The SCSp agreement details the economic rights of different partners, including payment of carried interest to general partners. • An SCSp can have one or more managers, who may form a management board. Limited partners cannot be managers. General partners can be managers or appoint nonpartners to perform the role. • Capital commitments by limited partners and commitment periods are contractually defined in the SCSp agreement. • Accounting and disclosure obligations of the

SCSp are less stringent than for similar corporate structures. • Finally, an SCSp can borrow or issue debt securities.

Source: PwC 2016.

In Marguerite II, the mechanism to screen investments for their compliance with the sponsors’ policy goals also differs from Marguerite I. Marguerite I addressed policy objectives via two separate instruments: (1) investment eligibility criteria in the private placement memorandum, and (2) a special eligibility verification procedure that the management board members could trigger with respect to investments that were potentially against EU objectives or public policy. The policy objectives of Marguerite II are addressed in the investment eligibility criteria stipulated in the LPA and certain side letters, and their compliance is monitored by the Advisory Committee. Side letters include the sponsors’ various ESG requirements, such as adherence to the UNPRI.

STAFFING AND RECRUITMENT

Marguerite has a team of more than 20 investment professionals dedicated to business development, origination, transaction execution, and the asset management of portfolio companies. Reflecting the pan-EU mandate, the investment team represents 10 nationalities. The team has more than 250 years of cumulative experience in infrastructure financing, fund management, consulting, project finance, investment banking, and industrial companies.

The choice of a legal and incentive structure is aligned as much as possible with market standards, thereby facilitating the hiring of an experienced investment team. Marguerite’s CEO negotiated a long-term incentive plan with the sponsors during the Marguerite launch phase in 2009–10, as an important