The forms of the companies
A private limited liability company (Société à responsabilité limitée – SARL) is a capital corporation (e.g. the limitation of shareholders' liability to the extent of their contribution) that has a principle the intiuitu personae (typical of individual companies) leading to the non-transferability of shares in the company to a non-associate without the consent of other associates.
The SARL is the most common form of incorporation in Luxembourg.
The minimum share capital amounts to €12,000 (or the equivalent in any other currency) and will have to be deposited prior to its incorporation on the bank account opened in the name of the company.
The bank will then block that amount and issue a certificate to the attention of the notary to confirm the latter that capital payment was duly made. The incorporation deed will have to be passed by a Luxembourg notary public.
The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then filed with the Luxembourg electronic gazette (« RESA »).
The capital of the S.à r.l. may also be paid in by way of a contribution in kind. In such case, the valuation will have to be confirmed to the notary by the contributing associate(s). As opposed to a Société Anonyme (see below), no valuation of the contributed asset by an independent registered auditor will be required.
The S.à r.l. exists as from the date of signature of the incorporation deed by the notary.
There is also a form of SARL known as a SARLs (simplified SARL). The SARLs is an exception to the set up process of a corporation, in that it is an SARL that can be set up by way of private deed (i.e. without intervention of a notary) with a minimum capital of € 1,-. This form is frequently adopted by small independent businesses as a start. Contact us for more information here.
The public limited corporation (société anonyme – S.A.), together with the limited liability company (société à responsabilité limitée – SARL), is of the most adopted legal form of company in Luxembourg.
For shareholders, the main attraction is the limitation of their liability to the level of their contribution to the capital. The S.A. is often the legal form of company chosen by large businesses, but it can also be used for smaller businesses as the shares in this type of company can be easily transferable. Thanks to its characteristics, the SA is suitable for a wide range of businesses of different sizes, with different types of activities, offering legal and natural persons the possibility to:
- promote the development of the business by bringing new shareholders on board;
- access the financial markets (capital markets).
The minimum share capital amounts to €30,000 (or the equivalent in any other currency) and will have to be deposited prior to its incorporation on the bank account opened in the name of the company. The bank will then block that amount and issue a certificate to the attention of the notary to confirm the latter that capital payment was duly made. The incorporation deed will have to be passed by a Luxembourg notary public.
The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then filed with the Luxembourg electronic gazette (« RESA »).
Contribution in kind may also be made to pay in the share capital of the S.A., and in such case, a valuation report issued by a independent registered auditor (Réviseur d’Entreprise) will have to be provided to the notary.
The S.A. will exist as from the signature of its incorporation deed by the notary.
Contact us for more information here.
A partnership limited by shares (société en commandite par actions - SCA) is a corporation made by two different categories of partners, i.e one or more General Partner(s) (GP) together with one or more Limited Partner(s) (LP).
The GP is subject to a joint and several liability for the commitments of the company, whereas the LP’s are liable to the extent of the amount of their contribution to the share capital. The LP’s are not authorized to take part in the day-to-day management of the company, whereas the GP has the widest power to manage the company. A benefit of the SCA is that its management is stable. The SCA is accordingly a useful legal form to gather investors (as LP’s) and entrepreneurs (as GP’s). In addition, it is a set up that enables the company to resist hostile takeovers. It is also suitable for small and medium-sized family businesses (ownership may be transferred to a minor heir).
The minimum share capital amounts to €30,000 (or the equivalent in any other currency) and will have to be deposited prior to its incorporation on the bank account opened in the name of the company. The bank will then block that amount and issue a certificate to the attention of the notary to confirm the latter that capital payment was duly made. The incorporation deed will have to be passed by a Luxembourg notary public.
The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then filed with the Luxembourg electronic gazette (« RESA »).
Contributions to the capital may be in cash or in kind. Contributions other than in cash must be valued by an independent registered auditor (réviseur d’entreprises). Contributions in services do not form part of the share capital but may be included in the articles of association and remunerated.
The SCA will exist as from the signature of its incorporation deed by the notary.
If you need more information, don't hesitate to contact us.
The special limited partnership (SCSp) operates similarly to a limited partnership and serves as an additional investment vehicle suited to alternative investment funds. Two associates are required, i.e. a GP and a LP.
The SCSp may be formed by way of a deed passed by a Luxembourg notary or under private seal which option is the most usual. Contractual freedom rules the language of the articles of association of the SCSp. The SCSp requires a minimum of two associates, i.e., at least one General Partner and one Limited Partner.
There is no minimum capital and capital contributions to the SCSP can be made of cash, contribution in kind or of industry. There is no need of a valuation for such purpose.
The wording of the partnership agreement is quite free, and may include specific provisions on the transfer of share, exclusion of a partner, voting rights, distribution of profits, changes in the partnership agreement, replacement of the GP in case of death or incapacity (
The SCSp will validly exist as from the date of execution of its articles of association. The deed is not published in full but only an excerpt does have to be, which shows name of the SLP, name of GP, purpose of the partnership (a general purpose of holding assets is commonly adopted) of the SLP, address and date of incorporation / end of the SLP. There is no need to publish the amount of capital, the identity of the Limited Partners, nor the contributions of the partners.
SLP’s are required to maintain regular accounting but are not required to follow the standardized chart of accounts, and such accounts do not need to be file or made available to public.
Flexibility and freedom of the articles of association as well as confidentiality in the limitation of public information, make the SLP be a very interesting tool for some specific private agreements. This may include arrangements for the distribution of potential gains between co-investors making contributions that are different and unequal in value but not necessarily in utility, or an anticipated transmission of succession. The absence of or the little tax impact on an existing business or tax advantage, gives a potential robustness over time to such structures (BEPS and similar actions have in principle no impact).
From the tax point of view, SLPs are transparent and are not subject to taxation in Luxembourg if they do not have commercial activity.
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The Cooperative Company set up as a Public Limited Corporation (société coopérative organisée comme une société anonyme – SCOPSA) is a cooperative company subject to the provisions of the Public Limited Corporation except for some of them as provided by the Luxembourg company law. The main features of a cooperative company include its variable capital, a variable number of partners and the absolute non-transferability of shares to third parties. The number of partners often changes, precisely because of the variable nature of its capital. For the SCOPSA, a single associate is possible.
The terms and conditions governing the admission and withdrawal of partners are specified in the articles of association.
A cooperative company is administered by one or more representatives. The representatives may or may not be partners and are only liable within the scope of the duties entrusted to them.
The Luxembourg company law allows a considerable latitude in drafting the articles of association of a SCOPSA, and the partners are free to determine the extent of their liability and how the company operates and is managed.
A cooperative company can be formed by way of a notary deed or a private deed. In a cooperative company, the capital is variable. There are no minimum or maximum capital requirements, and contributions to the capital may be in cash or in kind. Contributions other than in cash do not need to be valued by an independent registered auditor (réviseur d’entreprises).
If you need more information, don't hesitate to contact us.