​On 13 July 2016, the Luxembourg Parliament adopted a bill introducing a simplified form of the société à responsabilité limitée ("S.à r.l.-S") which is reserved to physical persons and intended to facilitate the commencement and development of new business activities.

The introduction of a simplified and easy-to-create company form in Luxembourg law will allow for the cost-efficient and swift formation of companies. For this purpose, the minimum share capital has been substantially reduced and there is no need to form the S.à r.l.-S by way of a notarised incorporation deed.

Variant of the S.à r.l.

This is not an additional company form, but rather a variant of the existing regime of the société à responsabilité limitée ("S.à r.l."). As such, the S.à r.l.-S is a corporate body with separate legal personality.

Creation by contract (signed under private seal) is possible

To allow for more flexibility and a cost-efficient formation, an Sàrl-S may be validly formed by way of contract signed under private seal without the requirement of a notary.

Starting share capital as low as one euro but joint and several liability of founders / shareholders

The starting capital can be set within a range between EUR 1 and EUR 12,000. However, each year 5% of the profits must be allocated to a special reserve until the share capital and such special reserve reach an aggregate of EUR 12,000.

Considering the very low amount of the minimum share capital, the shareholders of the S.à r.l.-S are jointly and severally liable for the obligations of the S.à r.l.-S unless the S.à r.l.-S has been transformed into another company form or has been dissolved.

Open to physical persons only

To avoid abuse, an S.à r.l.-S is only open to physical persons. As a result, the S.à r.l.-S can only have physical persons as shareholders and only physical persons can be managers of an S.à r.l.-S.

Available for targeted activities only

The S.à r.l.-S can only have a corporate purpose pertaining to activities which require a business licence.

The copy and the number of the business licence need to be included upon filing of the S.à r.l.-S with the Luxembourg Trade and Companies’ Register. This entails that the business licence must be requested prior to the formation of the S.à r.l.-S.

Although conceived as a transitory regime, the law does not impose a maximum duration for this regime.

Effectiveness as of 16 January 2017

The law will become effective as of 16 January 2017.

Please click here to download this Newsflash in pdf

Contacts

Laurent Schummer

Partner

Corporate Law, Mergers & Acquisitions, Private Equity & Real Estate, Capital Markets

Michael Jonas

Counsel

Private Equity & Real Estate

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