This change aims to enhance Luxembourg’s competitiveness by streamlining the company formation process, addressing practical hurdles such as delays in opening bank accounts due to stringent KYC/AML checks. Below is a summarised overview of what this bill entails.

This draft bill represents one of the most practical updates to Luxembourg company law in recent years. Here are the essential details you need to know:

• Deferred payment of minimum capital: The core change allows the payment of the €12,000 minimum share capital for a SARL to be deferred for up to 12 months post-incorporation. This applies exclusively to cash contributions.
• Mandatory subscription: While payment can be delayed, the requirement to fully subscribe to the entire share capital at the time of incorporation remains unchanged. Founders must still commit to the full amount from day one.
• Scope and exclusions: The deferral is limited to the statutory minimum. Any capital subscribed above €12,000 must be fully paid up at incorporation. Furthermore, contributions in kind must be fully paid up at the time of formation, as is currently the case.
• Extension to SARL-S: This new flexibility is also extended to the simplified private limited liability company (société à responsabilité limitée simplifiée - SARL-S), further lowering the barrier to entry for entrepreneurs (the minimum share capital for this type of company being €1.
• Alignment with European practice: The reform brings Luxembourg’s framework in line with several neighbouring jurisdictions, including France and Germany, removing a comparative disadvantage for company formation.

With increased flexibility comes a renewed focus on accountability and creditor protection.

• Founder liability: The liability of founders will be aligned with the stricter regime applicable to public limited companies (SAs). This includes responsibility for unpaid capital contributions.
• Suspension of voting rights: As a powerful sanction, the voting rights attached to shares for which capital calls remain unpaid may be suspended until the payment is made.
• Enhanced transparency: Companies must publish the names of shareholders with outstanding capital contributions, along with the amounts due, in their annual accounts. This ensures full transparency for third parties.

The legislative process is underway, with the draft bill currently under review by the Luxembourg Parliament and the Council of State. The new rules will apply to all SARLs and SARL-S incorporated after the law officially enters into force.

The draft Bill 8669 can be accessed here (in French).