Luxembourg Commercial Company

DEFINITION

A Luxembourg Commercial Company is any company that performs a commercial, craft or industrial activity in the territory of Luxembourg. In order to be able to perform the stated activities such company has to obtain a business permit (autorisation d'établissement or autorisation de commerce).

OBJECTIVE, PURPOSE

Luxembourg Commercial Company performs a commercial, craft or industrial activity in the territory of Luxembourg and/or abroad. It is considered to be a Luxembourg resident for tax purposes and has to file annual financial statements in compliance with Luxembourg legislation.

LEGAL BASIS

The main law governing incorporation and operation of companies in Luxembourg is the Commercial Companies Act of August 10, 1915 (as amended). Business activities of commercial companies are governed by the Law of 28 December 1988 and articles 1832 to 1873 of the Civil Code. The Law of 22 September 2011 and various regulations by the Grand Duchy of Luxembourg determine conditions for issuing a business permit to commercial companies.

Business activity can also be undertaken by an individual person, who has to register as a sole proprietorship.

A Partnership (transparent company) is considered to have a legal personality (it is a separate legal person), which is separate from the legal personality of its partners.

It has rights and obligations under commercial and tax law. It has its own assets and the partners of partnerships have unlimited liability, over and above their initial stake in the company.

Opaque company (capital company) is considered to have a legal personality (it is a separate legal person), which is separate from the legal personality of its shareholders. It has rights and obligations under commercial and tax law. It has its own assets. The liability of shareholders of capital companies is limited to their contribution to the company.

LEGAL FORM

Luxembourg law recognises the following types of commercial companies:

Société anonyme (S.A.) - similar to a Public Limited Company or an Aktiengesellschaft (AG) (also in a form of a single shareholder S.A.); Société à responsabilité limitée (S.à r.l.) - similar to a Private Limited Company or a Gesellschaft mit beschränkter Haftung (GmbH) (also in a form of a single shareholder S.à r.l.); Société en commandité par actions (SCA) - similar to Partnership Limited by Shares or a Kommanditgesellschaft auf Aktien (KGaA); Société en nom collectif (S.e.n.c.) - General Partnership...