Luxembourg Corporate Law - Modernisation 2016

Following extensive consultation, Luxembourg has enacted a far-reaching and meaningful modernisation of its corporate law. This provides a more modern, flexible and attractive corporate law framework whilst still rooted firmly in Luxembourg corporate law core principles: contractual freedom for shareholders and security for third parties.

As this new piece of legislation (the Law) has just been enacted, this briefing focuses on:

(i) the key changes that have been brought to the three most widely-used corporate forms: the private limited company (SARL), the public limited company (SA) and the limited partnership issuing shares (SCA); and (ii) the new form of company introduced into Luxembourg law: the simplified public company (SAS). SARL - Private limited company

As a flexible and quasi-partnership company, the SARL was already operating within a light set of statutory requirements. The Law further enhances its attractiveness by making it more flexible, adding useful new tools to its existing regime and providing legal certainty for certain already well established practices, as detailed below, in addition to the additional changes of general application outlined in the below section relating to all three types of companies (SARL, SA, SCA):

the maximum permitted number of shareholders is raised from 40 to 100, and except in case of an amendment to the articles, there is no need to hold shareholders' meetings unless there are more than 60 shareholders the minimum required share capital is reduced to EUR 12,000 SARL are now formally authorized to issue: the very flexible "beneficiary units" (parts bénéficiaires), which do not form part of the share capital, and whose rights, including in relation to voting and profit sharing, are exclusively determined by the articles, for maximum flexibility specifically redeemable shares, with conditions and modalities also exclusively determined by the articles debt securities to the public, although the public issue of shares and beneficiary units remains prohibited SARL may have an authorized share capital (in addition to the issued share capital), allowing it to issue shares within the limit of the authorisation granted by the shareholders, without the need to hold a shareholders' meeting before notary the shareholders' approval required to transfer shares to third parties may now be lowered to only half of shares of the Company (the same applies to beneficiary units with voting rights) unanimity is no...

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