Luxembourg Introduces A Simplified Private Limited Liability Company To Drive Business Creation

Bill of Law n°6777 (the Bill of Law or the New Law) which establishes a new simplified type of private limited liability company ("société à responsabilité limitée simplifiée", "S.à r.l.-S") or "company for 1 Euro" was voted on by the Luxembourg Parliament on 13 July 2016. The Council of State (Conseil d'État) granted an exemption from a second vote on 18 July 2016. The New Law should be enacted soon and will enter into force on 16 January 2017. The New Law shall amend the law of 10 August 1915 on commercial companies and the law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings.

The aim of this Bill of Law is to stimulate entrepreneurship in Luxembourg and facilitate business creation, by reducing the costs linked to incorporation, putting into place a faster, simplified and efficient incorporation process, and reducing the subscription and payment requirements.

Main characteristics of the S.à r.l.-S

The S.à r.l.-S will constitute an alternative to the private limited liability company ("société à responsabilité limitée") already regulated by the Luxembourg law dated 10 August 1915 on commercial companies, as amended (the Law).

The legal rules of the S.à r.l. shall apply unless otherwise provided for the S.à r.l.-S as follows:

The S.à r.l.-S can be incorporated by either a private or notarial deed. Only one or several natural persons may become shareholders of a S.à r.l.-S. This entity would become void if an entity became a shareholder. A natural person is only authorised to own shares in one S.à r.l.-S, otherwise his personal liability will be unlimited in the second S.à r.l.-S. However, an exception is permitted in case of the transfer of shares following the death of a shareholder. The corporate object of the S.à r.l.-S shall be restricted to activities requiring a business license application, which shall be obtained before filing of the S.à r.l.-S. The S.à r. l.-S shall be managed by individual persons only. The company shall have corporate...