New Draft Law N°6777 To Create A Simplified Private Limited Liability Company

Background

The Green paper issued in 2003 by the European Commission on European Entrepreneurship acknowledged the need for Europe to foster entrepreneurial drive more effectively.

The Internal Market, created by the European Union, is evolving through the removal of barriers and through mutual recognition and harmonisation. It facilitates trading in a market of approximately 450 million people triggering changes, which led to new opportunities for new entrepreneurial initiative, particularly in the area of services.

The capacity to adapt to economic changes is crucial for competitiveness. Hence, entrepreneurship is relevant for firms in all sectors, technological or traditional. New entrepreneurial initiatives boost productivity, increase competitive pressure, forcing other firms to react by improving efficiency or introducing innovation.

Therefore, considering the geographical situation of Luxembourg in the center of the European Union, and the various steps taken by the neighbouring countries like Belgium (Société privée à responsabilité limitée Starter or SPRL Starter)1, France (Entreprise Individuelle à Responsabilité Limitée (EIRL)2 and Germany (Mini-GmbH or Unternehmergesellschaft mit beschränkter Haftung (UGG))3, which have recently introduced simple and efficient instruments in this respect, it became obvious for Luxembourg to react quickly and efficiently in order to foster the entrepreneurship in Luxembourg.

It is on February 2nd 2015 that the draft law N°6777 having the purpose of creating a simplified private limited liability company (Société à responsabilité limitée simplifiée) (SàrlS) amending the law of August 10th 1915, on commercial companies, as amended (the Company Law) (the Draft Law 6777) was filed.

In compliance with the Luxembourg governmental program presented in December 2013, the Draft Law 6777 intends to stimulate the development of the entrepreneurial spirit by creating, for entrepreneurs that are natural persons, a legal structure that not only offers a protection in terms of personal liability, but also enhances their visibility.

Indeed, one of the toughest hurdles to overcome for young entrepreneurs or those that have access to limited resources is constituted by the minimum required capital necessary for the setting up of a company. Henceforth, the Luxembourg government wished to provide, through the creation of the SàrlS, entrepreneurs with a legal structure that will enjoy a simplified, fast and efficient...