PSF: CSSF Specifications On Company Incorporation And Management Services And On Debt Recovery Activities

On 4 February 2015, the CSSF published its updated Questions and Answers on the status of professionals of the financial sector, ("PFS").

  • One of the main changes resides in the amendment of Question 63 relating to the activities of the professional providing company incorporation and management services ("PIMs").

PIMs, as specialised PFS, need to be authorised by the Minister responsible for the CSSF. The CSSF clarifies the concepts of Article 28-10 of the Law on the Financial Sector (the "LFS") establishing the status of PIMs.

PIMs shall carry out activities other than those defined in its status only on an ancillary basis. Activities that are not described in Article 28-10 of the LSF should be limited or transferred to a distinct entity.

The activities a PIM may carry out are company incorporation services and company management services. The CSSF considers that if a PIM performs the sole provision of company incorporation services, excluding any company management services, it does not require PIM status.

Company incorporation services consist of performing all kinds of steps to set up the type of company requested. Company management services consist of making available to third party companies independent administrators, directors or managers, who actively intervene in the management of the client company by the fact that they have power of commitment and effective responsibilities.

This latter activity falls under Article 28-10 of the LFS if it complies with two conditions: (i) it is a regular occupation or business activity (ii) performed in a professional capacity. That criterion means that the activity must be based on a contractual relationship between the PIM and its client. To establish if the activity is regular, the CSSF takes into account the number of mandates and the time requirements. All situations are analysed on a case-by-case basis but the general rule is that authorisation is required when the activity covers at least two mandates as director of a financial sector entity simultaneously and at least 20 work hours per week for these mandates.

  • The other amendment is the addition of Question 47 relating to debt recovery. The CSSF defines the debt recovery activity as consisting of contacting a defaulting debtor in order to request him to pay his debts. The CSSF specifies that this activity falls under Article 28-3 of the LSF and requires authorisation when exercised through an amicable procedure based on a mandate from the creditor.

The professional is neither allowed to represent the creditor in justice nor to proceed with the enforcement of a judgment.