The Luxembourg act of 28 October 2022 introducing the procedure of administrative dissolution without liquidation (procédure de dissolution administrative sans liquidation, the "Administrative Dissolution Procedure") (the "Act") has just been published and will enter into force on 1st February 2023.
Background and objective
The purpose of the Act is to dissolve empty shell companies within a short timeframe at reduced costs for the Luxembourg State.The Administrative Dissolution Procedure will enable the administrative dissolution of certain companies without having to go through a formal procedure of judicial liquidation.
Scope of application
Luxembourg companies must meet the following three cumulative conditions in order to be subject to the Administrative Dissolution Procedure:1) they have no assets;2) they have no employees; and3) they pursue activities contrary to criminal law or which seriously contravene the provisions of the Luxembourg Commercial Code or the laws governing commercial companies, including the laws governing authorisations to do business.Certain companies are, however, excluded from the scope of the Act, such as entities that are subject to prudential supervision (which do not fall within the scope of bankruptcy regulations either).
Where there are clear and concordant indications that a company meets the aforementioned conditions, the Public Prosecutor (Procureur d'Etat) may request the administrator of the Luxembourg Trade and Companies Register (gestionnaire du Registre de Commerce et des Sociétés, Luxembourg, the "RCS Administrator") to start the Administrative Dissolution Procedure regarding such company.Only the Public Prosecutor can request the RCS Administrator to start the Administrative Dissolution Procedure, to the exclusion of the company itself or an interested third party.The RCS Administrator must notify the decision to initiate the Administrative Dissolution Procedure to the company and proceed to publish this decision in two newspapers published in the Grand Duchy of Luxembourg as well as in the Luxembourg Official Gazette (Recueil Electronique des Sociétés et Associations, Luxembourg, the "RESA").The RCS Administrator shall then verify that the relevant conditions are met, including the absence of assets and employees, and shall to that effect request information on the financial and administrative situation of the company from certain entities and administrations (e.g. banks and government authorities). These entities and administrations have one month to disclose the requested information.If all conditions are met, the RCS Administrator will give confirmation to the Public Prosecutor. The Administrative Dissolution Procedure will then be concluded, which will be published in the RESA, and the company will be dissolved.If the conditions are not met, the Administrative Dissolution Procedure will automatically be suspended. Such decision is also published in the RESA.
Recourse against the decision
The concerned company or any interested third party who considers that the conditions are not met, may lodge an appeal against such decision with the Luxembourg District Court (Tribunal d'Arrondissement, Luxembourg) (the "Court") within one month of the publication in the RESA.If the Court considers that the conditions had not been met, the Administrative Dissolution Procedure will be revoked, which decision will be published in the RESA.It must finally be noted that in the event assets appear after the conclusion of the Administrative Dissolution Procedure, the Court may, at the request of the Public Prosecutor, revoke the decision to close the Administrative Dissolution Procedure and order the liquidation of the company through a formal procedure of judicial liquidation.NautaDutilh's Corporate team remains at your disposal to answer any questions related to that topic. |