Bill No. 6777 aims to introduce the simplified private limited-liability company (société à responsabilité simplifiée or S.à r.l.-S) into the Luxembourg corporate landscape. The bill expresses the Luxembourg government's will to create a modern version of the traditional private limited-liability company. The new corporate form would be cheaper, easier and faster for new entrepreneurs with limited financial resources to establish.
The bill forms part of a broader movement aimed at luring new entrepreneurs away from European countries which already allow the establishment of this type of company (for instance the entrepreneur individuel à responsabilité limitée in France, the Mini-GmbH in Germany, and the Starter SPRL/BVBA in Belgium).
1. WHO CAN USE THE NEW CORPORATE FORM?
The S.à.r.l.-S is primarily intended for use by new entrepreneurs with limited financial resources.
An S.à r.l.-S may have one or more members, who must be natural persons. In other words, a legal entity cannot be a member or manager of an S.à. r.l.-S. Thus, an act or document pursuant to which a legal entity is made a member or manager of an S.à r.l.-S will be deemed null and void. However, the bill does not provide further information on the extent of such invalidity and whether a court order is required to enforce it.
A natural person may not be a member of more than one S.à. r.l.-S simultaneously. In the event of non-compliance with this rule, the natural person will be held jointly and severally liable for all obligations and liabilities incurred by the additional (second) S.à. r.l.-S, until the winding-up of the company or its conversion into another form.
To ensure that the S.à r.l.-S is not used for purposes other than those foreseen by the legislature, the bill provides that the company's corporate purpose must relate to an activity covered by Article 1 of the amended Act of 2 September 2011 governing the right to set up in commercial activities, skilled craft trades and certain specific (liberal) professions (the "Act"), and thus a business license issued by the Ministère des Classes Moyennes is required. The list set out in Article 1 of the Act covers architects, town planners, engineers, accountants, surveyors, and economic and intellectual property advisors.
2. WHAT RULES APPLY?
Apart from provisions specifically applicable to the S.à r.l.-S, the new corporate form will be subject to the same rules as regular private limited-liability companies.
An S.à r.l.-S can, however, be incorporated pursuant to a private agreement, which need not be notarised. The S.à r.l.-S must file with the Luxembourg Trade and Companies Register the names and addresses of its members, the number of shares held by each, as well as its business licence.
The share capital of an S.à r.l.-S may consist of a symbolic amount of one euro. The maximum share capital of an S.à r.l.-S is set at EUR 12,394.68. A capital increase beyond this amount is permitted but will require the conversion of the S.à r.l.- S into another type of corporate form, pursuant to a notarial instrument.
Each year, at least one twentieth (1/20) of the net profits of the S.à r.l.-S must be allocated to a statutory reserve.
3. WHEN CAN THE NEW CORPORATE FORM BE USED?
The bill was submitted to the Luxembourg House of Representatives on 2 February 2015. The House is expected to pass the bill after receiving an opinion from the Council of State (Conseil d'Etat) and its own Legal Affairs Committee (Commission juridique). Thus, it should be possible to incorporate an S.à. r.l.-S before the end of this year.