Luxembourg once again strengthens its position as a leading European hub for startups and innovation with the adoption on 13 July 2016 of the bill of law 6777 establishing the simplified private limited liability company (“société à responsabilité limitée simplifiée” or “S.à r.l.-S”), which will enter into force on 16 January 2017.
The S.à r.l.-S has been designed to allow a natural person who wishes to test and develop business innovative ideas to create a tailor-made company in a timely and cost-efficient way, with a symbolic financial contribution - i.e. EUR 1 as a minimum starting capital - while benefiting from limited liability1.
The main features of the S.à r.l.-S – being a simplified variant of the traditional S.à r.l. – may be summarised as follows:
- it can be incorporated under private seal instrument (i.e. without the need for a notary) with an initial corporate capital of between EUR 1 and EUR 12,000, which must be entirely subscribed and paid-up;
- its capital is open to natural people only who further cannot be members of several S.à r.l.-S at the same time;
- it can only be managed by a natural person; and
- it can only carry out activities for which a business license is required (autorisation d’établissement) under the law of 2 September 2011 (which license must be obtained prior the formal incorporation of the S.à r.l. – S).
With its reduced costs of incorporation (i.e. around EUR 191), the S.à r.l.-S is for sure a dedicated vehicle for young talented entrepreneurs with limited financial resources but unlimited ideas.
1. In return, 5% of the net profits of the company shall be allocated, each year, to a specific – non distributable - reserve until the latter reaches EUR 12,000, making the S.à r.l.-S a transitory form of company.