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Company Liquidation in Luxembourg
Updated on Wednesday 26th April 2023 Rate this article
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While most companies in the financial field thrive in Luxembourg, there are several industries that until recently did not offer enough to their shareholders, which is why many of them had decided to strike off their companies. Company dissolution in Luxembourg is governed by the following laws:- - the Luxembourg Commercial Code, through Articles 437 to 592;
- - the Luxembourg Company Act;
- - the Civil Code.
There are two types of company liquidation procedures in Luxembourg:
- - voluntary dissolution;
- - compulsory dissolution.
Our company formation consultants in Luxembourg can offer more information about the legislation related to company liquidation.
Voluntary liquidation in Luxembourg
Voluntary dissolution of a company in Luxembourg must begin with a general meeting of the shareholders where the decision of liquidating the company is taken and a liquidator is appointed. The decision of liquidating a company must be passed by a certain percentage of the shareholders. However, this percentage depends on the type of company registered with the Luxembourg Trade Registry.
Once the liquidation process begins, the liquidator must file an inventory with the company’s assets and liabilities and a liquidation balance sheet with the Companies Register, after which he or she will pay the Luxembourg company’s debts and, if any amount remains, it will be distributed among the shareholders in accordance with their capital contribution.
Compulsory liquidation in Luxembourg
The compulsory liquidation of a company in Luxembourg is ordered by a court if:
- - the shareholders file for dissolution and the court decides they have “legitimate grounds”;
- - public prosecutors ask for company liquidation following serious offences.
In this case, the liquidator, also known as official receiver, will be appointed by the court. The compulsory liquidation procedure starts once the official receiver files the motion with the Luxembourg Trade Register. Following that, the liquidator:
- - publishes the court order in the local press and in the electronic list of companies;
- - prepares the inventory and the liquidation balance sheet;
- - organizes the collection of money owed to the company and the sale of the company’s assets;
- - verifies the company’s receivables.
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What types of entities can be liquidated in Luxembourg?
The following types of structures can be dissolved or liquidated in Luxembourg:
- - public companies if they have lost at half or three-quarters of the share capital;
- - private companies if they have lost half of the share capital or if the maximum of number 40 members has been exceeded;
- - general partnerships if one of the members has died, has gone bankrupt or simply left the company;
- - limited partnerships if one of the members has left the business, died or gone bankrupt.
The compulsory liquidation can begin once one or more creditors file a petition with a Luxembourg court as a consequence of the company not being able to pay its debts.
Audit requirements in voluntary company liquidation in Luxembourg
One of the important requirements to respect when it comes to voluntarily liquidating a company in Luxembourg is to appoint an auditor who will verify the liquidator’s report, the financial documents to be used in liquidation and who will prepare the report to be presented to the shareholders.
The auditor to be appointed during the liquidation procedure must be independent, according to the Company Law in Luxembourg.
Our law firm in Luxembourg can assist business owner in various matters related to voluntary company liquidation procedures.
During the last shareholders’ meeting, a set of documents must be prepared and approved by the company’s shareholders. These documents are:
- - the auditor’s report;
- - the report on the distribution of the remaining assets;
- - information about where the company’s documents and books will be kept;
- - the decision on the transfer of assets remaining undistributed;
- - the declaration through which the liquidator will comply with the post-closing provisions of the operations of the company;
- - the report on closing the liquidation procedure.
After this meeting, the dissolution of the company will be published with the Trade Register.
Documents needed in a company dissolution process in Luxembourg
The following list of documents must be prepared when dissolving/liquidating a company in Luxembourg:
- a power of attorney granted by the shareholders to the liquidator appointed to complete the process;
- the latest balance sheet indicating the financial status of the company - issued by the tax administration office;
- negative certificates for companies which are not registered for VAT are required;
- certificates indicating the company is registered for taxation purposes are also required;
- information about the immovable properties of the company must be obtained from the Luxembourg Land Register;
- information indicating the company has paid its social security, pension, and insurance premium up to the point of the company liquidation decision.
Our Luxembourg lawyers can assist company representatives in preparing the documents needed in company liquidation. If you want to open a holding company in Luxembourg, we can offer legal advice.
Our immigration lawyers in Luxembourg can answer your questions regarding visas during your stay in the country.
The liquidation process and the liquidator’s duties
The appointed liquidator must draw up an inventory of the company’s asses and draw up a balance sheet in order to determine the assets and liabilities of that legal entity. Afterward, the liquidator will proceed to recover the dissolved company’s assets. Once recovered, the assets will be sold in order to pay the company’s debts. Only after all the debts are settled can the remaining assets or amounts (if any) be distributed among the company’s shareholders.
The distribution of the assets is performed according to the amounts owed to each creditor. The assets must be distributed to all creditors in a fair manner. The liquidator must prepare an annual financial statement. Once the process is complete, a final general meeting is convened in order to approve the final accounts and the liquidator’s report. After the liquidation process is complete, the company is removed from the Trade and Companies Register.
Our Luxembourg lawyers can inform you about the special procedures detailed in the Luxembourg Company Law applicable for certain types of companies in Luxembourg.
Then, the official receiver will pay the company’s debts, the remaining amount to the shareholders and, at last, file for bankruptcy.
For complete information about company liquidation procedures, please contact our company registration agents in Luxembourg.
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Contact our specialists in company formation in Luxembourg, who have a large experience in finance and international business.
Set up an appointment with us at +352 671 533 922. Alternatively you can incorporate your company without traveling to Luxembourg.
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