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Corporate Law in Luxembourg

Corporate Law in Luxembourg

The Commercial Code is the main law providing for the registration of companies in Luxembourg. This law dates back in the beginning of the 1900ies, making Luxembourg one of the countries which had a modern approach when it comes to regulating the establishment of companies here.

Our lawyers in Luxembourg can offer full information on the Corporate Law in the Grand Duchy.

The Law on Commercial Companies in Luxembourg

The Luxembourg Corporate Law is represented by the Law concerning Commercial Companies 1915 revised several times. The Law stipulates the conditions the legal entities can be established, the rules of their function, the procedures which needs to be performed before mergers, liquidation and any type of legal entity transformation.

The main legal entities regulated by the Law concerning Commercial Companies are:

  • ⁻          société en nom collectif (general corporate partnership or unlimited company),
  • ⁻          société en commandite simple (limited corporate partnership),
  • ⁻          société anonyme (public company limited by shares),
  • ⁻          société en commandite par actions (corporate partnership limited by shares),
  • ⁻          société à responsabilitélimitée (private limited liability company),
  • ⁻          société coopérative (co-operative society).

For consultancy in other European countries please contact our company formation agents in Poland or lawyers in Belgium.

The main forms of business established here are the private limited liability companies and the public limited liability companies. According to it, the liability of its members is limited by the contribution to the capital and the main difference between the two is that the share capital provided by the public companies is higher and the shares of the private companies are not freely tradable unlike the shares of the public companies.

The partnerships don’t involve any share capital but the liability of the general partners of such entities is unlimited, their personal assets can be used in case of liquidation.

What are the obligations for a company registered in Luxembourg?

All legal entities registered in Luxembourg must have a registered office as a principal headquarter and must be registered with the Register of Commerce and Companies in Luxembourg before starting any commercial activity.  The Civil Code is also regulating the registration in the Register by asking for some special documents and notarial deeds.

Besides the legal entities stated above, the law also regulates the “Association Momentanee” and the “Association en Participation”. An “Association Momentanee” is a form of entity which performs a commercial activity without taking a specific name, while the “Associaion en Participation” is a form of entity in which the individuals take an interest from an activity managed by a third party in their names.

The companies may be transformed by merger or acquisition of a company or by merger by incorporation of a company, processes also regulated by the Law on Companies from 1915.

In case the company wishes to cease the commercial activities due to various reasons such as the expiration of the term of availability, reaching the objectives for which was created, the violation if law, it must be liquidated. There are two types of liquidations regulated by the corporate law: voluntary (as a decision of the general members of the company or compulsory (as a decision of the Court).

The modern Company Law in Luxembourg

In 2015, Luxembourg has amended its Corporate Law with the aim of providing a more appealing business environment to foreign investors. Moreover, the government wanted to address emerging industries like high-tech and innovation in order to help the economy by diversifying the investment possibilities for foreign enterprisers.

The new regulations of the 2015 Company Law refer to:

  • –       the issuance of shares by private and public companies and limited partnerships;
  • –       the introduction of a new type of company: the simplified public company (SAS).

According to the new Corporate Law, a private limited liability company in Luxembourg will be allowed to have maximum number of 100 shareholders and will no longer be required to hold annual general meetings if the number of shareholders is below 60. Also, the share capital required to register this type of company was reduced to 12,000 euros. Private companies are also allowed to issue beneficiary units, according to the new Company Law.

When it comes to public companies, the 2015 Commercial Code provides for a reduction in the share capital, which now is established at 30,000 euros. The law also stipulates a specific regime for the issuance and distribution of free shares. The non-voting shares regime was also simplified. Another important change refers to the simplified procedure related to convening the annual shareholders’ meeting.

The new SAS company in Luxembourg

The new type of company which is recognized by the 2015 Commercial Law in Luxembourg will follow the same registration requirements and procedures like the ordinary public company, but will benefit from the following advantages:

  • –       it does not need a board of directors, as it can be managed by a president;
  • –       the president can be a natural person or a company and will represent the SAS in relations with other parties;
  • –       the company may have one or more directors who will assist the president.

The SAS cannot issue shares which can be listed on the stock markets in Luxembourg.

For full information on the provisions of the new Corporate Law, please contact our law firm in Luxembourg.