The purpose of the draft bill is to facilitate and speed up the incorporation process of SARLs and SARL-S companies by introducing the option to defer the cash payment of the minimum share capital for up to 12 months from the date of incorporation.
The new reform would provide greater flexibility by aligning its regime with those in other European jurisdictions regarding SARLs (i.e. France, Germany, Belgium and the Netherlands), as well as with the regimes applicable to other types of companies in Luxembourg.
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Current regime
The minimum share capital of EUR 12,000 for a SARL must be fully subscribed and paid in cash on the date of incorporation. In practice, these requirements may delay the incorporation process, as the set-up of a bank account in the company’s name prior to its incorporation may take some time.
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Scope
The provisions of the draft bill apply to private limited liability companies (“SARL”) as well as simplified private limited liability companies (“SARL-S”). The option for SARLs and SARL-S to defer the payment of share capital only concerns cash contributions.
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Key impacts of the draft bill
- Possibility to defer the cash payment of the minimum share capital of SARL
The draft bill provides for the possibility for the founders of SARL to defer the cash payment of all or part of the initial minimum share capital (EUR 12,000) for up to 12 months from the date of incorporation, subject to the terms and conditions set out in the company’s constitutional documents.
In the case the initial share capital exceeds EUR 12,000, full amount of this capital shall be paid at incorporation.
- Contributions in kind excluded from the scope
Contributions in kind must be fully released on the date of the company’s incorporation or, if made after incorporation, on the effective date of the issuance of the shares allotted in consideration of the capital increase.
- Regime of liability of the shareholders
Shareholders are responsible for the part of the contribution in cash which has not yet been paid.
The voting rights attached to any shares for which payment has not been made shall be suspended until payment is processed.
In the case of transfer of shares, the shareholder shall bear no liability for any contribution arising after the transfer of the shares has become effective vis‑à‑vis the company, nor for any contribution arising after the publication of the transfer with respect to third parties, however the transferring shareholder holds recourse against the new shareholder.
- Information of the third parties
A list of the shareholders who have not yet paid up their shares, together with the outstanding amounts, shall be disclosed in the annual accounts.
- Regime applicable for SARL-S
The draft bill clarifies that the deferral payment is also extended to SARL-S.
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