On 16 January, 2017 the law of 23 July, 2016 introducing the simplified private limited liability company (S.à r.l.-S) entered into force. The new entrepreneur-friendly company will be easy to incorporate and will only require a €1 minimum share capital.
Luxembourg introduced the simplified private limited liability company (société à responsabilité limitée simplifiée) to stimulate entrepreneurship. The S.à r.l.-S will enhance business creation because entrepreneurs will benefit from its cost-efficient and swift incorporation process and low subscription and payment requirements.
Main legal aspects of the S.à r.l.-S
- The simplified private limited liability company may be used as an alternative to the existing private limited liability company (société à responsabilité limitée - SARL).
- On pain of nullity, only natural person(s) can incorporate, for a limited or unlimited period of time, and be shareholder(s) of a simplified private limited liability company.
- Either a private or notarial deed can be used to incorporate the simplified private limited liability company.
- The corporate object of the simplified private limited liability company shall be limited to the activities for which a business license is required. Therefore, the company’s incorporation must be coordinated with the process of obtaining a business license from the Luxembourg Ministry of Economy.
- The subscribed share capital shall be comprised between €1 and €12,000. The share capital may be paid up by a contribution in cash or in kind.
- The management of the simplified private limited liability company must be composed of natural person(s) only.
- A natural person is authorized to own shares in only one simplified private limited liability company. The breach of this rule would result in the natural person’s joint liability for the obligations of all the other simplified private limited liability companies of which he/she became a shareholder. An exception to this rule occurs when a person, who already is a shareholder of a simplified private limited liability company, acquires shares in another such company further to the death of its shareholder.
- Every year, at least one-twentieth of the net profits must be allocated to the creation of a reserve. The reserve allocations shall cease to be compulsory when the sum of the reserve and the subscribed share capital reaches the amount of €12,000.
- If the shareholders of a simplified private limited liability company wish to increase its share capital to an amount which, together with the above reserve, exceeds € 12,000, the simplified private limited liability company must be transformed into another company form.
- The incorporated company’s denomination must state in full “société à responsabilité limitée simplifiée” or, in an abbreviated form, “S.à r.l.-S.”
