On February 2, 2015, the Luxembourg government filed with the Chamber of Deputies bill 6777 (the Bill).introducing a new type of private limited liability company, the “société à responsabilité limitée simplifiée” or simplified private limited liability company (“SARL-S”).
By so doing, the Luxembourg government aims at making available in Luxembourg company law structures that are more flexible to set up an operate, much as legislators in other countries have already done. Reference can be made to the Netherlands, where a simplied version of the “besloten vennootschap” (BV), commonly known as “Flex-BV”, was introduced about a year ago. Also, for more than a decade now, France has known a simplified “société anonyme” (corporation), mostly referred to in practice as “SAS”.
The ratio legis of the Bill is to stimulate the creation of corporate entities by starting entrepreneurs. Therefore, only physical person(s) can be shareholder(s) of the SARL-S; a legal entity is not allowed to be a shareholder of a SARL-S. Furthermore, a physical person can only be a shareholder in one single SARL-S at any time (except where shares are transferred following the death of a shareholder). Furthermore, the SARL-S may only have physical persons as its managers (“gérants”), not legal entities.
The corporate object of the SARL-S must be limited to the industrial, commercial and craftsman-activities regulated by the Luxembourg law of September 2, 2011, i.e. activities or professions for which a business license is required, as well as some other liberal professions. Therefore, an SARL-S will only be able to obtain its registration with the Luxembourg Register of Commerce and Companies (RCS), if it first obtains a license to engage in its business from the Ministry of Middle Classes.
An SARL-S can be incorporated either by notarial or private deed and the name of the SARL-S has to be followed by the mention “société à responsabilité limitée simplifiée” or the acronym “SARL-S”. We recall that in July 2013 the Luxembourg legislator also introduced, on the occasion of the adoption of the law transposing the AIFMD-directive, a simplified form of limited partnership known as “société en commandite simplifiée”, which does not require a notarial deed either. A regular private limited liability company (SARL) requires a notarial deed in order to come into existence.
One of the most significant innovations in the Bill is the virtual abolition of the requirement to pay in a minimum share capital at incorporation. The Bill provides that the share capital of the SARL-S must be comprised between EUR 1 and EUR 12,394.68 (the latter being the minimum amount of paid-in capital required for a regular SARL) and can be subscribed by way of contribution in cash or contribution in kind. If the share capital of the SARL-S exceeds EUR 12,394.68, the SARL-S may elect to become a regular SARL. If an SARL-S has however been incorporated by private deed, the transformation of the SARL-S into a regular SARL will require a notarial deed.
Finally, in order to protect creditors, the Bill provides that each year, one twentieth of the net profits of the company must be allocated to a non-distributable reserve, until this reserve, increased with the amount of the paid-in statutory capital of the SARL-S, reaches the amount of EUR 12,394.68.