Introduced on 2 February 2015, the legislative bill concerning “the introduction in Luxembourg of a simplified private limited liability company” entered its final stage on 29 April 2016 before eventual approval and publication.
Mr Franz Fayot has been appointed as rapporteur of this legislative bill that, following the changes in Germany (mini-GmbH), Belgium (SPRL-Starter) and The Netherlands (Flex-BV), intends to introduce a one-one-one type of private limited liability company (Sà rl) in Luxembourg.
One euro, one person, one day could be the slogan of this legislative bill whose goals are to allow a single entrepreneur who is young or without capital to start their own business via a rapid (one day – together with the expected changes to the law of 19 December 2002 regarding trade register) incorporation of their company, without needing a large initial investment (minimum share capital of one euro) and keeping the limited liability fundamental to the Sà rl.
Therefore, some amendments are proposed to the regime of the “classic” Sà rl in order to introduce, parallel to the well-known version, a simplified version of a private limited liability company (Sà rl-S) with the following relevant specifications:
- share capital of between EUR 1 and EUR 12,394.68 (immediately paid up) with the obligation to retain, annually, at least 5% of its net profits in a reserve until the difference between the share capital and EUR 12,394.68 is reached;
- only natural persons can be partners or managers of only one Sà rl-S – if the person becomes partner of another Sà rl-S, they will be considered as joint guarantor of the other Sà rl-S (except if they become partner mortis causa);
- the corporate objective of the company shall comply with the scope of application of the Law of 2 September 2011 concerning access to the professions of artisan, trader, manufacturer and some independent professions; and
- the possibility of incorporating the company by private deed.
But are the proposed measures sufficient to achieve the main goal of dynamizing Luxembourg entrepreneurship without risking the safety of the market and the creditors and employees warranties?
Although generally applauded, the said legislative bill has attracted several significant comments from entities invited to provide feedback on the project.
The expected corporate objective, for example, is seen as not being satisfactory because it excludes some activities which were definitely envisaged by the legislator when introducing this type of company, and also because some of the activities included cannot be undertaken without an initial significant investment.
The employees’ organizations, for instance, note that this type of company might be used to create false independents, which means real employees that will be beyond the scope of labour law, sometimes forced by employers, because of the legal form adopted.
But the corporate capital as the warranty of creditors and employees and the absence of real control over the identity of the partners and the source of the funds used to incorporate the company and the possibility of incorporating a limited liability company by private deed are the main issues to be determined.
On the other hand, the main problems regarding the incorporation and financing of a company in Luxembourg remain. The virtual absence of corporate capital will not be viewed favourably by banks or suppliers and certainly the banks will maintain their KYC policy regarding account opening, which is the most time-consuming step in incorporating a company in Luxembourg.
The rapporteur and deputies will have to consider all these issues when analysing and voting on this legislative bill.