The bill of law 6777/06 aimed at establishing a simplified private limited liability company ("S.à r.l.-S") is now in the spotlight and subject to debate.
Further to obtaining the respective opinions on this project from the Luxembourg key actors during 2015, the Council of State had in its turn to provide its opinion by issuing the notice 51.007 dated 24 November 2015. This notice expressed doubts about the ability of this structure to meet its main objective, namely to facilitate the setting-up of businesses by individual entrepreneurs.
At this stage, the Council of State has made the following important comments and recommendations:
- It recommends introducing a fully fledged legal form of S.à r.l.-S that would be distinct from an ordinary private limited liability company ("S.à r.l.-O"), to avoid textual inconsistencies such as declaring the nullity of an S.à r.l.-S. due to the absence of a notarized incorporation deed pursuant to article 12ter of the law on commercial companies dated 10 August 1915, as amended ("LSC").
- It highlights the complexity of coordination between the incorporation and delivery of a business licence to an S.à r.l.-S as provided by the bill of law: the business licence must be delivered by the relevant Ministry as initial approval ahead of the incorporation of an S.à r.l.-S. Once the incorporation has taken place, the business licence is effectively delivered and only then can an S.à r.l.-S be registered with the Luxembourg Trade and Companies Register.
- It points out that the promptness of incorporation of an S.à r.l.-S would not just result from not requiring a notarized deed. The Council reiterates (i) the burden of control formalities required by Luxembourg banks when opening a bank account on incorporation, which are also required for an S.à r.l.-S, and (ii) the procedural delays relating to the business licence as set out above.
- It questions the purported lower costs of incorporation of an S.à r.l.-S: although an S.à r.l.-S certainly requires a lower amount of share capital, potential advisory fees may however be added, particularly for the drafting of the corporate object clause of the articles, whereas these fees may, in the case of an S.à r.l.–O, be paid out with share capital funds.
Hence, it will be worth analysing which potential amendments of the bill of law will result from the above-mentioned opinion.