Luxembourg’s changes to the Companies Act, adopted in July 2016, include important alterations to incorporation and capital increase procedures.

  • Preference shares without vote may now represent more than 50% of the share capital (art. 45) – these will not be taken into account when determining a quorum or presence requirements (art. 46).
  • Conversion of convertible bonds (art. 32-4) and certain, liquid and due receivables (art. 32-1 (5)) are considered as contribution in cash -> no auditor report necessary.
  • Subscription below par possible for placement agent who need to pay at least 90% of par value (art. 26-5 (2)+(3)).
  • Authorised capital possible for S.à r.l. (art. 199).
  • Issue of “free” shares is possible (eg. for employee participation):

- By capital increase, in which case the fact that the shares will be issued below par value needs to be expressly mentioned in the agenda, the Board needs to prepare a report outlining the financial consequences of the operation for the shareholders and an independent auditor has to confirm that the figures in the Board report are accurate; both reports need to be included in the convening notice and are filed with the RCS.

- By authorised capital, if the issue below par is expressly included in the authorization; the reports of the Board and the auditor need to be submitted at the EGM which introduces the authorised capital, and the minimum subscription price needs to be mentioned.

  • Rules of capital increase applicable to the issue of convertible bonds or other convertible instruments (art. 32-4); in addition, the issue of convertible instruments by an S.à r.l. to non-shareholders is subject to the approval of the existing shareholders (art. 11quater)
  • In addition to contribution in cash and in kind, shareholders of a S.à r.l. may contribute industry and receive shares without par value (art. 183 (3))
  • Bonds may now also be listed by a S.à r.l. (art. 11ter)
  • Minimum share capital S.A. reduced to €30,000, S.à r.l. to €12,000
  • Maximum number of shareholders for S.à r.l. increased from 40 to 100
  • The share capital is no longer mandatory on minutes and business correspondence of an S.à r.l. (art. 187)

*All references to articles mentioned above are references to the law of 10 August 1915 unless expressly mentioned.


Overall, the changes either add flexibility by eliminating restrictions on preference shares, and allowing the choice of the S.à r.l. for the listing of bonds on a regulated market or for structures with a large number of investors; or they facilitate certain transactions by allowing an authorised share capital for an S.à r.l. This in turn will reduce administrative work and expenses in case of a large number of shareholders by allowing the Board to increase the share capital, instead of having to convene a shareholders meeting. Also by treating the conversion of convertible bonds as a contribution in cash which does not require the valuation by an independent auditor. The other minor changes will be convenient for the administration of the company without having too much of an impact on the typical Luxembourg investment vehicle.

Need more information?This is part 5 of a series of articles by TMF Luxembourg experts on changes in the Grand Duchy’s company law.
Read part 4: Changes to board of directors - managers

Read part 3: Changes to shareholder meetings

Read part 2: Changes to liquidation, incorporation and capital increase procedures

Read part 1: The confirmation of practice