Thanks to the Act of 10 August 2016 modernizing Luxembourg company law, which entered into force on 23 August 2016 (the “New Act”), the Grand Duchy now officially recognizes the possibility for companies to be wound up by means of a simplified procedure. This is unquestionably a useful tool which will further enhance Luxembourg's business-friendly reputation.
Pursuant to Article 141 of the Act of 10 August 1915 on commercial companies, as amended by the New Act and Article 1865bis of the Luxembourg Civil Code, a company with a sole shareholder may be dissolved without liquidation pursuant to a resolution adopted by its shareholder, in which case all of the company's assets and liabilities will be transferred by operation of law to the shareholder ("transmission universelle"). For a 30-day period starting on the publication date of the decision to wind up, creditors may petition the president of the district court for additional security.
This new means of winding-up is a speedier and cheaper alternative (for single-shareholder companies) to the traditional three-step liquidation procedure, which requires three shareholder meetings as well as the appointment of a liquidator and auditor. It should be noted that while a simplified procedure already existed in notarial practice, it lacked a clear legal basis.
In practice, the new procedure requires the issuance of three certificates by various administrative bodies in order to ascertain that the company is in compliance with its obligations regarding payment of taxes and social security contributions.
This newsflash forms part of a series which aims to provide insight into certain changes introduced by the Act of 10 August 2016. For further information and a general overview of the amendments please refer to our earlier newsflash "Modernisation of Luxembourg Company Law - What's new?".