Background and objective
Scope of application
Procedure
Recourse against decisions
The Luxembourg Act of 28 October 2022, which introduces the procedure of administrative dissolution without liquidation (the administrative dissolution procedure), has just been published and will enter into force on 1 February 2023.
The purpose of the Act is to dissolve empty shell companies quickly and at reduced costs for the Luxembourg state.
The administrative dissolution procedure will enable the administrative dissolution of certain companies without having to go through a formal procedure of judicial liquidation.
In order to be subject to the administrative dissolution procedure, Luxembourg companies must:
- have no assets;
- have no employees; and
- not pursue criminal activities or activities that seriously contravene the provisions of the Luxembourg Commercial Code or the laws governing commercial companies, including the laws governing authorisations to do business.
Certain companies are excluded from the scope of the Act – for example, entities that are subject to prudential supervision, which do not fall within the scope of bankruptcy regulations either.
Where there are clear and concordant indications that a company meets the aforementioned conditions, the public prosecutor may request the administrator of the Luxembourg Trade and Companies Register (the RCS administrator) to start an administrative dissolution procedure regarding the company.
Only the public prosecutor can request the RCS administrator to start the administrative dissolution procedure, to the exclusion of the company itself or an interested third party.
The RCS administrator must notify the company of its decision to initiate an administrative dissolution procedure and publish this decision in two newspapers published in the Grand Duchy of Luxembourg as well as in the Luxembourg Official Gazette (RESA).
The RCS administrator will then verify that the relevant conditions are met, including the absence of assets and employees. To that effect, the RCS administrator will request information from certain entities and administrations (eg, banks and government authorities) about the company's financial and administrative situation. Such entities and administrations have one month to disclose the requested information.
If all conditions are met, the RCS administrator will provide confirmation to the public prosecutor. The administrative dissolution procedure will then be concluded, which will be published in the RESA, and the company will be dissolved.
If the conditions are not met, the administrative dissolution procedure will automatically be suspended. Such decision is also published in the RESA.
The concerned company, or any interested third party who considers that the conditions are not met, may lodge an appeal against such decision with the Luxembourg District Court within one month of the publication of the decision in the RESA.
If the Court considers that the conditions were not met, the administrative dissolution procedure will be revoked, which will be published in the RESA.
If assets appear after the conclusion of the administrative dissolution procedure, the Court may, at the request of the public prosecutor, revoke the decision to close the administrative dissolution procedure and order the liquidation of the company through a formal judicial liquidation procedure.
For further information on this topic please contact Margaretha Wilkenhuysen, Romain Sabatier, Aline Nassoy or Brice Bertolotti at NautaDutilh Avocats Luxembourg by telephone (+352 26 12 29 1) or email ([email protected], [email protected], [email protected] or [email protected]). The NautaDutilh Avocats Luxembourg website can be accessed at www.nautadutilh.com.