What is a Luxembourg SOPARFI?
A SOPARFI (Société de Participation Financière), in straight forward terms, is an ordinary, unregulated, commercial company used extensively in Luxembourg. It is a generic term and does not refer to a specific legal form of corporate entity. The most common legal forms a SOPARFI can take are a private limited liability company (Societe a Responsabilite Limitee, commonly abbreviated to S.à r.l.) and a public limited liability company (Societe Anonyme, commonly abbreviated to SA).
Both a S.à r.l. and a SA are formed under the Commercial Companies Law 1915 (as amended), which stipulates the minimum share capital each vehicle should have; €12,500 in the case of a S.à r.l. and €31,000 for a SA. There are several other differences between the two types of vehicles, including minimum numbers of board members (three in the case of a SA)* and maximum numbers of shareholders (40 in the case of a S.à r.l.). **
What are the steps to incorporate a SOPARFI?
The process of incorporation of a SOPARFI maybe unfamiliar to those with more experience in common law jurisdictions and is undertaken by a public notary. The following is intended to give a broad overview of the steps, which are similar regardless of the legal form of company to be created.
Draft Articles of Incorporation
- Name, registered address and registered number, if a corporate, of the founder(s);
- Name and registered address of the company to be created;
- Currency and amount of share capital;
- Value and type of share of the company to be created, including different classesof share;
- Identification documents of the manager(s); and
- Financial year end and name of the auditor(s) (if required).
Open bank account
- Submission of Client Due Diligence documents for the immediate owning and controlling parties and ultimate beneficial owners;
- Draft articles of incorporation;
- Bank account opening forms executed by the proposed manager(s)
- Declaration(s) of beneficial ownership signed by the ultimate beneficial owner(s); and
- Transfer of the share capital of the company on to the bank account.
The bank then issues a blocking certificate which needs to be provided to the public notary. The effect of this certificate is to confirm to the public notary that the share capital is held in a blocked account for the incorporation of the company but not yet available for use.
Public Notary incorporates the company
- An appointment is made with the public notary and the following documents presented;
- The blocking certificate;
- The signed declaration(s) of the ultimate beneficial owner(s);
- Power(s) of attorney signed by the immediate shareholder(s) (usually in favour of the corporate administrator allowing them to represent the shareholder(s) in front of the public notary); and
- Draft articles of Incorporation.
Once the public notary is satisfied with the documents presented to them, they execute the articles of incorporation along with shareholder(s) (or their appointed attorney).
From that moment on, the company is validly incorporated and can enter into transactions.
The public notary then issues a de -blocking certificate. This certificate is provided to the bank, who then confirm that the company's bank account is fully operational and that funds are now at the company's disposal.
The public notary will then publish the articles of incorporation of the company with the Luxembourg Trade and Companies Register.
How long does it take to incorporate a SOPARFI?
It is important to allow sufficient time to complete the formalities outlined above and so early engagement with your domiciliation agent is encouraged. It should be possible to incorporate companies within two or three business days, subject to the receipt of all the required Client Due Diligence documents. Where more complex provisions are required in the company's articles of association, we would recommend allowing more time to complete these formalities.