NewsFlash I Today, the Luxembourg Parliament adopted Bill 8669 amending the Law of 10 August 1915 on commercial companies, as amended, with a view to introducing deferred payment of the minimum share capital for private limited liability companies (SARL).

Today’s business community demands a high degree of flexibility. Investors are regularly required to set up an SARL at short notice. However, the process of opening a bank account may, in some cases, take a long time due to the verification requirements under financial regulations. This was likely to discourage such investors from using Luxembourg vehicles and thus reduce the competitiveness of the Luxembourg financial place. The legislator has therefore sought to maintain this attractiveness by allowing the deferral of the obligation to pay up the minimum share capital for a maximum of twelve months from the date of incorporation of an SARL, to allow enough time for the opening of the company’s bank account.

The key points to note following the vote on this Bill are as follows:

  • The founders of a SARL will now have two options, depending on the company’s actual cash flow requirements in its early stages:
  1. either pay the full amount of the share capital at the time of incorporation;
  2. or defer all or part of the payment of the initial share capital after the date of incorporation, within a period of twelve months from the incorporation. This should facilitate the opening of a bank account in the weeks or months following incorporation, without delaying the incorporation itself. A 12-month period allows sufficient time to open the bank account and enable the full payment of the share capital.
  • The payment of share capital shall be made in accordance with the terms set out in the articles of association, unless otherwise provided (or a shorter period specified) therein.
  • Where a share premium is provided for, its amount must be paid in full at the time of incorporation. It will therefore not be eligible for the twelve-month period, which is provided for the payment of share capital only.
  • Deferred payment of the initial share capital will only be possible in the case of cash contributions. Shares issued at incorporation in exchange for contributions in kind must always be fully paid up at the time of incorporation. And if a share premium is provided for, it must, a fortiori, be fully paid up at the same time.
  • Any amount exceeding the minimum capital requirement must be paid in full at the time of incorporation.
  • Shares issued after the incorporation must be fully paid up at the time of their issue. And if an issue premium is provided for, it must be fully paid up at the same time.