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Legislation filed for new Luxembourg S.àr.l. Simplifiée company form

April 2015 - Corporate & Commercial. Legal Developments by Chevalier & Sciales .

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Following the announcement by the government in January of formal plans to establish a new type of Luxembourg company, the société à responsabilité limitée simplifiée (simplified private limited liability company, or SARL-S), implementing legislation was placed before parliament on February 2. The initiative, filed with the Chamber of Deputies as Bill 6777, is also known as the “1 euro” or “1-1-1” company because it can be founded by one person, with one euro, in one day.

The SARL-S was included in the government programme with the aim of making it easier, quicker and cheaper for entrepreneurs to start their own companies, especially those requiring little investment or start-up capital, such as service businesses. The initiative, which offers simplified administrative set-up and operating procedures and makes application documents available online, mirrors similar simplified company structures introduced in recent years in countries including Belgium, France, Germany and the Netherlands.

The corporate purpose of an SARL-S is restricted to industrial, commercial or skilled trades activities regulated by the Luxembourg law of September 2, 2011 – those for which a business licence is required – as well as certain other professional activities. Before an SARL-S can be registered with the Luxembourg Register of Commerce and Companies, it must first obtain a licence to carry on business from the Ministry of Small Business (Ministère des Classes Moyennes).

An SARL-S may be incorporated by either a private or notarial deed, with a minimum capital of one euro. Its shareholders must be individuals, not corporate entities, and a particular individual can only be a shareholder in a single SARL-S at any one time, except in cases where ownership is transferred following the death of a shareholder. Similarly, the SARL-S may have only physical persons as managers, not corporate entities.

In order to provide some protection to creditors, every year one 20th of the net profit of the company must be allocated to a non-distributable reserve, until this, along with the paid-up statutory capital of the SARL-S, amounts to €12,394.68, which is the minimum capital level for a standard private limited company. If the share capital exceeds this figure, the SARL-S must be converted into a ‘conventional’ S.àr.l. through a notarial deed.

In addition to the minimal initial capital required, the project also seeks to keep ancillary costs as low as possible, hence the absence of the requirement for submission of a business plan. Whereas establishment of a traditional S.àr.l entails capital and fees of around €13,300, an SARL-S will require just €191, including €15 for inclusion in the commercial register compared with €121.80 for its traditional counterpart. There are also Chamber of Commerce subscription fees of €70. The legislation does not include draft articles of association, but these may be obtained from professional bodies.

Before it can become law, the legislation will undergo review by the parliamentary justice commission and the Council of State before being debated by the Chamber of Deputies as a whole and submitted to a final vote. The text of the draft legislation can be consulted at:
http://chd.lu/wps/PA_RoleEtenduEuro/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/104/434/140333.pdf