1-Euro-company as per 2017

Luxembourg parliament recently twittered that the “one euro company” will see daylight as per 15 January 2017.

Luxembourg is not in the front rows when it comes to introducing a simplified company. Many other EU-countries, like German, Belgium and the Netherlands, already introduced such 1-euro-company, mainly in order to meet competition from the UK one-penny-limited and EU case law in this respect. Luxembourg’s draft bill of law dates back to 2007, but soon the plan disappeared in a drawer. It was not before 2014 that Luxembourg re-undertook this project, resulting in its current anticipated implementation in 2017.

Luxembourg mainly took a look at the examples of Germany and Belgium, with the mini-GmbH and SPRL-Starter respectively. Both jurisdictions, and now also Luxembourg, introduced a variant to their existing limited liability company.
The one-euro-company will therefore be called S.à r.l.-S (Société à responsabilité limitée simplifiée), as a special form of the existing S.à r.l. (Société à responsabilité limitée). This is for instance different than in the Netherlands, where the entire law on the limited liability company was amended in order to facilitate a one-euro-company as such (and simultaneously introducing more flexibility on other aspects as well).

The intention of the Luxembourg government with the S.à r.l.-S is to enhance economic activities and to accelerate the “entrepreneurial spirit”. This type of S.à r.l. will no longer require a minimum capital of EUR 12,394.68 at incorporation, but EUR 1.00 will suffice. Please note that the S.à r.l.-S may not have a higher capital than EUR 12,394.67.
In addition, incorporation and registration is being done by merely filling out a form at the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés – “RCS”). For a “normal” S.à r.l. incorporation has to be done via a notary; for the S.à r.l.-S this is optional.
The RCS will then resolve on the application within three days, and the costs will be EUR 15; instead of the current EUR 121 for registration of a notarial-established S.à r.l.

However, there are also some limitations as to the operations of the S.à r.l.-S. For instance, a S.à r.l.-S may only be established by private individuals and not by legal entities, on pain of nullity. Also, such incorporator may not incorporate more than one S.à r.l.-S. The managing director(s) of the S.à r.l.-S have to be private individuals as well. In addition, the scope of the S.à r.l.-S is limited to the activities of skilled craftsman, traders, manufacturers and certain liberalized professions (e.g. consultants, accountants, etc.).

The S.à r.l.-S therefore seems to mainly support (starting) sole traders or small businesses, who will especially benefit from the limited costs at incorporation. But it will not be suitable for every corporate undertaking. The current S.à r.l. and its larger equivalent, the S.A. (Société Anonyme – public company limited by shares), will therefore remain of importance.