Luxembourg Law of 10 August 1915 on Commercial Companies in English

Choosing the form

Most foreign investors use one of three forms. The S.à r.l. (Art. 710-1) is the default for holding and operating companies: 12,000 euros of capital, closed membership and flexible governance. The SA (Art. 410-1) is the form for listed companies and public offers, and is often used for larger holdings. The SCSp (Art. 320-1) is the usual vehicle for private equity and real estate funds because it has no legal personality, its partnership agreement is largely free, and it need not publish its accounts.

Capital and paying it up

The Law of 18 May 2026 changed one of the oldest features of the S.à r.l.: the capital no longer has to be fully paid up on the day of incorporation. Shares paid in cash can now be paid up within twelve months, or within a shorter period set by the articles. The notary still checks that the capital is fully subscribed, and anything paid above the 12,000 euro minimum, the share premium and contributions in kind are paid at once (Art. 710-6). The S.à r.l.-S, open only to individuals, can be formed with 1 euro of capital (Art. 720-4).

Who decides what

In an S.à r.l., members’ decisions need more than half of the capital, and amendments to the articles three quarters (Art. 710-18, Art. 710-26). Managers have all powers not reserved to the members, and the articles can set up a board of managers and delegate day-to-day management (Art. 710-15). An SA is run by a board of directors or, if the articles opt for the two-tier system, by a management board under a supervisory board (Art. 441-1, Art. 442-1). A director with a conflicting financial interest in a transaction must tell the board, have it minuted and stay out of the deliberation (Art. 441-7).

Distributions

Before profits are distributed, the legal reserve must be fed. Interim dividends are allowed in both the SA and the S.à r.l. if the articles permit it and interim accounts show sufficient funds (Art. 461-3, Art. 710-25). Unlawful distributions must be repaid by shareholders whom the company proves knew of the irregularity or could not have been unaware of it (Art. 461-5).

Restructuring

Title X is a complete toolkit: conversion from one form to another without dissolution (Art. 1010-1), mergers and divisions, contributions of a branch of activity and transfers of business assets (Art. 1040-1, Art. 1050-1). Since March 2025 the EU cross-border procedures for mergers, divisions and conversions follow Directive (EU) 2019/2121, with a pre-merger, pre-division or pre-conversion certificate issued by a Luxembourg notary after a legality and anti-abuse check (Art. 1025-12).

Penalties are real

Title XV is not decoration. Fines of 500 to 25,000 euros apply to filing and disclosure failures and to directors who fail to convene a general meeting within three weeks of a valid request (Art. 1500-2). Officers, including de facto officers, who in bad faith misuse company assets or powers face one to five years’ imprisonment (Art. 1500-11).