International tax advice

Company Law

Luxembourg Law acknowledges several types of commercial company:

CORPORATE & COMPANY LAW

The first two are the most common. However, a closer analysis reveals a number of tax and corporate advantages involved with each particular types.

Since 1992, one can set up a Private Limited Company alone. In such a case, it is called a Société à Responsabilité Limitée Unipersonnelle. The S.A. can also be held and managed by 1 person.

Investment Funds can be organized in the form of a partnership, but are commonly set up as a Fixed (SICAF) or Variable (SICAV) Investment Company. Recently, a new law defined various possibilities for setting up Risk Capital Investment Companies (SICAR). The same law makes it possible to constitute Securitisation Vehicle, which can take one of the above forms or mutual fund's.

Pension Funds can take the form of ASEP (Savings Pension Associations), or SEPCAV (Variable Capital Savings Pension Companies).

Holding Companies are not themselves a particular type of company. A special request written in the by-laws determines this status. Usually, a Holding 1929 takes the form of a Public Limited Company, but sometimes a Private Limited Company meets the requirements.

It is not necessary to obtain an official authorization prior to setting up a company, but the law requires certain types of commercial companies to have a business creation permit, available from the Department of Commerce and delivered on the basis of merit and professional qualifications.

Some Financial Sector Professionals come under the supervision of the 'Commission de Surveillance du Secteur Financier (CSSF)'.

The legal framework in Luxembourg is pragmatic and liberal.

Various rights accompany shares (the right to vote or no right to vote for founding members, other classes… ) Shareholder agreements and pre-emptive rights are also frequently used. The capital of the company can be subscribed in any of the recognized currencies. This also applies for annual return. Shares in a Public Limited Company can be either nominal or bearer shares.

Transnational mergers can go ahead without any changes to the legal entity. Foreign companies can move to Luxembourg and Luxembourg companies can move abroad, provided the company's by-laws allow for this type of move. Once the registered office transfer is voted by the shareholders, it is published in the official gazette (Mémorial). This operation is not subject to capital duty. For this kind of operation, latent capital gain or the company's reserves are not taxed in Luxembourg (except when moving out Luxembourg).

Other types of Company

Luxembourg also allows the possibility to create General Partnerships, Real Estate Corporations (Société civile immobilière), and (European) Economic Interest Groups.

The European Company

Since the 1st of October 2004, the new European Company and the European Cooperative Company are available in Luxembourg. This type of entity has met some success in Luxembourg.

Public and Private Limited Companies

Below is a comparison of the main features of these two types of Company :

 
Public Limited Company
Private Limited Company
Constitution
Notarial deed, registered with the Registre of Commerce & published in extenso in the Mémorial
Idem
Capital
capital subscribed is minimum  € 31,000  - 1/4 of which must be paid-in
capital subscribed is minimum € 12,500 to be  fully paid in
Shares
Nominative or Bearer
Nominative only
Shareholders
1 or several persons (individuals or companies)
Luxembourg or foreign nationals
Residents or Non Residents

1 or several associates

Idem

Assembly
The General Assembly takes place once a year

Idem if  > 25  associates
Administrative Council
minimum 3 persons  (1 if one shareholder)
OR Conseil de Surveillance & Directoire
1 or several managers
Statutory auditor
1 required
None if < 25 p
Idem if  > 25 p
Audit
if the size of the company requires it
Idem
Accounts
once per year to be submitted to the Register
Idem
Report
an Auditor's report is required
no report is needed

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