Opening a bank account is often the most time-consuming step in company incorporations and can delay the process by weeks. The new law is likely to significantly speed up the process.
By Thibault Corlay, Head of Corporate Services at Ancorius
Businesses setting up a private limited liability company (SARL) in Luxembourg will no longer have to fork out the up-front €12,000 share capital when incorporating their company if a draft law gets the green light. Instead, the Bill suggests allowing companies to pay the statutory minimum capital of €12,000 within the first 12 months after incorporation.
An SARL – which can have between two and 100 shareholders – is the most common type of incorporation in Luxembourg, with around two-thirds of companies opting for this status, according to public administration portal, Guichet.lu. Currently, companies must meet the minimum threshold to set up an SARL before they can obtain legal status.
The obligation to fully pay the €12,000 share capital at incorporation forces founders to complete AML/KYC onboarding first, which can delay transactions by weeks. In practice, the biggest bottleneck when incorporating an SARL is not the notary; it’s opening a bank account, which is often the most time-consuming step in the process. The draft reform addresses exactly that issue. Removing the ‘bank account first’ constraint is significant in day-to-day structuring.
Deal-driven SPVs where incorporation timing is critical, SMEs facing lengthy bank onboarding processes, and international groups setting up Luxembourg subsidiaries would particularly benefit from the changes.
This reform will reinforce the SARL’s attractiveness from a speed-to-incorporation perspective, enabling clients to implement their structures faster while maintaining creditor protection and governance safeguards.
Under the proposed changes, full subscription would still be mandatory at incorporation and any capital exceeding the statutory minimum or contributions in kind would still need to be fully paid on day one. Shares issued after incorporation would need to be fully paid at issuance – the deferral mechanism would not apply to capital increases. Notaries would be obliged to verify full subscription and any partial payment at incorporation.
The reform is likely to enhance Luxembourg’s attractiveness, in particular for cross-border groups. It allows incorporation without immediate capital funding, while maintaining strong creditor protection and transparency mechanisms. That balance is important from an international perspective.
Companies incorporating after the reform would need to carefully draft the articles to define payment terms and timing, and consider whether to set capital strictly at the statutory minimum to benefit fully from the mechanism. It would be important for them to put in place internal monitoring for unpaid capital and anticipate voting suspension mechanics, as voting rights relating to unpaid shares would be suspended as long as duly called payments are not made.
At Ancorius, we help clients navigate the new rules by structuring incorporations efficiently, drafting compliant and robust articles of association, advising on capital structuring strategy, and coordinating governance, accounting and publication requirements.
The Bill was put to parliament in December and is now under review.
