The public limited company (société anonyme – SA), together with the private limited liability company (société à responsabilité limitée – SARL), is one of the most common types of company in Luxembourg. This form of company offers many advantages, in terms of limited liability (limited to the level of contribution) and regulated access to capital.

The SA is often the legal form of company chosen by large businesses, but it can also be used for SMEs, as the shares in this type of company can be bearer shares and are therefore more easily transferable.

For shareholders, the main attraction is the limitation of their liability to the level of their contribution to the capital and the possibility of operating in relative anonymity.

Owing to its characteristics, an SA is suitable for a wide range of businesses of different sizes, with different types of activities, offering legal and natural persons the possibility to:

• promote the development of the business by bringing new shareholders on board;
• access the financial markets (capital markets).

Who is concerned

Public limited companies can be formed by one or more natural or legal persons.

Prerequisites

At least one partner is required.

Any person wishing to set up a company to do business in Luxembourg must have the authorisations/approvals required to carry out the activity.

Costs

Setting up an SA entails certain costs, including:

• notary fees;
• the cost of publication in the Trade and Companies Register (Registre de commerce et des sociétés – RCS);
• statutory auditor fees, if a statutory auditor is required;
• a share capital contribution of at least EUR 30,000;
• any costs related to the issuance of administrative permits.

How to proceed

The SA's deed of incorporation

An SA must be formed in the presence of a notary.

The articles of association must be filed in full with the Trade and Companies Register (RCS).

The law specifies a list of mandatory information that must be included in the articles of association:

• the identity of the signatories to the deed of incorporation;
• the form of the company;
• the company name;
• the purpose of the company;
• the address of the company's registered office;
• the amount of subscribed share capital and, where applicable, the amount of authorised share capital;
• the amount initially paid into the subscribed share capital;
• the share classes and their characteristics;
• whether the shares are registered, bearer or dematerialised shares, and any additional or derogation clause which may override the law;
• a description of each contribution in kind;
• the cause and content of special benefits granted upon the company's formation;
• where applicable, the number of securities or shares that do not form part of the share capital, and the rights attached thereto;
• the rules that determine the number of and method of appointing the members of the bodies representing the company with respect to third parties, administering, managing, overseeing or auditing the company; and the rules that determine the distribution of authority among these bodies if it deviates from the law;
• the duration of the company;
• at least an approximation of the company's formation costs.  

Company name

The name of the SA is established in its deed of incorporation.

The name must be different from that of any other existing company.

To find out whether the company name is available, contact the RCS.

Duration of the SA

The duration of the SA's existence must be set by its articles of association.

The company may be established for a limited duration or an unlimited duration.

Conversion

An SA may change its corporate form in the course of its lifetime through shareholder decision.

In particular, it may convert to a European company if, for at least 2 years, it has had a subsidiary that is governed by the laws of another European Member State.

The rules on mergers and demergers, which are likely to bring about a change in legal form, apply to SAs.

Dissolution

The company is automatically dissolved at the end of the duration specified in the articles of association.

It may be dissolved by the shareholders, for example, if the share capital is lost.

The SA may also be dissolved through a legal ruling, for legitimate reasons or due to unlawful activities.

In the event of voluntary dissolution, the following administrative certificates must be filed:

• a certificate issued by the Data-Processing, Membership and Contributions Centre of the Joint Social Security Centre (Centre commun de la sécurité sociale – CCSS);
• a certificate issued by the Luxembourg Inland Revenue (Administration des contributions directes);
• a certificate issued by the Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA).

The dissolved company retains its legal personality for the purposes of its liquidation.

Capital

The minimum amount of capital needed to form an SA is EUR 30,000.

The SA's capital may be amassed through subscriptions. The capital must be fully subscribed and at least 25 % paid up.

Cash contributions or contributions in kind are permitted.

Contributions in kind must be covered by an assessment report drawn up by a statutory auditor (réviseur d’entreprises);

In the event of a capital increase, the shareholders are granted preferential subscription rights (except where a justified subscription limit has been decided on during an extraordinary general meeting).

Form of shares

Shares can be given and show a nominal value or show no nominal value.

Shares are registered shares until they are fully paid up. Fully paid up shares then become:

• registered shares;
• bearer shares; or
• dematerialised shares.

Registered or bearer shares may be converted into dematerialised shares by recording them in a securities account managed by an account holder, if such a conversion is allowed by the articles of association.

It is possible to create shares which are not representative of the share capital and which are called "profit shares". The SA's articles of association determine the rights attached to such shares.

An SA may issue shares without voting rights:

• when the company is formed, if stipulated in the articles of association;
• when a capital increase takes place;
• through the conversion of ordinary shares.

A logbook of the registered shares that establishes their ownership is kept at the head office. The owner may request a certificate.

A dematerialised share is materialised when it is recorded in a securities account with an authorised body.

Transfer of shares

The transfer of registered shares only affects the company if one of the 2 following procedures is completed:

• a declaration of transfer in the share register, dated and signed by the assignor and the assignee;
• a notification of the transfer to the company or acceptance of the transfer by the company recorded in an authentic deed.

The transfer of bearer shares is carried out between parties by exchange of consents and with third parties by transfer of the share certificate. The custodian receives all documents certifying the transfer.

The transfer of dematerialised shares is carried out by bank transfer.

Managerial structure

An SA can choose one of the following management structures:

• monistic: a board of directors that manages the company;
• dualistic: a management board that manages the company and a supervisory board that supervises the management.

The choice must be specified in the SA's articles of association.

Monistic system (board of directors)

Board of directors

The board of directors is the body that is responsible for managing the company. However, this has no impact on the possibility to delegate responsibility; decisions concerning general policy cannot be delegated to others.

The members of the board of directors are appointed by the general meeting of shareholders. The board includes at least 3 directors, unless the company has only one shareholder, in which case only one director is required.

Directors may be natural or legal persons.

When a legal person is appointed director, the legal person must appoint a permanent representative who is tasked with carrying out its mandate.

The term of office for directors is limited to 6 years, with the possibility of re-election and early dismissal by the general meeting.

The board of directors may decide to set committees, and is free to determine the make-up and responsibilities of those committees.

Dual system (management board and supervisory board)

The supervisory board

The supervisory board monitors the management board's work on an ongoing basis, but has no powers to interfere in the management. It approves the decisions laid down in the articles of association. It reports to the general meeting.

The members of the supervisory board are appointed by the general meeting of shareholders. The supervisory board comprises at least 3 members unless the company has only one shareholder, in which case only one member is required.

Members of the supervisory board can be natural or legal persons. When a legal person is appointed as a member of the supervisory board, the legal person must appoint a permanent representative who is responsible for carrying out the mandate on behalf of the legal person.

The term of office for members of the supervisory board is limited to 6 years, with the possibility of re-election or dismissal by the general meeting.

The management board

The management board manages the company. It has the necessary powers to act in furtherance of the corporate purpose, with the exception of those reserved to the supervisory board or the general meeting, by law or the articles of association.

The members of the management board are appointed by the general meeting of shareholders or by the supervisory board.

The number of senior managers is set by the SA's articles of association or, alternatively, by the supervisory board (SAs with share capital less than EUR 500,000 or SAs that have only one shareholder have the option of having only one senior manager).

The senior manager may be a natural person or a legal person. When a legal person is appointed as a member of the management board, the legal person must appoint a permanent representative responsible for enacting the mandate on behalf of the legal person.

The members of the management board can be dismissed by the supervisory board or, if stipulated by the articles of association, by the general meeting.

The term of office for members of the management board is limited to 6 years, with the possibility of re-election.

The management board may decide to set committees, and is free to determine the make-up and responsibilities of those committees, which operate under the management board's supervision.

The supervisory board may grant one or more of its members a special mandate for one or more specific purposes.

Shareholders' meeting

The shareholders' meeting has all necessary powers to ratify the SA's acts.

In particular, it decides on capital increases and transactions involving the capital.

The ordinary and extraordinary general meetings are convened by the board of directors, the management board or the auditors.

If the way in which general meetings are convened is not determined in the articles of association, the procedure stipulated by law must be followed. This procedure is as follows:

• depending on the situation, the board of directors, management board or supervisory board convenes the meeting. The auditors are entitled to convene the general meeting;
• notices of meeting must contain the agenda and are issued through announcements filed with the RCS and published at least 15 days before the meeting in the electronic compendium of companies and associations (Recueil électronique des sociétés et associations – RESA) and in a newspaper published in Luxembourg;
• notices of meeting must be sent to the shareholders at least 8 days before the meeting by post or another method agreed to by the recipients.

Day-to-day management of the SA

The day-to-day management of the SA, as well the representation of the company in managerial matters, can be delegated to one or more directors, senior managers, managers or other representatives – who may or may not be partners – acting alone or jointly.

The procedures for appointing them are laid out in the SA's articles of association.

Liability

The shareholders are liable up to the level of their contributions to the share capital.

The founders are jointly and severally liable to third parties:

• for the capital not validly subscribed and for the difference between the minimum capital requirements and the subscribed amount;
• for the effective payment of 25 % of the subscribed shares, and for the payment, within 5 years, of shares issued for non-cash contributions;
• for the redress of damage arising from either the nullity of the company or the absence or non-conformity of statements in the company deed or object.

The SA is bound by the acts carried out by the competent bodies, even if they surpass the corporate purpose, unless it can be proven that the third party involved knew, or could not have been unaware of the fact that these acts surpassed the corporate purpose, given the circumstances (the publication of the articles of association does not, in itself, constitute sufficient proof).

The restrictions on the powers of the board of directors are not binding on third parties, even if they are published. Nonetheless, it is possible, through the articles of association, to assign responsibility to one or more directors to represent the company, either alone or jointly, in acts or in court. This clause is then binding on third parties, subject to publication in the RCS.

The clause under which the day-to-day management is delegated to one or more persons acting either alone or jointly is binding on third parties, subject to publication in the RCS. This provision may not be combined with a restriction on managerial powers, which is not binding on third parties in any circumstances.

The directors, members of the executive committee and chief executive officer may not contract any personal obligation with regard to the company's commitments.

The directors, management and chief executive officer are liable to the company for any misconduct in carrying out the mandate entrusted to them.

The directors and members of the executive committee are jointly and severally liable to the company and to third parties for all damages resulting from infringements of the law on commercial companies or the articles of association of the company, unless they obtain a waiver in the absence of personal fault from the competent body.

Obligations

Oversight of the company

The legal audit of financial statements must be delegated to one or more approved statutory auditors (réviseur d’entreprises agréé) in any company which, on the balance sheet date after 2 consecutive financial years, exceeds 2 out of the following 3 criteria:

• balance sheet total: EUR 4.4 million;
• net turnover: EUR 8.8 million;
• average number of full-time employees: 50.

For companies that do not exceed these criteria, oversight is nevertheless mandatory by one or more internal auditors (commissaires aux comptes), who may or may not be shareholders.

Legal publications

The articles of association of the SA must be filed in full with the RCS for publication.

In order to register the SA with the RCS, certain information about the company must be disclosed.

In addition, the SA must file the following with the RCS:

• the complete deed of incorporation;
• information on the appointment and discontinuation of the various management bodies and on liquidators, where applicable;
• information on the custodians of the bearer shares;
• certain legal decisions;
• where applicable, information on the dissolution of the company;
• annually, the status of the share capital, following the balance sheet;
• the annual financial statements;
• the management report;
• the internal auditors' report or statutory auditors' report.

Any subsequent changes must be filed with the RCS.

The corporate financial statements must be filed with the Trade and Companies Register (RCS) within one month of their approval and no later than 7 months after the close of the financial year.

Accounting aspects

An SA must produce: balance sheet, profit and loss account, annexes to the financial statements and management report, which must be approved by the general meeting of shareholders.

SAs can draw up an abbreviated balance sheet if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:

• balance sheet total: EUR 4.4 million;
• net turnover: EUR 8.8 million;
• average number of full-time employees: 50.

SAs can draw up an abbreviated profit and loss account if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:

• balance sheet total: EUR 20 million;
• net turnover: EUR 40 million;
• average number of full-time employees: 250.

Tax aspects

SAs are subject to the following fees and taxes:

• fixed registration fee;
• property tax;
• business tax;
• net wealth tax;
• corporate income tax;
• VAT declaration according to the following criteria:
  • if the annual turnover excluding taxes is less than EUR 112,000: VAT returns must be filed annually;
  • if the annual turnover excluding taxes is between EUR 112,000 and EUR 620,000: VAT returns must be filed quarterly;
  • if the annual turnover excluding taxes exceeds EUR 620,000: VAT returns must be filed monthly.

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