Societal impact company (SIS)

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The societal impact company (société d'impact sociétal - SIS) is open to all natural or legal persons, acting in an individual capacity or as part of a group, who wish to create a commercial company with a view to engaging in an economic activity with a social or societal purpose.

Only commercial companies that comply with the principles of the social and solidarity economy may be accredited as societal impact companies.

The SIS is meant for both existing enterprises or organisations and project sponsors who wish to engage in an economic activity with a social or societal purpose.

The Ministry of Labour has implemented the first incubator for societal impact companies that offers tailor-made support (with and without appointment) to carry out the procedures for setting up an SIS.

The SIS offers a number of benefits for the entity concerned, including a clearly defined legal framework, an appropriate tax regime, and access to national and European public procurement contracts.

SIS accreditation affords the following benefits:

  • a guarantee that the economic activities engaged in by the SIS are genuine and responsible;
  • liberty to promote the social purpose of the company.

SISs are nevertheless subject to strict obligations in terms of transparency and governance.

Who is concerned?

SIS accreditation is reserved for:

that comply with the principles of the social and solidarity economy.

Prerequisites

Applications for SIS accreditation may be filed by existing companies as well as by companies in formation.

The accreditation application file must contain at least:

  • the draft articles of association, concordant with the information provided in the application for accreditation; and
  • all of the requested supporting documents.

Costs

Setting up an SIS entails certain costs, including:

  • a minimum share capital (depending on the legal form of the company);
  • the cost of publication in the Trade and Companies Register (registre de commerce et des sociétés - RCS);
  • costs related to the issuance of administrative authorisations, where applicable;
  • notary fees, if the services of a notary are required (depending on the legal form of the company);
  • where applicable, approved statutory auditors' annual fees.

How to proceed

Deed of incorporation

An SIS can only be incorporated as a:

The corporate purpose of an SIS must satisfy at least one of the following 2 conditions:

  • provide support to persons considered to be vulnerable on account of:
    • their economic or social circumstances;
    • their personal circumstances, particularly their state of health or their need for social or medical and social support – such persons may be employees, customers/clients, members, adherents or beneficiaries of the SIS); or
  • contribute to:
    • preserving and developing social cohesion;
    • combating health-related, social, cultural and economic exclusions and inequalities;
    • promoting gender equality;
    • maintaining and strengthening territorial cohesion;
    • protecting the environment;
    • developing cultural and creative activities;
    • developing initial or ongoing training.

The economic activity must be an ongoing activity involving the:

  • production; or
  • distribution; or
  • exchange of goods or services.

Particular attention should be paid to the following considerations:

  • the precise definition of the corporate purpose and the societal impact sought;
  • the identification of performance indicators that can be used to quantify the societal impacts achieved by pursuing the corporate purpose;
  • the reinvestment of profits: at any time, impact shares must form at least 50% of the share capital.

Any amendment to the deed of incorporation or change in the conditions connected with accreditation must first be approved by the minister with responsibility for the social and solidarity economy.

Company name

The name of the SIS-accredited company must be established in its deed of incorporation.

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

A company name availability search can be requested from the RCS.

Term

The term of existence of an SIS-accredited company must be specified in its articles of association in accordance with the rules applicable to the company's legal form.

Conversion

An SIS-accredited company may change its corporate form in the course of its existence further to a decision by the shareholders in accordance with the rules applicable to the company's legal form.

The rules on mergers and demergers, which might result in a change in the company's legal form, apply to SIS-accredited companies.

Dissolution

The SIS-accredited company is automatically dissolved at the end of the term specified in its articles of association.

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

It may also be dissolved by a court decision if its accreditation is revoked because it no longer satisfies the requisite conditions.

Any act of voluntary dissolution by the reunion of all shares in one hand must, on pain of nullity, be accompanied by administrative certificates issued by:

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

Regardless of the type of liquidation, any liquidation surplus must be donated to:

  • another SIS whose purpose is the same as or comparable to that of the SIS being liquidated; or
  • a foundation established under Luxembourg law or a non-profit organisation recognised as being of public interest by a Grand-Ducal regulation.

Capital

Form of company shares/units

The minimum share capital of an SIS-accredited company is set in accordance with the rules applicable to the company's legal form.

The share capital of an SIS-accredited company must be made up of:

  • at least 50% impact shares/units, which confer no entitlement to dividends;
  • no more than 50% distribution shares/unit, which confer entitlement to dividends, provided that the corporate purpose, as assessed using performance indicators, has been achieved.

All impact and distribution shares/units are registered shares and issued with a nominal value.

Impact shares/units may not under any circumstances be converted into distribution shares/units.

Profits allocated to impact shares/units may only be used to achieve the corporate purpose and are reinvested in full in maintaining and developing the activity of the SIS-accredited company.

Transfer of shares/units

Impact and distribution shares/units may be transferred in accordance with the rules applicable to the company's legal form.

However, if the SIS is dissolved or liquidated, holders of distribution shares/units as well as holders of impact shares may only be refunded to the extent of their initial contribution, provided that there are sufficient assets.

Managerial structure

The rules on the management of an SIS-accredited company are established in accordance with the rules applicable to the company's legal form.

The management of an SIS must be autonomous, in the sense that it is fully able to:

  • form and revoke its governing bodies; and
  • control and organise all of their activities.

Liability

The liability regime applicable to the management bodies of an SIS-accredited company is established in accordance with the rules applicable to the company's legal form.

Obligations

Supervision of the SIS

SIS accreditation does not exempt the company from complying with the supervision rules that it would normally be required to comply with, based on its legal form.

However, the SIS is also subject to supervision by the minister with responsibility for the social and solidarity economy, as regards compliance with the terms of its SIS accreditation.

The SIS must fulfil a number of special legal obligations, namely:

  • impact shares must form at least 50% of the share capital of the SIS;
  • employees' maximum annual remuneration must not exceed 6 times the annual social minimum wage;
  • the SIS may not:
    • borrow cash from its members, either directly or indirectly; or
    • issue debt instruments to its members, either directly or indirectly.

The annual financial statements of an SIS must be accompanied by an annual financial report. The report, which must certify that the SIS fulfils its legal obligations, must be drawn up by:

  • an approved statutory auditor, if the SIS's turnover or net assets exceed EUR 1,000,000;
  • an internal auditor, if the SIS's turnover or net assets are between EUR 100,001 and EUR 1,000,000.

If the SIS's turnover or net assets are less than EUR 100,000, the report can be drawn up by the company itself, in the form of a self assessment.

Furthermore, all SIS-accredited companies must produce an annual non-financial impact report for their partners or shareholders. The report sets out details on the implementation of the performance indicators provided for in the SIS's articles of association.

The annual financial report and the non-financial impact report must be forwarded to the minister responsible for the social and solidarity economy within 2 weeks of the general meeting of shareholders/partners.

Should the company fail to fulfil its legal obligations, its accreditation may be revoked by the minister.

Legal disclosures

The formalities for registering the company with the RCS require that certain details on the SIS-accredited company be provided, depending on the legal form of the company. These details include:

  • the company or trade name and, where applicable, any abbreviations and/or commercial signs used;
  • the legal form of the company and, where applicable, the additional wording 'societal impact company', as required by law;
  • the exact address of the registered office;
  • the purpose of the company;
  • the amount of the share capital – or an indication of the variable nature of the capital – and the number of impact and distribution shares forming the capital;
  • the identity and private or business address of each person authorised to manage, administer and sign on behalf of the company in their capacity as a legal representative of the company, the signing rules, the date on which they were appointed and the date on which their mandate expires and, where applicable, their position and the corporate entity to which they belong;
  • the date of the company's incorporation, its term, and the date and references of its ministerial accreditation.

Any subsequent changes must be filed with the RCS for publication.

Accounting

The accounting rules applicable to SIS companies are those determined in accordance with the rules applicable to the company's legal form.

Taxation

Societal impact companies in which impact shares form 100% of the share capital are entitled to the following tax benefits:

In respect of these companies, the law also makes provision for cash donations to these companies to be deducted from donors' total net income. This is the same tax benefit as that which is afforded to non-profit organisations (associations sans but lucratif - asbl) and foundations recognised as being of public interest.

SIS companies in which impact shares form less than 100% of the share capital are not entitled to any tax benefits.

Online services and forms

Who to contact

Department for the Social and Solidarity Economy

Social business incubator (SBI)

Union Luxembourgeoise de l'économie sociale et solidaire (ULESS)

House of Entrepreneurship

'Contact Entreprise' at the Chamber of Skilled Trades and Crafts - Luxembourg

  • Chamber of Skilled Trades and Crafts 'Contact Entreprise' at the Chamber of Skilled Trades and Crafts - Luxembourg
    2, Circuit de la foire internationale L-1347 Luxembourg-Kirchberg Luxembourg
    B.P. 1604 / L-1016
    Visit website: http://www.cdm.lu/

Luxembourg Business Registers

  • Luxembourg Business Registers
    Luxembourg
  • Luxembourg Business Registers - Luxembourg Office
    14, rue Erasme L-1468 Luxembourg-Kirchberg Luxembourg
    L-2961 Luxembourg
    Fax: (+352) 26 42 85 55
    Email address: helpdesk@lbr.lu
    Monday to Friday from 09.00 - 12.00 and 13.30 - 16.00
    Registration helpdesk: Monday to Friday by appointment only
  • Luxembourg Business Registers - Diekirch Office
    Place Joseph Bech L-9211 Diekirch Luxembourg
    Fax: (+352) 26 42 85 55
    Email address: helpdesk@lbr.lu
    Mondays, by appointment only

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Related procedures and links

Procedures

Registering with the Trade and Companies Register as a natural person Legal form Comparative table - Capital companies Public Limited Company (SA) Private limited liability company (SARL) Simplified limited liability company (SARL-S) Cooperative company (SCOP) Legal form - Fiscal implications Management & Developement

Links

Further information

Legal references

  • Loi modifiée du 10 août 1915

    concernant les sociétés commerciales

  • Loi modifiée du 19 décembre 2002

    concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises

  • Loi modifiée du 12 décembre 2016

    portant création des sociétés d'impact sociétal et modifiant a) la loi modifiée du 19 décembre 2002 concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises, b) la loi modifiée du 4 décembre 1967 concernant l'impôt sur le revenu, c) la loi modifiée du 1er décembre 1936 concernant l'impôt commercial communal et d) la loi modifiée du 16 octobre 1934 relative à l'impôt sur la fortune.

  • Règlement grand-ducal du 5 décembre 2017

    portant coordination de la loi modifiée du 10 août 1915 concernant les sociétés commerciales

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