Luxembourg companies and notaries must now embrace digitalisation.
On 15 June 2023, the Luxembourg Parliament adopted the law on the use of digital tools and processes in company law (the "Law"), which aims to digitalise and modernise company law and the notarial profession.
The Law has two key objectives:
- implementing EU Directive 2019/1151 of 20 June 2019 as regards
the use of digital tools and processes in company law (the
"Directive"); and
- digitalising the notarial profession.
By way of background, the Directive's aims include enabling
online incorporation of certain forms of companies and online
registration of branches, and simplifying searches for information
about companies.
Main measures
The main measures from a Luxembourg law perspective
include:
-
Incorporation of companies without physical presence
Luxembourg sociétés anonymes (public limited companies), sociétés à responsabilité limitée (private limited companies) and sociétés en commandite par actions (partnerships limited by shares) can be incorporated online without physical presence; online incorporation is also possible with physical presence.
Standard articles of association are made available free of
charge by the Chamber of Notaries.
-
Making cash contributions online
The Law introduces online payment for cash contributions to an
account opened in the name of the company held with a bank
operating in the EU. Payments in cash to a bank operating outside
the EU are still possible, as is proceeding by way of separate
proof of funds.
-
Electronic format available for notarial deeds
Notarial deeds may be drawn up in electronic format under the
conditions and in the form laid down by the applicable laws and
regulations. In all cases, the following three conditions must be
met:
- the author (such as the notary) of a notarial deed in
electronic format must be identified;
- the technical process used must guarantee the integrity of the
notarial deed's content as soon as the deed is created in its
final form; and
- the technical process used must be easily understood by human
beings.
-
Principle of non-discrimination between electronic and paper formats
The Law introduces a general principle of non-discrimination between instruments, deeds and copies in electronic format, and paper instruments, deeds and copies issued by notaries. It should be noted that the concept of instruments is broader than notarial deeds and includes, among others, instruments drawn up by a bailiff (huissier de justice) or a registrar (officier de l'état civil). When instruments, deeds or copies in electronic format meet the above conditions, they are valid as originals and have the same legal value as documents, deeds or copies in paper format. The Civil Code is amended in this respect.
This principle applies both to companies that must be
incorporated by notarial deed and to other forms of companies that
choose to be incorporated by notarial deed (e.g.
sociétés civiles (civil companies) and
sociétés en commandite simple (common
limited partnerships)). Consequently, the latter will also benefit
from the online incorporation process.
-
New rules for notaries
The Law provides for new rules for notaries. Key points
are:
- Identification of the parties to the deed:
Notaries remain responsible for the accuracy of the identity of the
parties to the deed and for the statements and indications that
they certify in the deed. They may require the use of technology
(e.g. video conferencing) to be able to exchange
information with the remote party.
- Signature of the notarial deed: Notaries must
sign their deeds, copies, extracts and certifications drawn up in
electronic format using a qualified electronic signature or an
electronic seal within the meaning of the eIDAS Regulation (EU
Regulation 910/2014 of 23 July 2014).
- Notaries can refuse to draw up a deed in remote
electronic format: In certain circumstances, notaries may
require the physical presence of a party and refuse to draw up a
deed in remote electronic format (e.g. where there is a suspicion
of identity theft or falsification, or the company's share
capital includes a contribution in kind).
- Setting up a notarial electronic exchange
platform: Notaries must use the electronic exchange
platform to draw up their deeds. This e-platform enables notaries
to draw up their deeds in electronic format, collect electronic
signatures from the parties, obtain data from public bodies and
authorities, and transmit data to public bodies and
authorities.
- Strengthening exchange of information between Member
States' trade and companies registers
The Law aims to strengthen the exchange of information between
Member States' trade and companies registers, in particular, by
allowing easier access to information about companies and
branches.
-
Registration of branches with the Luxembourg Trade and Companies Register
- Registration of Luxembourg branches:
Luxembourg branches of commercial and civil companies, economic
interest groupings and European Economic Interest Groupings
governed by Luxembourg law must register with the Trade and
Companies Register ("RCS") to obtain a
registration number.
- Registration of EU branches of Luxembourg
companies: Branches of Luxembourg
sociétés anonymes,
sociétés à responsabilité
limitée and sociétés en commandite
par actions which are located in an EU Member State must be
registered with the RCS to obtain a registration number.
- Registration of Luxembourg branches:
Luxembourg branches of commercial and civil companies, economic
interest groupings and European Economic Interest Groupings
governed by Luxembourg law must register with the Trade and
Companies Register ("RCS") to obtain a
registration number.
These changes do not lead to additional administrative burdens
for companies, as they must already take certain steps with the
RCS, either for themselves or their branches.
What's next?
The law will enter into force on the first day of the month following its publication in the Luxembourg official journal.
It is worth noting that further EU reform on digital tools is underway. In March 2023, the EU Commission published a proposal for a directive amending the Directive to expand and upgrade the use of digital tools and processes in company law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.