The 'Snippet' series from our New York office regularly offers insights on a range of EU tax and legal topics. In this snippet, we focus on the incorporation of a Luxembourg private limited liability company (Société à Responsabilité Limitée – SARL).
Selecting a suitable legal form is pivotal. Due to its flexibility, the SARL stands out as the most commonly used legal form by US Fund Managers.
Incorporation steps. The incorporation of a SARL requires the following preparatory steps:
- choosing a name, a registered office and managers;
- collecting KYC/AML information;
- opening a bank account (which should ideally, but does not need to, be opened with a Luxembourg bank) and wiring the necessary cash to the bank account, such wire to be confirmed by the bank to the notary in a so-called "blocking certificate"; and
- preparing the company's articles of association (the Articles) including, among others, the corporate object and provisions on shareholder and board meeting organization, external representation of the company and distributions.
The minimum share capital for a SARL is EUR 12,000 or the equivalent in another currency. The incorporation of a SARL is effective as soon as the decision to incorporate and to adopt the Articles is recorded by or on behalf of the founder(s) (typically on the basis of powers of attorney signed in advance) in a Luxembourg notarial deed.
Post-incorporation formalities. Following the incorporation of the SARL the Luxembourg notary will (i) issue a so-called "deblocking certificate" confirming that the incorporation funds are at the disposal of the company and (ii) apply for the registration of the SARL and file the Articles with the RCS, requesting their publication in the electronic gazette of companies and associations (RESA).
The SARL's manager(s) are also required to identify, and file up-to-date information concerning, the beneficial owner(s) with the Luxembourg Register of Beneficial Owners (not accessible to the general public).
Local footprint. The SARL must have its central administration in Luxembourg. While it is not mandatory to have resident managers on the board of the SARL, the appointment of local managers will facilitate the day-to-day operation of the SARL. A company which does not rent or own premises of its own may be domiciled at the premises of a third party (typically regulated professionals, which are subject to oversight).
Concerned about the timing for opening a bank account? The share capital of a SARL can also be paid up by means of a contribution in kind, consisting of assets that are capable of being valued in monetary terms, such as receivables. The value of the contributed assets must be certified by the founder(s) to the Luxembourg notary. No external audit or valuation is required.
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.