Investors choose to open a company in Luxembourg because of its stable economy, low inflation and a low unemployment rate. Luxembourg is a member state of the EU and enjoys the advantages of free market in Europe.
Types of companies in Luxembourg
Entrepreneurs have a wide range of business entities to choose from in Luxembourg: the joint stock company (SA), the limited liability company (SARL), partnership (SNC), the limited partnership (SCS), the limited partnership (SCA) and the cooperative company (SC).
The joint stock company requires a minimum share capital of EUR 31,000. A joint stock company can be registered in Luxembourg by at least one resident or non-resident shareholder and a board of directors must be appointed. The liability of each shareholder depends on his/her contribution to the share capital of the company.
Our lawyers in Luxembourg can offer you complete information about the particularities of each type of company in this country.
We invite you to watch a short video about the types of companies a foreign investor can set up in Luxembourg, helped by our local lawyers:
Opening a business in Luxembourg
The Grand Duchy of Luxembourg welcomes foreign direct investments and the country has an attractive framework as well as a multicultural and competent workforce. Many entrepreneurs choose to open a limited liability company, this type of company being the most used in Luxembourg. For a limited liability company, the entrepreneurs must deposit as minimum share capital at least 12,400 EUR. This form of legal entity has a maximum number of shareholders and their responsibility depends on the contribution to the company's capital.
The procedure of incorporating a limited liability company in Luxembourg is straightforward and it begins by signing the required documents with the local public notary and afterwards the company is registered with the local Trade Registry.
The partnership is a type of business entity common for medium and small companies. No minimum share capital is required for a partnership in Luxembourg and the shareholders are equally responsible for the company’s activity (including the company's debts).
Necessary steps for opening a company in Luxembourg
The first step entrepreneurs make when opening a company in Luxembourg is to check the uniqueness of the company’s name. The next step is depositing the minimum share capital. This is done by opening a bank account, which will remain blocked until the company is fully incorporated.
The entrepreneurs must also draw up the articles of association, which must be certified by a public notary and must also be signed by all shareholders (or appointed persons). It is strongly recommended to ask for legal advice provided by a lawyer in Luxembourg for this operation, as the document must be concluded in one of the approved languages in Luxembourg.
Our lawyers in Luxembourg can help you draw up all the necessary documents. The articles of association must be published in the Official Gazette, within two months after the registration. The articles of association must contain the following information:
- the founder's identity,
- the legal form and type of business,
- the minimum shared capital and the amount deposited by each shareholder,
- the number of securities which are not part of the share capital,
- the related rights (if applicable).
This document must also contain internal regulations regarding the nomination of the members of corporate bodies (if not provided by the law).
The Commercial Register issues an official registration number that will identify the company. The unique number issued by the Commercial Register is provided in 24 hours. The final step for opening a company in Luxembourg consists in unblocking the authorized capital from the previously opened bank account. This is done on the basis of a certificate provided by the notary, in which is mentioned that the company has been fully incorporated. The certificate is send to the bank in order to release the capital.
Shareholder’s responsibilities in Luxembourg
The limited partnership in Luxembourg is characterized by two types of shareholders: general shareholders and limited shareholders. The main difference between the two consists in their liability and power of decision - the limited partners have limited liability, according to their capital contribution and cannot take management decisions, while the general shareholders have unlimited liability and they can be involved in the company's decisions. A limited partnership does not require a minimum share capital.
Investors willing to open a company in Luxembourg can choose to open a cooperative company, although this type of business is rarely used. A cooperative company is composed of at least seven persons, it has no minimum share capital and the liability of the members is established in the company's articles of association.
Our law firm in Luxembourg can provide guidance for company incorporation in Luxembourg, as well as in other European countries. By working with our team, you will benefit from specialized assistance and guidance throughout the whole procedure.