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Types of Structures in Luxembourg

Types of Structures in Luxembourg

Updated on Monday 24th October 2016

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According to the Luxembourg Commercial Law, there are several types of legal entities which can be incorporated here:

  • -       société anonyme (SA);
  • -       the limited liability company (GmbH);
  • -       the company en nom collectif (SNC);
  • -        the limited partnership (SCS);
  • -       the company limited by shares (SCA);
  • -       the cooperative society (CS);
  • -       the cooperative society functioning as a SA (COOPSA).

The main forms established by the investors are the GMBH and the SA, described below. Our Luxembourg lawyers can offer information about all types of companies available for registration in this country.

Main types of companies

Just like in other country around the world like Singapore, the most common types of companies are the limited liability companies.

The private limited liability company is a type of structure in which the liability is limited to the participation of each shareholder. The number of members may vary from 1 to 40 or lower. Legal entities of this type can also be established by a single person and are called sole proprietorships. The share capital of the LLC is 12,500 EUR which must be fully paid when the company is registered. The share capital may be expressed in a currency other than the euro. The share capital is usually paid in cash, but it is also possible to make contributions in kind of real or personal property.

Unlike the shares of a SA, the shares of the LLC are not negotiable and cannot be publicly traded. The transfer of shares in the LLC is restrictive and any transfer of shares undergoes an approval procedure. These measures are taken in order to allow the company to exercise control over its future partners. The member wishing to sell their shares must notify the project to the company. Permission to transfer is expressly given by the majority of shareholders representing at least 75% of the share capital of the company. (The majority may be higher if decided so by the Articles of Association but in no case, less).

The public limited liability company may be incorporated by just one founder and does not have a limited imposed to the number of members. The share capital is rounded to 31,000 EUR and may be expressed in various currencies. A minimum of 7,500 euros must be paid at incorporation and the rest in maximum 5 years. As part of a company formed by a contribution in kind, the capital must be paid within five years. The proof of cash payment is represented by a certificate blocking the funds by the bank. The certificate is handed to the notary at the time of registration. In case the shareholders fail paying in time their contribution to the social capital, the founders who are jointly liable are obliged to pay for shares up to 25%.

The Law of 25 August 2006 has introduced the administrative structure of public limited companies. According to it, the governing body of the company is the Supervisory Board and the Management Board. The articles of incorporation can opt for one of the two formulas: the company is managed by the Board of Directors appointed by the General Assembly or the management is entrusted to the executive board, organ acting under the control of the supervisory board.

Unlike the corporations, the partnerships don’t require a minimum share capital and the liability of the members is unlimited. Only in case of a limited partnership, the limited partner has its personal assets covered in case of liquidation. His/her liability is limited by the contribution to the capital.

Holding Companies also called SOPARFI companies are not a form of separated society. Most often, it is the form of limited company that is chosen and its main purpose is to control other legal entities by acquiring a majority of shares with voting rights in those entities.

Investment funds structures in Luxembourg

Investment funds may simply take the form of joint ownership but they are often made in the form of limited company with fixed capital (SICAF) or variable capital  (SICAV). there is also the possibility of investment companies in risk capital (SICAR). 

Societe d’ Investissement a Capital Variable(SICAV) it’s an open investment plan, organized as a company limited by shares, whose principal objective of  investing in financial assets.

Societe D'investissement A Capital Fixe(SICAF) it’s a type of closed investment scheme that also  operates as a company limited by shares but it’s mostly used for invest in private placements.

Société d’investissement en capital à risqué(SICAR) is established with the objective of facilitating the raising of funds and investing it in risk-bearing capital. It can be established in any form of legal entity. 

Specialized Investment Fund (“SIF”) is a type of fund based on a share capital which amount to at least 1,250,000 EUR payable within the year (12 months) and may be established as a company or a partnership.

These funds are extremely advantageous as are exempt from capital tax, income tax on qualifying income and dividend withholding tax.

Société de Gestion de Patrimoine Familial (SPF) is specially designed for private wealth management and unlike the rest of the funds it allows the individuals to manage their financial assets. It can be set up in any other form of legal entity and cannot have a social object covering business activities. It is exempt from paying income tax, net wealth tax and municipal business tax.

The Commission de Surveillance du Secteur Financier is the competent authority for the supervision of financial companies, other professionals in the financial sector, mutual funds, asset management companies, pension funds, SICAR. It also supervises the markets in financial instruments, including their operators and corporate auditors (auditors).

Our law firm in Luxembourg can offer more information on setting up investment funds in the Grand Duchy.

How to register a company in Luxembourg

No matter the type of company chosen, a foreign investor must register it with the Trade Register in Luxembourg. In the case of investment funds, approval from the CSSF is required after the company is incorporated. The main documents to be prepared in order to register any type of company in Luxembourg are the memorandum and articles of association. These documents can be prepared by attorneys in Luxembourg.

For assistance in opening a company, do not hesitate to contact our Luxembourg law firm.




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