Incorporate Now, Pay Later: Deferred capital payments open door to easier SARL incorporation

On 16 December the government filed a draft law with the Chamber of Deputies. The draft law relates to deferred payment for the minimum share capital for SARL incorporation (N8669).

The draft aims to amend the law of 10 August 1915 on commercial companies, specifically targeting the rules for the incorporation of SARLs in Luxembourg. The main objective is to allow the minimum share capital (currently EUR12,000) to be paid up to 12 months after the company’s formation, rather than requiring full payment at the time of incorporation. Context of the draft bill:

• At present, the entire minimum share capital must be paid at incorporation, a rule dating back to and inspired by French law almost 100 years ago.
• This requirement can delay company formation due to banking procedures and discourage the use of Luxembourg vehicles, especially for investors needing rapid setup.
• France, Germany, Belgium and the Netherlands already allow deferred or partial payment, and some have abolished minimum capital requirements altogether, resulting the current Luxembourg regulations causing competitive disadvantage.

Impact of the draft bill on clients:

• Founders of a SARL can choose to pay the minimum capital in full at incorporation or defer all or part of the payment for up to 12 months after formation. Simplified SARLs (SARL-S) can benefit from deferred payment under the same conditions.
• The deferred payment applies only to cash contributions. Contributions in kind must still be fully paid at incorporation.
• The new regime allows the company to be formed before a bank account is opened, which can be done in the following weeks or months.
• Founders are still responsible for ensuring the capital is fully paid within the 12-month period. If payment isn't made, voting rights attached to unpaid shares are suspended. The name of shareholders who haven't fully paid their shares must be published with the company’s annual accounts.
• The law introduces publicity requirements to inform third parties about unpaid capital.

Our Corporate Team remains available to discuss how these changes may impact your business.