Digitalization revolutionizes corporate law
On 15 February 2022, the bill of law n°7968 transposing Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 on the use of digital tools and processes in company law (the Bill) was tabled with the Chamber of Deputies of Luxembourg.
The Bill intends to modernize the Civil Code and the law of 9 December 1976 on the organisation of the profession of notary, as amended, by introducing the possibility to enact authentic deed in electronic form. In this context, the Bill also aims at modifying the law of 10 August 1915 on commercial companies, as amended, to facilitate the use of digital technologies throughout the life cycle of companies.
The Bill provides that public limited liability companies (S.A.), private limited liability companies (S.à r.l.) and corporate partnerships limited by shares (S.C.A.) will be able to be incorporated through an authentic deed in electronic form. In practice, this means that the founder(s) (or their authorized representative(s)) can either be physically present in front of the relevant notary, with the authentic deed being drawn-up in electronic form or in the non-electronic format, or, alternatively, sign the incorporation deed remotely through electronic signature(s) without being physically present in front of the notary. In the latter scenario, the notary may require the parties to use a qualified electronic signature.A notarial electronic exchange platform will be created to allow for the drawing-up of authentic deeds in electronic form. Where the authentic deed in electronic form is being signed remotely by the founder(s), the latter will need to receive access to such exchange platform under the supervision of the notary.
Under the Bill, it will also be possible to pay the share capital in cash online in an account established in the name of the company to be incorporated, with a proper credit institution established in an EU Member State. The proof of payment can also be provided online.In accordance with the Bill, a notary would only be authorised to refuse to enact a deed electronically in case the share capital would be paid up in kind or if they have grounds to suspect identity fraud or non-compliance with the rules applicable to the legal capacity or powers of representation by one party to the deed.
In addition, the Bill also provides that branches of Luxembourg S.A.s, S.à r.l.s and S.C.A.s which have been established in the territory of EU Member State, will need to be registered with the Luxembourg Trade and Companies Register.
Finally, the Bill also includes provisions to improve the exchange of information flow between Member States' business registers. In this context, the Bill then intends to further modify the law of 19 December 2002 on the Trade and Companies Register as well as the accounting and annual accounts of companies.