Public Limited Company (SA)

This page was last modified on 17-10-2016

The public limited company (société anonyme - SA) together with the limited liability company (société à responsabilité limitée - SARL) is one of the most common legal forms in Luxembourg. This form of company offers many advantages, namely in terms of limited liability (liability is limited to the level of contribution) and regulated access to capital.

In Luxembourg, an SA is often chosen as a form of company for large businesses, but it is also an option for SMEs as the shares in such companies can be bearer shares and are therefore more easily transferable.

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Who is concerned

Owing to its characteristics, an SA is suitable for a wide range of business activities of different sizes, offering legal and natural persons the possibility to:

  • promote the development of the business by bringing new shareholders;
  • access the financial markets (capital markets).

For shareholders, the main attraction is the limitation of their liability to the level of their contribution to the capital and the possibility of operating in relative anonymity

Prerequisites

There is no legal restriction on access to the legal form of an SA. It is nevertheless useful to be aware of the main administrative constraints specific to an SA, namely:

  • the obligation to draw up a notarised deed;
  • requirement of a report from a statutory auditor (réviseur d’entreprises) in the case of a contribution other than in cash;
  • significant obligations in respect of accounting;
  • organisational model which makes decision-making more cumbersome;
  • creation of specialised committees.

How to proceed

Creation of the company

Constitutional documents

  • by notarised deed;
  • lodging with the Trade and Companies Register (registre de commerce et des sociétés - RCS) for the purpose of publication in the electronic compendium of companies and associations (Recueil électronique des sociétés et associations - RESA) and registration of the company.

Duration

unlimited, unless otherwise specified in the articles of association;

Capital

Conditions

  • minimum EUR 30,000;
  • must be fully subscribed and at least one quarter of the nominal value of each share paid up;
  • contributions in cash or in kind;
  • contributions in kind must be covered by an assessment report drawn up by a statutory auditor (réviseur d’entreprises);
  • in the event of a capital increase, the shareholders are granted preferential subscription rights (except where a justified subscription limit has been decided during an extraordinary general meeting).

Form of shares

  • fully paid up bearer, registered or dematerialized shares;
  • partially paid up shares remain registered shares until they are fully paid up;
  • shares can indicate a nominal value (each share must be of equal value, minimum EUR 1.24) or not indicate any nominal value.
Registered or bearer shares may be converted into dematerialized shares by recording them in a securities account managed by an account holder, provided the conversion is foreseen by the articles of association.

Transfer of shares

  • the transfer of registered shares only affects the company if one of the two following procedures is completed:
    • declaration of transfer in the share register, dated and signed by the assignor and the assignee;
    • notification of the transfer to the company or acceptance of the transfer by the company recorded in an authentic deed.
  • transfer of bearer shares is carried out between parties by exchange of consents and with third parties by transfer of the share certificate.
  • the transfer of dematerialized shares is carried out by bank transfer.

Shareholders

Number

Public limited companies can be formed by a natural or a legal person.

Liability

  • the shareholders are liable up to the level of their contributions to the share capital;
  • the founders are jointly and severally liable towards third parties:
    • for the capital not validly subscribed and for the difference between the minimum capital requirements and the amount of the subscriptions;
    • for the effective payment of 25 % of the subscribed shares, and for the payment, within five years, of shares issued against contributions other than in cash;
    • for the redress of damage arising from either the nullity of the company or the absence or non-conformity of statements in the company deed or object.

Shareholders’ meetings

  • ordinary and extraordinary general meetings, convened by the board of directors or the auditors;
  • if the way in which general meetings are convened is not defined in the articles of association, it is necessary to follow the procedure foreseen by the law.

Day-to-day management and status of the business managers

There are 2 systems for administering an SA: the traditional (monistic) system with a board of directors and the dual system composed of a management board responsible for day-to-day management of the company and a supervisory board responsible for monitoring the work of the management board.

Monistic system (board of directors)

  • the shareholders’ general meeting appoints the members of the board of directors (directors). Statutory minimum: 3 (except where the company only has one shareholder: 1);

  • directors may be natural or legal persons;

  • a director’s term of office is limited to 6 years with the possibility of re-election;

  • the directors do not enter into any personal commitment concerning the company.
    They are liable for faults, misdemeanours and offences committed during their term of office.

Dual system (management board and supervisory board)

  • supervisory board:

    • the shareholders’ general meeting appoints the members of the supervisory board. Statutory minimum: 3 (except where the company only has one shareholder);

    • members of the supervisory board can be natural or legal persons;

    • the term of office of a member of the supervisory board is limited to 6 years with the possibility of re-election;

    • the directors take no personal obligation concerning the commitments of the company.
      They are liable for faults, misdemeanours and offences committed during their term of office.

    • a member of the management board cannot be a director.

  • management board:

    • the shareholders’ general meeting or the supervisory board appoints the members of the management board (the directors);

    • the number of directors is laid down in the articles of association or, failing that, by the supervisory board (companies with capital < EUR 500,000 or those with only one shareholder may have only one director);

    • directors may be natural or legal persons;

    • the term of office for members of the management board is limited to 6 years with the possibility of re-election;

    • management board members do not enter into any personal commitment concerning the company.
      They are liable for faults, misdemeanours and offences committed during their term of office.

    • a director can not be a member of the supervisory board.

Accounting aspects

Accounting and financial information

  • obligation to produce: balance sheet, profit and loss account, notes to the financial statements and management report, which must be approved by the shareholders’ general meeting;
  • the annual accounts, the management report and the report of the auditor (commissaire aux comptes) or of the statutory auditor (réviseur d’entreprises) must be lodged with the Trade and Companies Register (Registre de Commerce et des Sociétés - RCS) within 7 months of the financial year-end (6 months to hold the meeting plus 1 month as from the meeting);
  • SAs can draw up an abbreviated balance sheet if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:
    • balance sheet total: EUR 4.4 million;
    • net turnover: EUR 8.8 million;
    • average number of staff: 50;
  • SAs can combine certain headings in the profit and loss accounts if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:
    • balance sheet total: EUR 20 million;
    • net turnover: EUR 40 million;
    • average number of staff: 250.

The accounts must be drawn up according to the "Lux Gaap" rules.

Controlled supervision of the company

  • Supervision by one or more statutory auditors (réviseurs d’entreprises) is mandatory in all companies which, on the balance sheet date after two consecutive financial years, exceed 2 out of 3 of the following criteria:
    • balance sheet total: EUR 4.4 million;
    • net turnover: EUR 8.8 million;
    • average number of staff: 50;
  • for companies that do not exceed these criteria, supervision is nevertheless mandatory by one or more internal auditors (commissaires aux comptes), whether they are shareholders or not.

Tax aspects

Who to contact

14, rue Erasme
L-1468 - Luxembourg
Luxembourg
Phone: (+352) 42 39 39 - 330
Email info@houseofentrepreneurship.lu

Opening hours
from 8.30 to 18.00
Chamber of Skilled Trades and Crafts
2, Circuit de la foire internationale
L-1347 - Luxembourg-Kirchberg
Postal box B.P. 1604 / L-1016
Luxembourg

Email contact@cdm.lu