Introduction
Luxembourg’s company law framework — established by the Law of 10 August 1915 on commercial companies (“1915 Law”) and modernised in 2016 — underpins the country’s corporate ecosystem.
On 16 December 2025, the Government filed Draft Law n° 8669, proposing key amendments aimed at modernising and simplifying company formation and capitalisation requirements. These changes respond to market feedback on bottlenecks in structuring vehicles, particularly private limited liability companies (sociétés à responsabilité limitée – S.à r.l.), and to competitive pressures from neighbouring jurisdictions.
Key Points of the Proposed Reform
- Deferred Payment of Minimum Share Capital
Under the current regime, a Luxembourg S.à r.l. must have a minimum share capital of €12,000 fully paid up before incorporation. The draft law would allow founders to defer full payment (including any share premium) for up to twelve (12) months after incorporation, provided this is laid out in the articles of association. Delayed payment can cut through delays caused by bank account setup and AML/KYC checks, which often slow incorporation.
- Retained Subscription Requirement
While payment can be deferred, full subscription of the capital at incorporation will remain mandatory. The reform does not permit partial subscription.
- Scope and Limitations
- Only cash contributions relating to the minimum share capital requirement are eligible for deferral; contributions in kind remain fully payable at incorporation.
- Capital in excess of the statutory minimum and capital increases post-incorporation (including any share premium) must stay fully paid up at the time of issuance.
- Corporate Governance and Transparency Measures
To protect creditors and outsiders, the draft introduces requirements for disclosure of unpaid capital alongside annual accounts. Additionally, shareholders who fail to pay called-up amounts may see their voting rights suspended until payment.
Liability and Safeguards
The draft law aligns elements of the S.à r.l. regime with that of public limited companies (Sociétés anonymes – S.A.), especially regarding liability for unpaid capital:
- Founders’ Joint and Several Liability: Founders would remain jointly and severally liable for unpaid capital after the 12-month period expires.
- Transfer of Shares: Should unpaid shares be transferred, liability adjustments ensure that obligations persist against transferees and their successors.
- Voting Rights Suspension: Non-payment triggers suspension of voting rights — a practical lever encouraging compliance.
Market Impact and Outlook
If adopted, the reform would represent a significant evolution of Luxembourg’s corporate framework by:
- Reducing friction in company incorporation and structuring;
- Aligning Luxembourg more closely with EU peers that allow deferred capital payment or have abolished minimum capital regimes altogether;
- Enhancing competitiveness and attractiveness for investment funds, private equity, SMEs, and special purpose vehicles.
However, this flexibility is balanced with creditor protection and legal certainty, core pillars of Luxembourg company law.
Introduction
Luxembourg’s company law framework — established by the Law of 10 August 1915 on commercial companies (“1915 Law”) and modernised in 2016 — underpins the country’s corporate ecosystem.
On 16 December 2025, the Government filed Draft Law n° 8669, proposing key amendments aimed at modernising and simplifying company formation and capitalisation requirements. These changes respond to market feedback on bottlenecks in structuring vehicles, particularly private limited liability companies (sociétés à responsabilité limitée – S.à r.l.), and to competitive pressures from neighbouring jurisdictions.
Key Points of the Proposed Reform
- Deferred Payment of Minimum Share Capital
Under the current regime, a Luxembourg S.à r.l. must have a minimum share capital of €12,000 fully paid up before incorporation. The draft law would allow founders to defer full payment (including any share premium) for up to twelve (12) months after incorporation, provided this is laid out in the articles of association. Delayed payment can cut through delays caused by bank account setup and AML/KYC checks, which often slow incorporation.
- Retained Subscription Requirement
While payment can be deferred, full subscription of the capital at incorporation will remain mandatory. The reform does not permit partial subscription.
- Scope and Limitations
- Only cash contributions relating to the minimum share capital requirement are eligible for deferral; contributions in kind remain fully payable at incorporation.
- Capital in excess of the statutory minimum and capital increases post-incorporation (including any share premium) must stay fully paid up at the time of issuance.
- Corporate Governance and Transparency Measures
To protect creditors and outsiders, the draft introduces requirements for disclosure of unpaid capital alongside annual accounts. Additionally, shareholders who fail to pay called-up amounts may see their voting rights suspended until payment.
Liability and Safeguards
The draft law aligns elements of the S.à r.l. regime with that of public limited companies (Sociétés anonymes – S.A.), especially regarding liability for unpaid capital:
- Founders’ Joint and Several Liability: Founders would remain jointly and severally liable for unpaid capital after the 12-month period expires.
- Transfer of Shares: Should unpaid shares be transferred, liability adjustments ensure that obligations persist against transferees and their successors.
- Voting Rights Suspension: Non-payment triggers suspension of voting rights — a practical lever encouraging compliance.
Market Impact and Outlook
If adopted, the reform would represent a significant evolution of Luxembourg’s corporate framework by:
- Reducing friction in company incorporation and structuring;
- Aligning Luxembourg more closely with EU peers that allow deferred capital payment or have abolished minimum capital regimes altogether;
- Enhancing competitiveness and attractiveness for investment funds, private equity, SMEs, and special purpose vehicles.
However, this flexibility is balanced with creditor protection and legal certainty, core pillars of Luxembourg company law.