Introduction

Luxembourg’s company law framework — established by the Law of 10 August 1915 on commercial companies and modernised in 2016 — underpins the country’s corporate ecosystem.

On 29 May 2026, the law of 18 May 2026 – proposing key amendments aimed at modernising and simplifying company formation and capitalisation requirements – was published in the Luxembourg Official Journal (the “Law”). The Law entered into force on June 2, 2026. 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.

1. Key Points of the Law

a. Deferred Payment of Minimum Share Capital

Under the previous regime, a Luxembourg S.à r.l. must have a minimum share capital of €12,000 fully paid up before incorporation. The Law now allows founders to defer full payment of the share capital 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.

b. Retained Subscription Requirement

While payment can be deferred, full subscription of the capital at incorporation remains mandatory. The Law does not permit partial subscription.

2. 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 share premium shall be fully paid up at the time of the incorporation.
• Capital increases post-incorporation (including any share premium) must stay fully paid up at the time of issuance.

3. Corporate Governance and Transparency Measures

To protect creditors and outsiders, the Law introduced 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.

4. Liability and Safeguards

The Law aligned 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’ liability: Founders will remain 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.

5. Market Impact and Outlook

The Law represents 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.