Luxembourg S.A. (Public limited liability company)

This guide provides an overview of the formation, capital requirements, governance and tax treatment of a Luxembourg S.A. (public limited company), a widely used corporate structure in Luxembourg for medium to large businesses, investment vehicles, capital-raising structures and group holding companies. It is provided for general information purposes only and does not constitute legal, tax, accounting or other professional advice under Luxembourg law or practice. No reliance should be placed on the information contained herein. Specific advice should be sought in relation to particular circumstances.

A Luxembourg S.A. is a capital company governed by Luxembourg law. Shareholders’ liability is limited to their investment in the company. 

The share capital of a Luxembourg S.A. may be paid in by way of contributions in cash, contributions in kind, or a combination thereof.

Cash contributions

Where contributions are made in cash, at least 25% of the nominal value of each share subscribed must be paid up at incorporation. In practice, the paid-up amount is deposited into a blocked bank account opened in the name of the company in formation. The bank issues a capital deposit certificate (blocking certificate) confirming receipt of the funds, which is customarily provided to the notary prior to execution of the notarial deed of incorporation. Following execution of the notarial deed and completion of the incorporation formalities, the funds are typically released upon presentation of the relevant notarial documentation to the bank.

Contributions in kind

Where the share capital is paid in by way of contributions in kind, no blocked bank account is required. Contributions in kind must be fully contributed at incorporation and are described and valued in the notarial deed. An independent auditor’s report issued by a réviseur d’entreprises agréé is required by law and must be made available to the notary prior to incorporation. The report must confirm that the value of the contributed assets corresponds at least to the nominal value (and any share premium) of the shares issued in consideration thereof.

A Luxembourg S.A. is incorporated by notarial deed. The company acquires legal personality upon execution of the notarial deed. Filing and publication with the Luxembourg Trade and Companies Register (RCS) are required for opposability vis-à-vis third parties.

The articles of association set out the company’s structure and include, among other matters:

• company name and legal form
• registered office
• corporate purpose
• share capital and authorised capital, if any
• share classes and characteristics
• governance structure and allocation of powers
• duration of the company
• incorporation costs

The minimum share capital of a Luxembourg S.A. is EUR 30,000, which must be fully subscribed and, in the case of cash contributions, at least 25% paid up at incorporation.

Contributions forming part of the share capital may be made in cash or in kind. Contributions in kind must be fully contributed at incorporation. Contributions in kind must be described and valued in accordance with the applicable statutory rules and are, in principle, subject to an independent valuation report prepared by an approved statutory auditor, subject to statutory exemptions.

Shares in a Luxembourg S.A. may be issued with or without nominal value and may be divided into one or more classes with different economic and/or voting rights, as provided in the articles of association (including, as applicable, ordinary shares and other classes commonly referred to as “preferred” shares), subject to the applicable statutory conditions.

As regards form, shares must be issued in registered form until fully paid up. Once fully paid up, shares may be issued in registered form or, where the relevant statutory and settlement conditions are met, in dematerialised form. Bearer shares may be issued only once fully paid up and are subject to strict statutory immobilisation and transparency requirements (including immobilisation with an authorised depositary) and are therefore rarely used in practice.

In connection with the issuance of shares, a Luxembourg S.A. may provide for the payment of a share premium (prime d’émission) in addition to the nominal value (if any) of the shares. Any such share premium must be fully paid up upon issuance and is allocated to a non-distributable reserve, subject to the conditions set out in Luxembourg law and the articles of association.

In addition, an S.A. may issue profit shares (parts bénéficiaires) and other securities that do not form part of the share capital, subject to the conditions set out in Luxembourg law and the articles of association.

Shares in a Luxembourg S.A. are, in principle, freely transferable, subject to any restrictions provided for in the articles of association. Transfer restrictions may also be set out in shareholders’ agreements, which are generally enforceable between the parties thereto.

The mechanics of share transfers depend on the form of the shares (registered, bearer or dematerialised) and the applicable registration, custody or settlement arrangements.

A Luxembourg S.A. may adopt either:
• a one-tier system (board of directors), or
• a two-tier system (management board and supervisory board),
as specified in the articles of association. 

Under a two-tier system, the management board is responsible for managing the company and representing it vis-à-vis third parties, under the ongoing supervision of the supervisory board. Members of the management board and the supervisory board may not sit on both bodies simultaneously. 

Day-to-day management and representation may be delegated to one or more persons acting alone or jointly, in accordance with the articles of association or by decision of the competent management body, without affecting the overall responsibility of the members of the management bodies. 

Shareholders exercise their rights through general meetings, which may be ordinary or extraordinary.

The general meeting decides in particular on:

• approval of annual accounts and allocation of results
• appointment and dismissal of directors or board members
• capital increases or reductions
• amendments to the articles of association
• mergers, demergers, conversion and liquidation

Voting rights are attached to the shares, subject to any classes of shares or arrangements provided for in the articles.

Shareholders’ liability is limited to their contribution to the share capital. 

Directors, management board members and, where applicable, supervisory board members may incur liability towards the company and, in certain circumstances, towards third parties, in the event of breaches of law, violations of the articles of association or misconduct in the performance of their mandate.

A Luxembourg S.A. must appoint one or more statutory auditors (commissaires) to supervise the company’s accounts, unless it appoints or is required by law to appoint one or more approved statutory auditors (réviseur(s) d’entreprises agréé(s)).

An approved statutory auditor must be appointed where the S.A. exceeds, for two consecutive financial years, at least two of the following thresholds:
• a balance sheet total exceeding EUR 4.4 million;
• net turnover exceeding EUR 8.8 million;
• an average workforce exceeding 50 full-time employees.

Where these thresholds are met, the approved statutory auditor is responsible for carrying out the legal audit of the annual financial statements. An S.A. may also voluntarily appoint an approved statutory auditor even where these thresholds are not met.

Our corporate team advises clients on the establishment and ongoing operation of a Luxembourg companies, including private limited liability companies (S.à r.l.); public limited liability companies (S.A.), corporate partnerships limited by shares (S.C.A.), common limited partnership (SCS) and special limited partnership (SCSp)and in particular:

• Advising on the choice and structuring of the appropriate Luxembourg corporate vehicle, taking into account your commercial objectives, governance requirements, shareholder arrangements, financing structure and tax considerations;
• Assisting with the incorporation of Luxembourg S.A., S.à r.l. and S.C.A., including the drafting of articles of incorporation, notarial deeds and relevant filings.
• Structuring and establishing holding companies, acquisition vehicles, financing companies, joint venture entities and special purpose vehicles (SPVs) in a Luxembourg and cross-border context.
• Coordinating with notaries, banks and other service providers, including assistance with bank account openings, and corporate secretarial set-up.
• Providing ongoing corporate and governance support throughout the life of the company, including amendments to the articles of association, changes to share capital, transfers of shares, reorganisations, mergers, demergers and liquidations.
• Advising on directors’ duties, shareholder rights and corporate governance matters, including board composition, delegation of powers and decision-making processes.
• Assisting with shareholder arrangements and ancillary documentation, including review and negotiation of shareholders’ agreements, investment agreements and related corporate documentation.
• Keeping clients informed of relevant legal and regulatory developments affecting Luxembourg corporate structures and company law.