Luxembourg Corporate Law Reform Enhancing Flexibility in the Incorporation of Private Limited Liability Companies Now in Effect

Following publication in the Official Journal of the Grand Duchy of Luxembourg on June 1, 2026, the Luxembourg law, adopted on April 28, 2026 and amending the Law of August 10, 1915 on commercial companies (as amended) with a view to introducing a deferral of the payment of the minimum share capital for private limited liability companies (the Law), came into force on June 2, 2026. As a reminder, the Law allows the statutory minimum share capital of a new private limited liability company (société à responsabilité limitée) (SARL) to be paid within 12 months of its incorporation, as opposed to the previous requirement that all the initial share capital be paid into its bank account prior to its incorporation. By permitting the SARL to be incorporated without requiring the opening and funding of a bank account, the Law is giving market players greater flexibility.

Context

With some limited exceptions (such as a contribution in kind instead of a contribution in cash or other electronic banking solutions), previously, a SARL required a minimum share capital of €12,000, fully subscribed and paid up at incorporation, with founding shareholders obligated to open a bank account and deposit the entire amount beforehand. This requirement combined with the practical complexity of opening bank accounts delayed the SARL’s market entry and prevented incorporation at short notice.

Main Changes Introduced by the Law

The Law preserves the requirement that all shares have to be subscribed for at incorporation but, importantly, allows shareholders up to 12 months following the SARL's incorporation to pay the cash contributions they have committed. This deferral option is available for cash contributions (as opposed to contributions in kind, which still must be made at incorporation) of €12,000. Under the Law, any amount exceeding the minimum share capital requirement must still be paid in full at the outset. This is likely to limit the ability of SARLs incorporated in a currency other than euro (a non-euro SARL) to benefit from the deferral. A non-euro SARL would typically set its minimum share capital slightly above the €12,000 equivalent to guard against shortfalls from foreign exchange fluctuations. However, where the conversion exceeds €12,000, the SARL cannot rely on the deferral.

Importantly, following parliamentary amendments raised by the Justice Commission (Commission de la Justice), the deferred payment mechanism is expressly restricted to the minimum share capital of €12,000 with the exclusion of any issue premium. Where an issue premium is contemplated, its amount must be paid in full at the time of incorporation, regardless of whether the related share capital itself benefits from the deferred payment mechanism. This represents a change from the position initially set out in the draft bill of the Law.

It is important to note that the deferred payment regime is only available at the time of the SARL's incorporation. If further shares are issued after incorporation, those shares have to be fully paid at the time of issuance, as does any related issue premium.

Articles of Incorporation

Deferred payment is an option, but not an obligation. Where a SARL proposes to avail itself of the deferred payment mechanism, the terms and timing for the payment of the deferred amount must be set out in the SARL's articles of incorporation. The articles of incorporation should clearly address the payment timetable, the process for calling capital, notification requirements, and the consequences of non-payment, as broadly worded provisions may create uncertainty as to when amounts become payable and may complicate the enforcement of capital calls. It should also be noted that the Law expressly provides that capital calls for the purposes of paying up the share capital fall within the competence of the SARL’s management body. This express attribution of competence was not included in the original version of the draft bill of the Law but was introduced by a parliamentary amendment to prevent any misunderstanding.

Consequences of Non-Payment and Transfer of Partly Paid Shares

If a shareholder fails to pay the amounts due following a valid and due call for funds, the Law provides that the voting rights attached to the unpaid shares will be suspended until full payment. The shareholder remains liable for the unpaid amount.

Share transfers involving partly paid shares require careful consideration of the deferred payment regime. The transfer documentation should clearly set out the outstanding amount, identify which party is responsible for future capital calls and from what date that responsibility takes effect, and include appropriate protections for the parties in respect of any unpaid share capital.

The Law further aligns the SARL regime with rules applicable to public limited liability companies (sociétés anonymes), notably by extending the founding shareholders' liability to cover the effective payment of the capital, including where payment has not been made within the 12-month period.

Transparency Requirements

Where a SARL avails itself of the deferred payment mechanism, the Law introduces a transparency obligation requiring the identity of shareholders who have not yet fully paid up their shares, and details of the amounts remaining due, to be disclosed in the company's accounting documentation and published after the balance sheet. Unpaid share capital therefore becomes externally visible information rather than a purely internal matter, and companies opting into the new regime should factor this into their governance and investor relations considerations from the outset.

Conclusion

With the Law now in effect, the process for establishing SARLs has been accelerated, enabling private equity, real estate and other alternative-asset managers, as well as corporate groups, to set up Luxembourg SPVs or subsidiaries swiftly and with greater flexibility for transactional purposes.

The Law does not remove banking or KYC/AML requirements. The practical benefit of the reform lies in decoupling the timing of incorporation from the prior opening of a bank account. A SARL can now be incorporated before a bank account is opened, but the relevant onboarding processes will still need to be completed in due course.