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Company Incorporation
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[ BACKGROUND ] [ COMPANY FORMATION
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Geographical Location The Grand Duchy is situated at the crossroads of Europe, in the triangle where the borders of Belgium, France and Germany meet, and covers an area of 2,586 sq km. Climate: modified continental with mild winters, cool summers. Temperatures as low as -15C, while the summer (July, August) temperatures can rise to as high as 35C. Population 429,080 (July 1999 est.). Ethnic groups: Celtic base (with French and German blend), Portuguese, Italian, and European (guest and
worker residents) Language Luxembourgisch, German and French are the official languages. English is also widely spoken, and is used daily in commercial transactions. Currency Luxembourg Franc. 1 Flux equals approximately $0.03. Belgian Francs also circulate freely in Luxembourg, as the two currencies are at par. Exchange Control None. Type of Law Civil Law. Principal Corporate Legislation Commercial Companies Act 1915, as amended.
Type of Company for International Trade and Investment
Procedure to Incorporate The Acte de Constitution, the Articles of Incorporation have to be prepared in the form of a deed. This deed should include:
In addition to the aforementioned a Certificate of name acceptability issued by the Trade Registry is required, together with a Certificate of Blockage produced by the proposed company's Luxembourg Bankers confirming that the paid up capital is deposited with them. The aforementioned documents and information then have to be presented before a Notary Public by the proposed company's appointed representative. After notarisation the Notary Public lodges the Articles of Incorporation and Bye-Laws with the Department of Registration and Trade Registry. The Articles of Incorporation are then published in the Official Gazette. Restrictions on Trading A 1929 Holding Company may not:
A 1929 Holding Company may:
The 1990 normal Luxembourg Trading and Investment Company with SOPARFI provisions has no trading restrictions other than without the appropriate licences it may not undertake the business of Banking, Insurance, Assurance, Re-Insurance, Fund Management, Collective Investment Schemes and any other activity that may suggest an association with the banking and insurance industries. The real advantages of a 1990 normal Luxembourg Trading and Investment Company with SOPARFI provisions can be summarised as follows: Companies investing in shares can benefit from the affiliation privilege; which means that these companies are fully subject to corporation tax, but exemptions are granted by law for dividends received from shareholdings; capital gains made on the sale of shareholdings; liquidation gains on liquidation of companies in which shares are held. This corporate tax exemption is granted with the following conditions: Dividend and liquidation gains exemption on shareholdings of at least 10% or a cost of at least LFR 50 million held at the start of the financial year of receipt, and at least 12 months prior to the end of the financial year of receipt.
Powers of Company As dictated by the objects in the articles of incorporation. Language of legislation and corporate documents The Legislation is published in both French and German. The corporate documents can be in any language, provided they are accompanied by a French or German translation. Registered Office Required Yes, must be maintained in Luxembourg. Shelf Companies available Due to the costs associated with incorporation and paid up capital requirements, shelf companies are not available. Time Scale to Incorporate Subject to adhering to the prerequisite criteria, a company can be incorporated in one day. Name Restrictions Any name that is similar or identical to an existing name. Any name of a major international corporation, where written consent to incorporate is not available. Any name which in the opinion of the Trade Registry is undesirable or offensive. There are no other specific rules regarding name restrictions. However it is normal practice for the Trade Registry to refuse names that are associated with the banking and insurance industries and any name that would suggest Government patronage. Language of Name Can be in any language using the Latin alphabet.. The Public Registry may request a French or German translation if a foreign language is used. Names requiring Consent or a Licence The French and German names for Bank, Buildings Society, Savings, Insurance, Assurance, Re-Insurance, Fund Management, Investment Fund, Council, Municipal, Co-operative or the foreign language equivalent. Suffixes to denote Limited Liability "Société Anonyme or "S.A." Disclosure of Beneficial Ownership to Authorities No.
SHARE CAPITAL, TAXATION, LICENCE FEES AND COMPLIANCE MATTERS Authorised and Issued Share Capital The minimum Authorised Share Capital of a 1929 Holding Company and a 1990 Company with SOPARFI provisions is 1,250,000 Flux ($45,000) all of which has to be issued and fully paid up. The capital can be expressed in any currency. Classes of Shares Permitted
Bearer Shares Permitted Yes, but must be fully paid. Taxation A 1929 Holding Company is exempt from local taxation, but pays 0.2% per annum on its share capital, which is payable quarterly. A Company with SOPARFI (Société de Participation Financière) provisions is subject to the normal rate of taxation (39%), but subject to certain conditions (as detailed under "Restrictions on Trading") dividends received and capital gains are exempt from taxation. Double Taxation Agreements Luxembourg has entered into many double taxation agreements. As 1929 Holding Companies are exempted from local taxation, they are excluded from benefit of the Agreements. Luxembourg companies with SOPARFI provisions may access Luxembourg's extensive treaty network. The centres include: Austria, Italy, Belgium, Japan, Brazil, Morocco, Bulgaria, Netherlands, The Czech and Slovak Republics, Russia, Denmark, South Korea, Finland, Spain, France, Sweden, Germany, Switzerland, Greece, CIS (air traffic treaty only), Hungary, United Kingdom, Iceland (air traffic only), United States of America and Ireland Licence Fees Not applicable. Financial Statement Requirements Yes. An annual audit is compulsory.
Directors The minimum number of directors is three. They may be natural persons or bodies corporate. They may be of any nationality and need not be resident in Luxembourg. Company Secretary The Luxembourg Companies Acts do not provide for the appointment of a company secretary. Shareholders The minimum number of shareholders is two. |
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