1. Advantages of forming a Public Limited Company (PLC., Corp./SA)

In Luxembourg, the legal structure of the Public Limited Company (PLC., Corp./SA) is used by large- as well as small and medium-sized companies, particularly due to the possibility to issue easily transferable bearer shares. Furthermore, the Public Limited Company (PLC., Corp./SA) is suitable for numerous Luxembourg business forms. This includes, but is not limited to, the SOPARFI-, the Financial Holding, the Trading Company, the Private Asset Management Company and the Securitisation Company (SPV).

I. Legal structure of a Public Limited Company (PLC., Corp./ SA)

1. Concept

The Public Limited Company (PLC., Corp./SA) in Luxembourg is a legal person whose capital is determined in advance and segmented into shares. The assets of a Public Limited Company (PLC., Corp./SA) are wholly liable for the company's liabilities. A Public Limited Company (PLC., Corp./SA) in Luxembourg may be formed for the carrying on of commercial or non-commercial purposes. Moreover, registered shares as well as bearer shares may be issued.

2. Formation

A Public Limited Company (PLC., Corp./SA) in Luxembourg is formed through the recording of the articles of association by a notary . Its articles of association will subsequently be published in the Official Bulletin (Mémorial C) and lodged with Luxembourg's Trade and Companies Register. At least one natural or legal person is required for the said formation. The person may be of any nationality and is not required to be resident in Luxembourg.

3. Minimum capital

The minimum capital of a Public Limited Company (PLC., Corp./SA) in Luxembourg is 31,000 EUR. This requires to be contributed in full in the form of a cash or non-cash contribution.  Non-cash contributions are independently valued by an auditor. When a Public Limited company (PLC., Corp./SA) is formed, at least 25% of the nominal value of every share requires to be paid up. Notwithstanding this, bearer shares will only be issued once the complete capital contribution is made.

4. Shares and the transfer of shares

Bearer shares in a Public Limited Company (PLC., Corp./SA) are transferred through the agreement and transfer of the bearer securities. However, the transfer of registered shares is only effective on a Public Limited Company (PLC., Corp./SA) in Luxembourg if either a transfer statement dated and signed by both the transferor and the transferee is present in the Register of Registered Shares or if  the Public Limited Company (PLC., Corp./SA) has been notified of the transfer or if the said transfer has been accepted by the Public Limited Company (PLC., Corp./SA) in the form of a notarial deed.

5. Organisation

5.1. General meeting

The general meeting of the shareholders is the supreme authority of a Public Limited Company (PLC., Corp./SA) in Luxembourg. It is authorised to make all decisions relating to the Public Limited Company (PLC., Corp./SA) including the appointment of the board of directors. The ordinary general meeting must be convened annually at the date prescribed in the articles of association. Furthermore, the board of directors as well as the auditor of a Public Limited Company (PLC., Corp./SA) in Luxembourg can convene an extraordinary general meeting.  The said meeting shall appoint the board of directors of the Public Limited Company (PLC., Corp./SA).

5.2. Board of directors

The board of directors is responsible for the management and representation of a Public Limited Company (PLC., Corp./SA). It must consist of at least one member (director). However, if a Public Limited Company (PLC., Corp./SA) has more than one shareholder, the board of directors must consist of at least three members (directors). The said members (directors) may be natural or legal persons resident in or outwith Luxembourg. Moreover, it is not required that the members of the board of directors be shareholders of the Public Limited Company (PLC., Corp./SA).   

5.3. Appointment of an auditor

A Public Limited Company may appoint one or more commissaire to supervise the Public Limited Company (PLC., Corp./SA), who may be shareholders or non-shareholders, if the following upper limits are not exceeded: a balance sheet total of 6.25 million EUR, net turnover of 6.25 million EUR as well as having an average number of 50 full-time posts. Where these upper limits are exceeded, an independent auditor must be appointed  to inspect the books.

6. Annual accounts

The annual accounts of a Public Limited Company in Luxembourg (PLC., Corp./SA) consist of the balance sheet, the profit and loss account and the notes thereto. Following their approval, the annual accounts will be lodged with Luxembourg's Trade and Companies Register and published in the Official Bulletin (Mémorial C).

7. Liquidation

If 75% of the share capital of a Public Limited Company (PLC., Corp./SA) in Luxembourg has been lost and 25% of the votes cast at the general meeting are in favour of liquidation, the company shall enter into liquidation.

II. Tax structure of a Public Limited Company (PLC., Corp./SA)

1. Corporate taxation

Since January 1st, 2013, all Public Limited Companies (PLC., Corp./SA) in Luxembourg have been subject to corporate taxation at a rate of 29.22%. This said rate consists of the following components: corporate income tax at a rate of 21% on income exceeding 15,000 EUR (or a rate of 20% for income not exceeding 15,000 EUR); the solidarity surtax at a rate of 7% as well as the municipal business tax at a rate of 6.75%. All Public Limited Companies (PLC., Corp./SA) resident in Luxembourg which do not require a trade licence and whose assets, securities and bank balance together exceed 90% of its balance sheet total are required to pay only the minimum corporate taxation of 3,210 EUR (3,000 EUR plus the 7% solidarity surtax).

Furthermore, Public Limited Companies (PLC., Corp./SA) in Luxembourg are liable to withholding tax at a rate of 15% on their dividend distributions. In contrast thereto, royalty and interest payments as well as proceeds from liquidation or partial liquidation are tax-free.

2. Net wealth tax

Public Limited Companies (PLC., Corp./SA) in Luxembourg are further subject to a net wealth tax at a rate of 0.5%. Public Limited Companies (PLC., Corp./SA) resident in Luxembourg are therefore subject to a net wealth tax on their total assets (assets in and outwith Luxembourg). However, Public Limited Companies (PLC., Corp./SA) not resident in Luxembourg are subject to the said tax on their assets in Luxembourg only.

FORMATION/INCORPORATION/SETTING UP PROCEDURE

For the formation/incorporation/setting up of a company in Luxembourg, the following steps require to be taken:

  • The choosing of the legal form and the company name
  • The drawing up of the articles of association
  • The opening of a company bank account
  • The paying in of the company capital
  • The recording of the articles of association by a notary
  • The registration and publication of the articles of association
  • If applicable, the submission of a trade licence application to Luxembourg's Ministry of Small and Medium-sized Businesses (autorisation d ́établissement)
  • Value-added tax (VAT) registration with Luxembourg's Tax Authority for Direct and Indirect Taxation