Legal Alert – Share Capital Payment and Company Incorporation
The amount of capital to be subscribed and paid up
The amount of capital to be subscribed and paid up is a key factor when determining which corporate form best meets the needs of a future entrepreneur.
Until now, Luxembourg law has provided that:
- the share capital of a public limited company (société anonyme – S.A.) must amount to at least EUR 30,000, must be fully subscribed upon incorporation, and each share must be paid up to at least one quarter (Article 420-1 of the amended Law of 10 August 1915 on commercial companies – the “1915 Law”);
- the share capital of a private limited liability company (société à responsabilité limitée – S.à r.l.) must amount to at least EUR 12,000 and must be fully subscribed and paid up upon incorporation (Articles 710-5 and 710-6 of the 1915 Law).
Facilitating the incorporation of SMEs with limited resources
In order to facilitate the incorporation of SMEs with limited financial resources, the Luxembourg legislator had already introduced the possibility for an individual shareholder to incorporate a simplified private limited liability company (S.à r.l.-S.) with a share capital of EUR 1, with the balance to be funded from future profits until the minimum amount of EUR 12,000 is reached (Articles 720-1 to 720-6 of the 1915 Law).
While this development has enabled many entrepreneurs to launch a business with limited funds, it should be noted that simplified private limited liability companies are less resilient in the event of financial difficulties, as their very low share capital is often insufficient to cover initial start-up costs.
Difficulties that may delay the incorporation of a company
That being said, another difficulty often delays the launch of a company: the opening of a bank account, which is currently required in order to pay in and block the initial share capital.
Against this background, and based on the observation that “the mandatory payment in full of the share capital upon incorporation no longer meets the requirements of today’s business environment, which calls for greater flexibility in this respect. The burden of this requirement effectively hinders access by economic operators to Luxembourg companies. Except where a company is incorporated by means of contributions in kind, it requires a bank account to be opened even before the S.à r.l. can be incorporated. However, in some cases, the process of opening such a bank account may take a significant amount of time in light of the verification obligations imposed by financial regulations”, the Government submitted Bill No. 8669 to the Chamber of Deputies on 16 December 2025 concerning the deferred payment of the minimum share capital of private limited liability companies.
What does the Bill provide?
The Bill continues to require the share capital to be fully subscribed upon incorporation but provides, for private limited liability companies, that the shares must be fully paid up within twelve months from the date of incorporation.
The Bill would therefore make it possible to incorporate a private limited liability company without first opening a bank account.
However, this does not change the fact that the entrepreneur will still need to find a way to finance the initial start-up costs, such as notarial fees, legal fees, accounting costs and initial inventory.
Any amounts advanced would give rise to a debt owed by the company to its shareholder, which could subsequently have been converted into share capital.
The Bill nevertheless provides that the deferred payment of the initial share capital and any related share premium will only be permitted in the case of cash contributions.
It remains to be hoped that this relaxation of the capital payment rules will not be misused by dishonest entrepreneurs to incorporate companies at minimal cost without any genuine prospects of viability.
The liability of the founders will, however, extend to the effective payment of the initial share capital, where applicable after expiry of the twelve-month period provided for by the Bill, which should provide a sufficient deterrent.
➡️ For any questions, please contact Nicolas Bernardy.