Luxembourg SARLs: Deferred payment of share capital

Background

The law of 18 May 2026, derived from Draft Bill No. 8669, introduces the possibility of deferred payment of the minimum share capital for private limited liability companies (Société à Responsabilité Limitée – “SARL”) (the “Law”). The Law was published on 29 May 2026 in the Official Journal of the Grand Duchy of Luxembourg (Journal official du Grand-Duché de Luxembourg) and entered into force on 2 June 2026.

The Law aims principally to enhance Luxembourg’s competitiveness as a financial hub and to align Luxembourg’s legal framework on the minimum share capital for private limited liability companies with the flexibility offered in neighbouring jurisdictions. In doing so, it seeks to address “time-to-market” challenges stemming from practical hurdles connected to the opening of a bank account. These hurdles have numerous side effects on the post-incorporation life of a company and may be particularly acute in transactional contexts.

While the reform introduces welcome flexibility, it does not fundamentally eliminate the practical bottlenecks associated with bank account opening, which remain the key constraint in SARL incorporations. Moreover, the Law, in its adopted limited scope, leaves a number of practical aspects unaddressed, which coordinated efforts to develop good market practices and to implement efficient and robust mechanisms in practice.

Overview of the deferred share capital payment regime for SARLs

The Law provides founders of SARLs the option to defer payment of share capital up to the statutory minimum of €12,000. Unless a shorter period is specified in the articles of association upon incorporation, payment may be deferred up to 12 months from incorporation. The shares must still be fully subscribed at incorporation, even if payment is deferred.

The flexibility offered by the Law is strictly limited to cash contributions and applies only up to the minimum capital amount. Shares issued in exchange for contributions in kind and amounts exceeding the minimum share capital requirement of €12,000 must be paid in full at the time of incorporation. Furthermore, the deferral regime applies exclusively to shares subscribed at the time of incorporation and does not extend to shares issued in subsequent capital increases.

Following the recommendation provided in the opinion of the Chamber of Notaries (Avis de la Chambre des Notaires) of 26 February 2026, the Law excludes the possibility of deferring the payment of share premium upon incorporation. Share premium must therefore be paid at the time of the incorporation.

In summary, the payment deferral is only possible for:

• Shares subscribed at the time of the SARL's incorporation;
• Subscriptions for such shares made in exchange for cash contributions; and
• Shares representing the minimum share capital amount of €12,000 (or the equivalent in foreign currency), to the exclusion of any share premium.

Practical safeguards

The Law requires the publication, together with the annual accounts, of a list of shareholders who have not fully paid up their shares, including the outstanding amounts. However, do not provide immediate public disclosure, as they must be prepared and approved within six months from the end of the financial year. Furthermore, for a newly incorporated entity, the first financial year is in principle longer, therefore this publicity function of the annual accounts would need to be supported by more dynamic methods. We can anticipate that, in practice, the publicity function will be ensured primarily by the filing and publication of the incorporation deed and the articles of association with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés – “RCS”).

Furthermore, we believe that the RCS will play a proactive role and will, by default, include on any extract the relevant information regarding any deferral of share capital, as is currently the case for public limited companies (Sociétés Anonymes).

Importantly, shareholders remain liable for unpaid amounts, regardless of any contrary stipulation, and voting rights attached to unpaid shares are suspended until payment is made, if such payment has been called up by the company’s board of managers and remains unpaid. In practice, the suspension of voting rights should be addressed in the articles of association, to clarify how the quorum and majority rules are to be calculated in this scenario. It is reasonable to expect that the same approach will be followed as in other cases of voting rights suspension, where the shares whose voting rights are suspended are disregarded for the purposes of determining both quorum and majority.

It remains to be seen whether, in practice, the suspension of voting rights in a single shareholder SARL could create a de facto deadlock at shareholder level (particularly, but not only, for decisions requiring the passing of a notarial deed).

Anticipation of market reaction

The reform is expected to benefit the funds ecosystem broadly, as it facilitates the incorporation of SARLs with little or no initial activity. This is particularly relevant in the context of limited partnerships (société en commandite simple – “SCS”) and special limited partnerships (société en commandite spéciale – “SCSp”) structures, which are widely used in the funds industry and require the appointment of a general partner responsible for managing the fund’s operations. By streamlining the incorporation of such general partners, the reform effectively removes one of the key structural bottlenecks in the set-up of general partners for SCS/SCSp structures.

In addition, in practice, the reform is unlikely to displace existing structuring techniques, particularly used with SARLs, which will remain central to managing timing and operational constraints. Such practices may include:

• Incorporation through contributions in kind: This method does not require an expert’s report for a SARL therefore the procedure is rather straightforward and has the benefit to not condition the incorporation from the existence of a bank account. However, it does require proof of existence of such contribution to be provided to the notary upon incorporation.
• Account 115 contributions instead of share capital increases with cash contributions: The use of account 115 contributions (i.e. equity contributions without the issuance of shares) is expected to remain a widely used funding mechanism for SARLs that have already been incorporated. This is primarily because they are typically simpler and quicker to implement than share capital increases, as they avoid most of the corporate law formalities associated with changes in share capital. In particular, they do not require the payment formalities applicable to cash capital contributions, such as the provision of a bank certificate confirming the deposit of funds on a blocked account. From a banking perspective, no dedicated blocked account or bank certificate is required in the context of an account 115 contribution. This can be particularly advantageous in intra-group financing scenarios where, combined with payment directions, funds may be transferred directly to the end beneficiary, thereby aligning the legal steps at entity level with streamlined cash flows.
• Contractual arrangements: Market participants may need to conclude contracts and make payments for investment-related purposes (such as, acquisition contracts) whilst undergoing the bank account opening procedures for the SARL that has been incorporated using the deferred share capital payment procedure. Intra-group contractual arrangements will continue to be used in practice to facilitate timing constraints, such as (i) arranging for a group affiliate of the SARL to conclude a relevant contract, with the rights and obligations thereunder being subsequently transferred to the SARL following its incorporation and bank account establishment, or (ii) implementing payment directions to streamline payments and cash flows, whilst temporarily bypassing the SARL in the process of setting up its bank account.

Conclusion

While the Law is a positive reform, signalling the legislator’s ambition to maintain Luxembourg’s attractiveness as a global financial hub, it remains to be seen whether the Law alone will materially facilitate the timely incorporation of SARLs, or whether more coordinated efforts will be required in practice – in particular with the support of the financial institutions playing a key role on the operation of a company, notably through the opening of bank accounts and the complexity of the associated procedures.

The flexibility offered by the Law will likely pave the way for the development of good market practices in this area, with the support of public notaries, who once again play a key role both in the operation of the mechanism and in the broader ecosystem.