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Business creation: which legal status to choose?

legal status

 (Photo: © Pixabay)

JUNE 12, 2019

Reading time: 3 min

At the dawn of the creation of a company, every entrepreneur is inevitably confronted with the question of the choice of his status. Important decision conditioning the operation and the structure of the company but also answering many legal and financial questions, this one could not be taken lightly, in order to ensure an optimal entry on the market.

But on which criteria do you base your choice? Between the nature of the activity, the investment capital or the willingness to associate, the list is long ... To help you in this arduous task, we dissect for you the main options offered to your selection to find the legal form best suited to your business.

LLC (Limited Liability Company)   : for SMEs and SMEs

Most favored status in Luxembourg with no less than 70% of the companies having decided to join, the SARL has the first advantage of simplifying as much as possible all the formalities inherent in the creation and life of a company.

Being able to be made up of a single manager and to count up to 100 partners (natural or legal persons), its creation requires a notarial report by authentic act as well as the contribution of a minimum capital of 12 000 euros, to be entirely released during its constitution.

Due to its specificities, this legal form is highly indicated for small and medium-sized enterprises , as well as entrepreneurs creating a society whose full decision-making powers they wish to retain.

SA (limited liability company)   : limited liability

The second most common legal form in Luxembourg, the SA, like the SARL, offers a range of benefits primarily in limiting the financial responsibility of the partners but also in the regulation of access to capital. To qualify for this status, the company concerned must have a minimum capital of 30,000 euros, divided between the shareholders and to be fully subscribed and released at least a quarter of its total value.

Main reason for its selection by a majority of entrepreneurs, and as the name suggests, the SA allows managers and shareholders to operate under cover of a certain anonymity , although relative.

SENC (partnership)   : for family businesses

Composed of a minimum of two partners (legal or natural persons, with or without Luxembourg nationality) and without a maximum, the SENC requires the status of merchant for all of its partners, and thus personally commits them to its debts for which they may be sued by potential creditors.

Note however that no minimum capital is required to form a SENC, the partners having full freedom in the decision of the amount to be released during the constitution.

The creation of a SENC is recommended at first instance and only when one or more of the partners do not have Luxembourg nationality .

SECS (Limited Partnership)   : for young entrepreneurs and beginners

An easy legal form, it is suitable for new entrepreneurs and investors wishing to limit their financial risks to the limit of their personal contributions.

The most flexible status offered to entrepreneurs by Luxembourg companies, SECS requires a minimum of two partners for its operation: the sponsor and the general partner.

The limited partner is the partner providing the capital, capital not subject to a legal minimum but necessarily in cash. The general partner brings his industrial means or his technical and commercial capacity in the form of commitments and may be held personally liable in case of inability to honor them. Note that only the limited partner is required to have merchant status .

The constitution of a SECS involves little financial means in comparison with the other statutes. The same goes for all subsequent changes.

Remember that the status of your company will have to be registered with anotaryand its registration registered in the Trade Register.


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