5 things to know about setting up an Sarl-S company

Unlike an Sàrl (limited liability company), a Sàrl-S, with the extra S standing for "simplified", has the advantage of freeing entrepreneurs from certain constraints associated with setting up a company. There are 5,672 such companies in Luxembourg. But some obligations remain. Here are five things you need to know.

A company's articles of association, or deed of incorporation, represent the fundamental charter of a business and lay down its operating rules. In the case of a simplified limited liability company (société à responsabilité limitée, Sàrl-S)--also known as a "one-euro company" because it only requires a minimum share capital of one euro--the incorporation procedure is intended to be simplified. However, there are certain rules to be aware of. Questioned by MP (Pirate), justice minister (CSV) outlined some of them.

1. No, the Sàrl-S legal form does not have to appear in the business name

The minister of justice reiterated a number of rules applying to Sàrl-Ss, starting with the company name. Contrary to the view of Clement, who argued that the corporate indicator Sàrl-S must appear in the business name, the minister stressed that it is not necessary for the company to add a reference to its legal form after its name, if this reference is not an integral part of the name chosen by the company: "The name of this company does not necessarily have to include the legal form of the company. However, this reference must appear on documents issued by the Sàrl-S".

2. The articles of association do not have to be drawn up by a lawyer or notary

The company's articles of association do not have to be drafted by a lawyer or notary. This is also the case for sociétés en commandite simple, sociétés en commandite spéciale and sociétés en nom collectif. "This is a decision taken by the legislator for reasons of speed, efficiency and cost reduction", explained Margue. Model articles of association drawn up by the professional chambers are available on their websites or on Guichet.lu.

3. Application for authorisation to set up remains compulsory

Once the articles of association have been drafted and signed, an application for authorisation must be made to the Ministry of the Economy. The Sàrl-S must then undergo a summary legal audit by the companies registrar LBR. The LBR then issues a provisional authorisation within two to three weeks. This will enable the applicant to register the Sàrl-S with the Trade and Companies Registry (RCS). Once registration has been completed, the Ministry of the Economy will issue the definitive authorisation.

4. Simplified does not mean unchecked

Several checks are carried out during the procedure. At the time of registration, for example, it is verified that the name registered corresponds to the name given in the Sàrl-S's articles of association. The RCS administrator will also check that the mandatory details that must appear in the memorandum and articles of association, such as the amount of capital or the partners and managers, are correct. If this is not the case, the registration application is returned to the applicant for regularisation. The partners of a Sàrl-S must also be natural persons and must provide their Luxembourg identification number and a copy of their identity documents.

5. You cannot manage more than one Sàrl-S, except...

"The LBR ensures that a natural person who is already registered as a partner in a Sàrl-S cannot be registered in another SARL-S in this capacity", emphasised the minister in her parliamentary reply. Sàrl-Ss can only be set up by natural persons. A company can therefore never be a partner in an Sàrl-S. An individual may only be a partner in one and only one Sàrl-S at a time (unless the shares are transferred to them as a result of death).

Read the original French version of this article