COMPANIES & STRATEGIES - FINANCE & LEGAL

Luxembourg Business Registers

Half of companies in breach of business register rules



More than half of companies in Luxembourg were late in filing business records last year, with more than one in ten failing to provide complete documentation at all Photo: Shutterstock

More than half of companies in Luxembourg were late in filing business records last year, with more than one in ten failing to provide complete documentation at all Photo: Shutterstock

Around half of companies registered in Luxembourg were late to file annual results last year, with more than 4,280 cases pending legal proceedings for infractions tied to business records.

Companies have until the end of July to submit their results of the previous year to the business register, the so-called “Registre de commerces et des sociétés” (RCS). But last year, more than half of companies (51.17%) filed their documents late, said justice minister Sam Tanson (déi Gréng) in answer to a parliamentary question.

More than one in ten companies (13.57%) failed to file all documents required for 2019 and 2020, Tanson said. The process is still ongoing for 2021, with the deadline on 31 July this year. There are more than 150,000 entities registered with the RCS.

Companies can be fined or struck from the business register for failing to provide accurate records within deadline, but there are long delays at the public prosecutor’s office. More than 4,280 cases are still pending, Tanson said, which will take 171 weeks--more than three years--to resolve.

“The ministry of justice is aware that the current system applied to entities that are in breach of their legal filing/declaration obligations with the RCS needs improvement,” said Tanson.

Last year, the Luxembourg business tribunal issued 857 verdicts related to incomplete company records, a number largely stable from 2020 when 853 decisions were issued.

Reform underway

A reform of the Luxembourg Business Registers--the group that manages the RCS as well as the beneficial owners register (RBE) and the electronic compendium of companies and associations (RESA)--is underway with a proposal from the government pending a vote in parliament.

Under the reform, the LBR will have the power to penalise companies that have failed to file proper documentation. The group will be able to impose fines of up to €3,500--reduced to €250 for charities and foundations--after repeated warnings and strike the company off the business register.

Only as a last resort would it have to notify the public prosecutor’s office. The LBR under the plans will also be allowed to publicly name and shame companies who have failed to provide proper documentation.

“Change of paradigm”

Presenting the reform in February, Tanson said it marked a “change of paradigm” as the LBR up until now has been tasked with registering the data, not controlling it. Updates to its IT systems, for example, will also help ensure that companies file consistent documents across different registers, such as the RCS and RBE.

The LBR’s “more proactive role” in pursuing companies to update their information also comes as part of obligations towards international organisations such as the Financial Action Task Force (FATF), an anti-money laundering and anti-terrorist financing watchdog, or the OECD, Tanson said in February.

To fulfil its new mission, the LBR will roughly double its staff, from 25 to between 54 and 75 by the end of 2023, expecting to hire experts in data analytics, anti-money laundering and other areas.