Limited company

Method of establishment

The Ltd may be formed in two ways: by direct incorporation or by public subscription. Here we will discuss only about the first procedure. The direct incorporation process is to appear before the notary at least two shareholders, after the payment of their contributions.
Proxy: All future shareholders don’t have to appear personally before a notary. They may be represented by representatives provided with proxies.

Constitution

It includes the following statements:

Identity of the signatories of the act;

Legal form and name;

Headquarters;

Corporate purpose;

Amount of subscribed capital and paid-up capital;

Authorized capital if the procedure is retained;

Categories and form of shares;

If contributions in kind: name of the contributor and report of the external inputs;

Possible advantages granted to founders;

Number of shares excluding capital and related rights;

Structure of the organs of the Ltd;

Duration of the company;

Note that all subsequent changes of the previous points automatically require further appearance by the notary (with the exception of point 1). This is what we call a statutory modification.

Denomination

The Ltd can adopt as name:

A particular denomination;

The designation of its corporate purpose;

The name must be strictly unique to the Grand Duchy of Luxembourg.

Corporate Purpose

The corporate purpose must reflect the actual activity to be performed within the company. It is based on this corporate purpose that will be assigned the trade permit [see Trade permit]. This corporate purpose can be social commerce activity (buying, selling, trading products or services), financial activities (Detention and optimization of Securities or Shares) or both at once.

Number of shareholders

To form a Ltd, a single shareholder is enough and the maximum number is not fixed by law. Shareholders can be natural or legal persons (if authorized by their statutes to do such an operation).
No residency or citizenship is required. This means that a Luxembourg Ltd may be formed by a non-resident or a company established in another country.

Social capital

The minimum amount of share capital is set at € 31,000.00. It can be expressed in euro or in foreign currency, if it is convertible. This capital must be fully subscribed.
Each share must be paid at least a quarter or by payment in cash or by contributions in kind (ratio of an external input required).

Legally, the contributors in kind are required to release all of their subscription within five years, while cash providers have no time limit. Nevertheless, according to the needs of the company's operations, the Board of Directors made the calls necessary funds to subscribers.

The shares

The shares representing the capital may be nominative or to bearer [ See Anonymity]. They may nevertheless become to bearer when the capital was fully paid. Unless otherwise provided in the statutes, all shares have equal rights and each share entitled to one vote.
The shares are freely transferable.

General Meeting of Shareholders

The general meeting of shareholders shall have the widest powers to adopt or ratify any action concerning the Company. There are two types of assembly:
· Ordinary General Meeting : it is called at least once a year, date and time listed in the statutes. The annual accounts are presented, and the report of the directors and commissioners. It discusses the balance sheet and determines the allocation of the results. It also discharges the directors for their management and carries out any statutory appointments.
· Extraordinary General Meeting : Board of Directors and Commissioners have the right to convene a general meeting at any time if they consider that the corporate interest requires so; they have an obligation to do so, or within a month when 1 / 5th of shareholders upon written request indicating the agenda, either within two months, when the loss reached half of the share capital.

Board of directors

The Board of Directors consists of a minimum of 3 members, shareholders or not. In the case of a single shareholder, the administrator number can be limited to 1 if the status provide for this scenario. The directors may be natural or legal persons. The law does not impose a condition of nationality or residence.
It should be noted that the trade permit is subject to various conditions, including personal repute and professional qualifications of directors.
Directors are appointed by the general meeting of shareholders for a maximum term of 6 years, but renewable.

The board of directors has all powers that are not reserved to the General Meeting, to perform the acts necessary for the realization of the corporate purpose. Any statutory clause limiting the powers of the directors would be binding on third parties. Generally, the Board of directors delegates, with the agreement of the general meeting, the company's daily management to a "managing director". It is the latter which will be holder of the trade permit.

External Auditor

The internal monitoring of the company is entrusted to one or more auditors appointed by the general meeting of shareholders for a term of up to 6 years, but renewable. Commissioners may be natural or legal persons.
The commissioners have unlimited right of supervision and control of the financial and accounting situation. They should receive the Board of Directors twice a year on the assets and liabilities of the company, they control the annual accounts and the annual report before submission to the general meeting and they report on their work at the General Meeting.

Monitoring by one or more auditor (s) of companies is mandatory in any society which, at the balance sheet date exceeds the limits of two of the three following criteria:

Balance sheet total: 3,125 million EUR

Net sales: 6,25 million EUR

Staff: 50