On 18 October 2022, the Luxembourg parliament adopted with 58 votes in favour and 2 votes against, the law creating an administrative dissolution without liquidation (the “Law”).
The Law constitutes a first step to the envisaged reform of the Luxembourg bankruptcy law and is adopted with the aim to fight against money laundering by preventing so-called empty shell companies from being misused for illegal purposes.
Under the Law, the Luxembourg State Prosecutor (procureur d’État or “Prosecutor”) shall identify the Luxembourg commercial companies (except the companies listed in article 2 of the Law) that:
(i) fall within the scope of article 1200-1 of the amended law of 10 August 1915, on commercial companies (ie, any Luxembourg company that carries on business contrary to the criminal law or that seriously contravenes the provisions of the commercial code or the laws governing commercial companies, including relative to the right of establishment);
(ii) do not have any employees; and
(iii) do not have any assets.
Where there are clear indications that a commercial company fulfils the conditions listed above, the Prosecutor shall request the administrator (Gestionnaire) of the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés or “RCS”) to initiate an administrative dissolution without liquidation against this commercial company.
In turn, the RCS administrator shall (i) open the procedure for administrative dissolution without liquidation within three days of the Prosecutor’s requisition, (ii) notify the concerned company by way of registered letter with acknowledgment of receipt to the company’s registered office registered in the RCS and (iii) proceed to its publication by extracts (the “Publication”) within three days in two newspapers published in the Grand Duchy of Luxembourg and in the Luxembourg electronic gazette (Recueil Électronique des Sociétés et Associations or “RESA”).
The RCS administrator shall then verify the absence of assets and employees of the company.
In case one of the above conditions is not met (ie, the conditions listed above under sections (i), (ii) and (iii)), the Prosecutor is informed and shall request the RCS administrator to end the procedure and the latter shall publish this decision in the RESA.
If all three conditions are met, the Prosecutor is informed and shall request the RCS administrator to pursue the procedure of administrative dissolution without liquidation. When the procedure is closed, it leads to the dissolution of the company which is published in the RESA.
It is to be noted that the commercial company subject to the procedure of administrative dissolution as well as any interested third party who consider that the cumulative conditions listed above under sections (i), (ii) and (iii) are not fulfilled may appeal to the judge presiding the chamber of the District Court (Tribunal d’Arrondissement) sitting in commercial matters, within one month following the Publication.
Please contact the members of our corporate team should you need any assistance or should you have any question in relation to the above.