Luxembourg SARL Reform: A Welcome Modernisation

Published on: January 23, 2026

A draft bill introduced to Luxembourg’s parliament on 16 December 2025 proposes a welcome modernisation of SARL incorporation rules, removing practical obstacles while maintaining investor protections.

Today’s Regime

Luxembourg SARLs currently require €12,000 minimum capital, fully paid at incorporation.

While the capital amount itself is not typically an obstacle for asset managers, the requirement creates a significant administrative hurdle: companies must open a bank account, transfer the funds, and in some cases complete the KYC/AML clearance process before incorporation can proceed.

These banking and compliance procedures often experience substantial delays and can derail time-sensitive transactions.

The Proposed Regime Reform

The reform allows subscription of full capital at incorporation but permits payment to be deferred up to 12 months. This decouples incorporation from the immediate opening of a bank account, enabling founders to complete the often-lengthy KYC-driven banking processes after the company has been legally established. In this way, the pre-incorporation banking requirement is removed in most cases, allowing companies to incorporate first and arrange banking later.

However, key safeguards will remain in place:

• Amounts exceeding the minimum must be paid immediately;
• Capital in kind stays fully paid at incorporation, and;
• Unpaid shareholders face disclosure requirements and temporary voting restrictions.

European Alignment

This reform addresses a real friction point in Luxembourg’s investment infrastructure. By reducing administrative and banking hurdles and making business setup more efficient, it aligns with modern European practice and enhances Luxembourg’s competitiveness for:

• Investment structures requiring rapid vehicle deployment;
• Corporate groups executing time-critical transactions;
• Entrepreneurs needing flexibility during launch.

Commercial Implications

Speed of execution in setting up alternative investment structures can create significant competitive advantage. Under the proposed new regime, there are substantial benefits to a full spectrum of investors, entrepreneurs and corporate bodies. Clients will be able to incorporate holding companies more quickly; in particular in the context of fund establishment where management company needs to be incorporated before a fund can be established, and then address the bank account opening process subsequently.

For client facing teams at Gen II, these changes are greeted positively. They will support a more pro-active and flexible approach, noticeably reducing incorporation timelines.

Luxembourg: A Premier European Jurisdiction

This is most definitely a welcome modernisation of the current regime. It enables more timely company incorporation, removes unnecessary administrative and banking barriers while continuing to preserve creditor protections.

Most importantly, it demonstrates Luxembourg’s ongoing commitment to maintaining its position as a premier European jurisdiction for structuring investments.

This new regime will come into force once the law is formally adopted and effective. Until then, it remains a draft and may be amended.