Newsflash – Bill of Law N° 7791

The Bill of Law N° 7791 (the Bill) was approved by the Luxembourg Chamber of Commerce on 18 March 2021, a year and two days after it had been submitted to the Parliament on 16 March 2020.

With the Bill’s proposal to amend article 1500-7 of the Luxembourg law of 10 August 1915 on commercial companies, as amended (the Law), it has now been confirmed that the Luxembourg legislator never intended for the financial assistance prohibition of article 430-19 of the Law to be applicable to Luxembourg SARLs when the Law was modernised in 2016.

Article 1500-7 will be amended to delete the references to “parts sociales” (i.e. the French term for shares issued in a SARL), which until now had caused doubts about the applicability of the financial assistance prohibition to SARLs. The reference to “parts sociales” was seen by some practitioners as an extension of the prohibition of article 430-19 of the Law to SARLs and by others as an oversight of the legislator. With the deletion proposed by the Bill, the position of the latter has finally been confirmed and the legislator’s intention clarified: the financial assistance prohibition is not applicable to Luxembourg SARLs.

The clarity brought by the Bill enhances the flexibility and the legal certainty for PE/RE transactions in Luxembourg and the financing thereof.