6 Legal Requirements for Company Liquidation in Luxembourg

Liquidating a company in Luxembourg involves several complex processes governed by strict legal requirements. These procedures ensure that the company discontinues its operations lawfully. This article outlines six legal requirements crucial for company liquidation in Luxembourg, providing a framework that can guide directors and shareholders through the necessary steps.

1. Decision to Liquidate

The initial step in the liquidation of a company in Luxembourg is the formal decision to liquidate, which must be approved by the shareholders. Luxembourg law requires that this decision follows a specific procedure:

• General Meeting: A general meeting must be convened with the specific agenda to dissolve the company. The invitation to this meeting must be made in accordance with the stipulations of the company's statutes and adequate notice must be given according to Luxemburg corporate law.
• Quorum and Majority: The decision to liquidate must be taken by a quorum and majority that are often higher than for ordinary decisions. Typically, a dissolution decision requires a quorum of at least one-half of the subscribed share capital and a majority of at least two-thirds of the votes cast.
• Minutes: The resolutions passed at the general meeting must be documented in minutes, which are then filed with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés, RCS).

2. Appointment of a Liquidator

The appointment of a liquidator is a critical step in the liquidation process. The liquidator is responsible for overseeing the winding down of the company, including settling debts, selling company assets, and distributing the remaining assets to the shareholders.

• Selection and Approval: The liquidator, who can be an individual or a company, is typically appointed by the shareholders during the dissolution meeting. The appointment must be approved by the RCS.
• Duties and Powers: The liquidator is granted comprehensive powers to act in the name of the company, such as handling the disposal of assets, paying creditors, and representing the company in legal proceedings.
• Regulatory Compliance: The liquidator must ensure compliance with all regulatory requirements, including tax filings and final accounts preparation. They must also inform social security, tax authorities, and other relevant administrations about the company's liquidation.

3. Notification of Liquidation

Once a company decides to liquidate and a liquidator is appointed, this must be publicly announced:

• Publication in the Official Gazette: An announcement regarding the company's liquidation must be published in the Luxembourg Official Gazette (Mémorial C). This notification informs public and creditors about the liquidation process and invites them to present their claims.
• Registration with RCS: The liquidation process, along with the appointment of the liquidator, must be registered at the Luxembourg RCS. This serves to update the legal status of the company in public records.

4. Settlement of Claims and Debts

A key phase in the process is settling all claims and debts of the company:

• Creditor Notification: Creditors must be notified of the liquidation and invited to file their claims within a specific period, typically set at six months from the date of the announcement in the Mémorial C.
• Debt Payment: The liquidator must ensure that all company debts are paid from the company's assets. If the assets are insufficient to cover all debts, the liquidator must follow the legal order of priority in paying creditors.
• Surplus Distribution: Any surplus after the payment of debts is distributed to the shareholders in proportion to their shareholding in the company.

5. Preparation of Final Accounts

The liquidator is responsible for preparing the final accounts of the company, which detail all transactions related to the liquidation:

• Final Balance Sheet: The final balance sheet and accounts must be prepared, reflecting the cessation of the company's operations and showing how assets have been disposed of and liabilities settled.
• General Meeting Approval: The final accounts must be approved by a general meeting of the shareholders. This meeting is also an opportunity to discharge the liquidator from their duties, provided the shareholders are satisfied with the work done.

6. Deregistration from the Luxembourg RCS

The final legal requirement in the liquidation process is the removal of the company from the RCS:

• Filing Closure of Liquidation: After the final accounts are approved by the shareholders, a formal statement indicating the closure of the liquidation must be filed with the RCS.
• Deregistration: Upon satisfactory submission of all required documents and the settlement of all obligations, the RCS will deregister the company. This marks the legal end of the company’s existence in Luxembourg.

Company liquidation in Luxembourg is a tightly regulated process, requiring adherence to several legal mandates to ensure fairness and transparency. Each step, from the decision to liquidate to deregistration, must be executed meticulously to comply with Luxembourg law and properly conclude a company’s operations.