There are two types of procedures associated with company liquidation in Luxembourg: voluntary and compulsory or mandatory. While there are certain similarities between them, it is of utmost importance to understand the differences of each of them.

Our company formation specialists explain how you can close a company in Luxembourg. We are at your disposal if you need support in the procedure of winding up a company in the Grand Duchy.

Conditions for company liquidation in Luxembourg

In order to close a company in Luxembourg, there are several conditions to be met. In the case of the voluntary procedure, they can entail one of the following reasons:

- the company has reached the end of its existence (this means that it was created for a limited period of time);
- the company has completed its purpose, therefore, the shareholders no longer consider they have grounds to maintain it active;
- the shareholders have reached a mutual agreement for winding up the company in Luxembourg;
- the company no longer complies with the requirements of the Commercial Code or its own statutory documents.

Disputes among the shareholders can also lead to the decision to terminate a business.

In the case of compulsory company liquidation, the reason is usually one: the Luxembourg business has gone into debt. This will lead one or more creditors to asking for recovery in a court of law. In this case, the court will rule the winding up of the said company.

Our Luxembourg company formation consultants can offer detailed information on each situation.

Company liquidation legislation in Luxembourg

While most companies in the financial field thrive in Luxembourg, there are several industries that until recently did not offer enough to their shareholders, which is why many of them had decided to strike off their companies. Company dissolution in Luxembourg is governed by the following laws:

- the Luxembourg Commercial Code, through Articles 437 to 592;
- the Luxembourg Company Act;
- the Civil Code.

There are two types of procedures to follow to close a company in Luxembourg:

- voluntary dissolution;
- compulsory dissolution.

Our company formation consultants can offer more information about the legislation related to company liquidation in Luxembourg.

Voluntary liquidation in Luxembourg

Voluntary dissolution of a company in Luxembourg must begin with a general meeting of the shareholders where the decision of liquidating the company is taken and a liquidator is appointed. The decision of closing a company in Luxembourg must be passed by a certain percentage of the shareholders. However, this percentage depends on the type of company registered with the Luxembourg Trade Registry.

Once the liquidation process begins, the liquidator must file an inventory with the company’s assets and liabilities and a liquidation balance sheet with the Companies Register, after which he or she will pay the Luxembourg company’s debts and, if any amount remains, it will be distributed among the shareholders in accordance with their capital contribution.

Compulsory liquidation in Luxembourg

The compulsory dissolution of a company in Luxembourg is ordered by a court if:

- the shareholders file for dissolution and the court decides they have “legitimate grounds”;
- public prosecutors ask for company liquidation following serious offences.

In this case, the liquidator, also known as official receiver, will be appointed by the court. Compulsory company liquidation in Luxembourg starts once the official receiver files the motion with the Luxembourg Trade Register. Following that, the liquidator:

- publishes the court order in the local press and in the electronic list of companies;
- prepares the inventory and the liquidation balance sheet;
- organizes the collection of money owed to the company and the sale of the company’s assets;
- verifies the company’s receivables.

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What types of entities can be liquidated in Luxembourg?

The following types of structures can be closed or liquidated in Luxembourg:

- public companies if they have lost at half or three-quarters of the share capital;
- private companies if they have lost half of the share capital or if the maximum of number 40 members has been exceeded;
- general partnerships if one of the members has died, has gone bankrupt or simply left the company;
- limited partnerships if one of the members has left the business, died or gone bankrupt.

Compulsory liquidation can begin once one or more creditors file a petition with a Luxembourg court as a consequence of the company not being able to pay its debts.

Audit requirements in voluntary company liquidation in Luxembourg

One of the important requirements to respect when it comes to voluntarily closing a company in Luxembourg is to appoint an auditor who will verify the liquidator’s report, the financial documents to be used in liquidation and who will prepare the report to be presented to the shareholders.

The auditor to be appointed during the liquidation procedure must be independent, according to the Company Law in Luxembourg.

Our company registration agents in Luxembourg can assist business owner in various matters related to voluntary company liquidation procedures.

During the last shareholders’ meeting, a set of documents must be prepared and approved by the company’s shareholders. These documents are:

- the auditor’s report;
- the report on the distribution of the remaining assets;
- information about where the company’s documents and books will be kept;
- the decision on the transfer of assets remaining undistributed;
- the declaration through which the liquidator will comply with the post-closing provisions of the operations of the company;
- the report on closing the liquidation procedure.

After this meeting, the dissolution of the company will be published with the Trade Register.

Documents needed to close a company in Luxembourg

The following list of documents must be prepared for company liquidation in Luxembourg:

a power of attorney granted by the shareholders to the liquidator appointed to complete the process;
the latest balance sheet indicating the financial status of the company - issued by the tax administration office;
negative certificates for companies which are not registered for VAT are required;
certificates indicating the company is registered for taxation purposes are also required;
information about the immovable properties of the company must be obtained from the Luxembourg Land Register;
information indicating the company has paid its social security, pension, and insurance premium up to the point of the company liquidation decision.

Our specialists can assist company representatives in preparing the documents needed in closing a company in Luxembourg. If you want to open a holding company in Luxembourg, we can offer legal advice.

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The company liquidation process and the liquidator’s duties in Luxembourg

The appointed liquidator must draw up an inventory of the company’s asses and draw up a balance sheet in order to determine the assets and liabilities of that legal entity. Afterward, the liquidator will proceed to recover the dissolved company’s assets. Once recovered, the assets will be sold in order to pay the company’s debts. Only after all the debts are settled can the remaining assets or amounts (if any) be distributed among the company’s shareholders.

The distribution of the assets is performed according to the amounts owed to each creditor. The assets must be distributed to all creditors in a fair manner. The liquidator must prepare an annual financial statement. Once the process is complete, a final general meeting is convened in order to approve the final accounts and the liquidator’s report. After the liquidation process is complete, the company is removed from the Trade and Companies Register.

Our Luxembourg lawyers can inform you about the special procedures detailed in the Luxembourg Company Law applicable for certain types of companies in Luxembourg.

Conclusion of the company winding up procedure in Luxembourg

No matter the way the closing of the company in Luxembourg took place, a final general meeting of the shareholders must be convened. During it, they must:

- approve the auditor and the liquidation accounts;
- agree on where the company’s books and other documents will be kept;
- decide on the distribution of the remaining assets between them, if it is case;
- release the liquidator.

It must be noted that the company’s accounts must be kept for at least 5 years from the termination of the business. You can rely on our accounting firm in Luxembourg for record keeping solutions. On the same note, we can also assist with payroll services in Luxembourg.

Once all these aspects are clarified, a notice of dissolution must be drafted and filed with the Companies Register. The document will be made available to the general public.

The last stage, that also concludes the company liquidation procedure is the deletion of the enterprise from the Trade Register’s records. Then, the official receiver will pay the company’s debts, the remaining amount to the shareholders and, at last, file for bankruptcy.

Business termination statistics in Luxembourg

According to data compiled by the Statistics Office, in 2023:

- 935 Luxembourg companies went into bankruptcy, 7% less than in 2022;
- 527 companies were also liquidated the same year, 37% less compared to 2022.

For complete information on how to close a company in Luxembourg, please contact our company registration agents in Luxembourg.

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Company Liquidation in Luxembourg