On June 20, 2019, the European Commission unveiled a directive (“Directive”) on the digital tools’ use and processes in corporate law to facilitate the incorporation of companies, the registration of branches and to reduce the costs, time and administrative burdens associated with those processes.

The main purpose of the Directive was to overcome the current fragmentation of the incorporation processes set forth in the different EU Member States’ legislations and enhance the competitiveness of companies in the marketplace.

The Luxembourg law transposing the Directive has been adopted, following a dispensation from second vote  (the “Digitalization Law”). It amends the Luxembourg Civil Code – given the necessity to recognize the legal effects of notarial deeds drawn-up in electronic format, the law of 19 December 2002 on the trade and companies register and the law of 10 August 1915 on commercial companies. 

 Key terms of the Digitalization Law:

• Implementation of a new electronic exchange platform for Luxembourg notaries

Such electronic exchange platform enables notaries to, among other things:

• • draw up authentic instruments in electronic format;
  • collect the parties’ electronic signatures;
  • obtain data from public bodies and authorities, and
  • transmit data to public bodies and authorities.

The access to this platform to non-notaries is subject to a specific authentication procedure.

• Online incorporation of companies without physical presence Such a possibility will however be limited to sociétés anonymes (public limited companies), sociétés à responsabilité limitée (private limited companies) and sociétés en commandite par actions (partnerships limited by shares), and excludes incorporation by contributions other than in cash where the founder(s) will still need to physically appear or be appropriately represented before a Luxembourg notary.

• Acceptance of online contributions

Strictly limited to cash contributions to an account opened in the name of the company held with a bank operating in the EU.

• New registration of branches with the LBR

Branches established in the territory of a Member State of the European Union by a Luxembourg (i) sociétés anonymes (public limited companies), (ii) sociétés à responsabilité limitée (private limited companies) and (iii) sociétés en commandite par actions (partnerships limited by shares) shall from now on be registered with the Registre de Commerce et des Sociétés, Luxembourg.

• Introduction of non-discrimination principle between electronic and paper instruments for deeds and certified copies issued by notaries.

 New set of obligations for Luxembourg notaries:

• Notaries remain responsible for the accuracy of the identity of the parties to the deed, for the statements and indications that they certify.

• Notaries must sign their deeds, copies, extracts and certifications drawn up in electronic format using a qualified electronic signature or an electronic seal within the meaning of the eIDAS Regulation (EU Regulation 910/2014 of 23 July 2014).

• If there is a suspicion of identity theft or falsification, notaries may require the physical presence of a party and could refuse to draw up a deed in remote electronic format.

 Amendments to the Civil Code

The Digitalization Law introduces the possibility of drawing up authentic instruments electronically (art. 1371-1 and 1371-2), under three conditions:

• • the person receiving/issuing the deed must be precisely identified,
  • the technical process used must guarantee the integrity of the deed’s content from the moment it becomes final, and
  • the final deed must be intelligible to a human being.

Furthermore, it will be explicitly stated that authentic instruments concluded in electronic form will have the same value as paper instruments (principle of non-discrimination).

 What’s next ?

The European Commission proposed an additional directive to further expand and upgrade the use of digital tools and processes in corporate law on March 29, 2023.

Following the technical and legal finalization of the European Commission, the finalized text will be submitted to the Council and the European Parliament for adoption.

For more information or assistance on this topic, you may reach out to our Corporate team.