On 20 July 2023, the Luxembourg Parliament has adopted a new bill of law on the right of establishment in Luxembourg and on the modernisation of the business licensing process (“autorisation d’établissement”)

On 20 July 2023, the Luxembourg Parliament has finally adopted the draft bill n° 7989 after more than a year of negotiations (the “Modernisation Law”), which amends the law of 2 September 2011 on the access to the professions of craftsman and certain liberal professions – establishing the legal framework for business license’s application.

The Modernisation Law is scheduled to be published in the Luxembourg official gazette on 28 August 2023 and should thereafter enter into force on 1 September 2023.

The Modernisation law is laying down the foundations for a more fitted and clearer entrepreneurial framework adapted to today’s and tomorrow’s practices by inter alia modernising the application’s procedures and creating specific new business licenses.  

Please find below the key takeaways of the Modernisation Law:

Clarification regarding the requirement to hold a business license based on the recurrent performance of activities.

The Modernisation Law clarifies that a business license is required where the concerned applicant performs an activity falling into the scope of the law on a usual basis, as opposed to an activity performed on an occasional basis.  For the sake of clarity, such precision does not challenge the already existing possibility to combine several types of business licenses, under the conditions of the Modernisation Law.

Simplification of the requirements at the level of the business license’s holder.

It is no longer a requirement for the designated manager to be a shareholder, partner or employee of the company in order to hold the business license.

The former law provided that the designated manager (“dirigeant”) had to a be a partner, a shareholder or employee of the company (without any distinction between the type of business). The Modernisation Law introduces a distinction between situations where the activities are carried out by an applicant in his/her own name, in which case, the applicant will have to be the owner of the business, and situations where the activities are carried out by a company, in which case the designated manager shall be a registered with the Luxembourg Register of Commerce and Companies as a legal representative thereof (e.g. manager, daily manager).

The Modernisation Law maintains the requirement of an effective link between the company and its designated manager, who shall still perform the daily management of the company.

Such real link shall be demonstrated at least through the fulfillment of the conditions mentioned above, i.e. being the owner of the business if he/she carries out his activity in his/her own name or being registered with the Registre de Commerce et des Sociétés, Luxembourg as legal representative of the company (i.e. either as manager or daily manager).

Business license holder should in this respect note that any changes made to the data filed with the Luxembourg Registre de Commerce et des Sociétés de Luxembourg will from now on be automatically exchanged with the Direction Générale des Classes Moyennes. More generally, the Modernisation Law introduces an ongoing exchange between the manager of the commercial register, the manager of the beneficial owners register, the public prosecutor and the ministry of middle-classes.

Extension and clarification of the professional repute (“honorabilité”) conditions.

As a reminder, not only the person effectively in charge of the daily management but any other person having a significant influence on the management of the company or being a majority shareholder thereof, should pass the good repute test.

The Modernisation Law introduces repeated failures during at least 6 months to publish mandatory information at the Registre des Benéficiaires Effectifs, as an element compromising the professional repute. It furthermore clarifies the disqualifying circumstances pertaining to the failure of filing and publication with the commercial register, by indicating that failure to perform mandatory filings and publications with the commercial register at least twice during the past 3 years, qualifies as an element compromising the good repute.

t3TNMf6BgwRMXZa8wAAAAASUVORK5CYII=Limitation of the number of business licenses granted to a natural person.

A natural person may not be appointed as business license holder of more than two craft businesses if these businesses are not linked and do not form part of the same group of companies.

By way of derogation, a natural person may be appointed as manager of more than two companies if he/she holds, directly or indirectly, at least 25% of the shares in each of these companies.

The Modernisation Law does not affect the well-known “group exception” in line with other regulations applicable to the financial sector in particular, whereby activities falling into the scope of the Modernisation Law provided on an intra-group basis do not require a specific business license.

k3wA11dTChpsjHoQAAAABJRU5ErkJggg==New obligation for companies: two-dimensional barcode’s display.

The Modernisation Law introduces a two-dimensional barcode assigned to each business license. The two-dimensional barcode must be displayed in a place accessible to the public on the company site or shop.

Failure to display the two-dimensional barcode is subject to a fine of between 25 and 250 euros.

vLHud1+ARr+I4BMc4NGAAAAAElFTkSuQmCCPrinciple of second chance after bankruptcy.

The Modernisation Law introduces the principle of second chance after bankruptcy.

Indeed, the Minister of Economy following the second chance commission’s consultative opinion, may grant a second business license to (i) a company that uses the services of a former manager, or (ii) a person who has been able to exercise significant influence over the management or administration of the company, or (iii) who held a majority shareholding in the company declared bankrupt, if that person is able to establish that the bankruptcy was directly caused by any of the following reasons: 

      • a natural disaster recognized as such by the government in council;
      • an involuntary destruction of the place of production or the production tool;
      • the loss of a pre-eminent customer;
      • the loss of a major commissioned work;
      • a medically certified partial or total incapacity to work of the business license holder;
      • a pandemic recognized as such by the government in council, or
      • a loss of profitability following a major market disruption.

Such change aims in particular at avoiding sanctioning misfortunate entrepreneurs who made wrong management or investments choices, in a difficult business climate. According to the Luxembourg Public Prosecutor’s Office the majority of the bankruptcies and judicial liquidation decided by the Public Prosecutor are based on breaches of their publications obligations in the Luxembourg Registre de Commerce et des Sociétés de Luxembourg .

Introduction of new specific categories of business licenses.

The Modernisation Law introduces new categories of business licenses such as for real estate business introducer, or companies offering co-working spaces renting services, to cater recent evolutions in these business areas.

The business activity as real estate business introducer is defined as “the commercial activity consisting in the intermediation between a real estate agent or promoter and any other person willing to sell or buy real estate”.

The disqualifying criteria to the assessment of professional good repute consisting in the failure to comply with anti-money laundering and anti-terrorist financing obligations, or the failure to file tax returns, or in the concealment of the company’s financial situation from a future director, will hence be applicable to such professionals.

However, the fact that the Modernisation Law requires a business license to perform these activities does not result in an automatic application of the law of 12 November 2004 on the fight against money laundering and terrorist financing to the concerned persons, absent a correlate amendment of this latter law.

Introduction of new circumstances of business license withdrawal.

Business license holders failing to declare a change in the manager’s residence or of the place of business within a month will now face a risk of business license withdrawal.

hpEb0wqJzlbLp8eAAAAAElFTkSuQmCCWhat’s next?

The Modernisation Law should enter into force on 1 September 2023. Business companies and professionals currently holding a business license have a 2-year period as from such date to comply with the content of the Modernisation Law.

For more information or assistance on this topic, please do not hesitate to contact us at the following address: welcome@brouxelrabia.lu.

Samia RABIA, Partner Brouxel and Rabia Luxembourg Law Firm
Estelle NZOUNGOU, Senior Associate - Brouxel and Rabia Luxembourg Law Firm
Senior Associate
Margot GEISLER Brouxel & Rabia Luxembourg Law Firm
Samia RABIA, Partner Brouxel and Rabia Luxembourg Law Firm
Estelle NZOUNGOU, Senior Associate - Brouxel and Rabia Luxembourg Law Firm
Senior Associate
Margot GEISLER Brouxel & Rabia Luxembourg Law Firm