Conversion of legal form in Luxembourg: SARL to SA

What is a conversion of legal form in Luxembourg?

A conversion of legal form in Luxembourg is the shareholders' decision to move the company from one form to another, for instance from a SARL to a SA, without dissolution or liquidation: the operation neither ends the company nor creates a new legal personality, and the company keeps its assets, its contracts and its registration.

That continuity is the starting point of the whole file, and it is also the source of the most common misunderstanding. Changing form is not incorporating a company and then moving a business into it: there is no contribution, no disposal, no transfer of assets. The registration number with the trade and companies register stays the same, receivables and debts follow, leases and employment contracts are not taken over but simply continued. Civil and commercial companies may change their legal form provided the articles of association do not prohibit it.

One exception must be known before the operation starts, because it reverses the reasoning entirely: the conversion of a special limited partnership into another form of company does create a new legal personality. As the SCSp has no legal personality of its own, continuity cannot apply. For the usual capital companies, SARL, SA and partnership limited by shares, continuity remains the rule.

We regularly see the same confusion of vocabulary in the files that reach us: a director announces that he will "close the SARL and open a SA". These are not the same operation. A dissolution followed by an incorporation loses the company's seniority, its RCS number, its tax loss carry-forwards and the benefit of its holding periods, for a notarial and administrative cost higher than that of a conversion. The first question is therefore the target form, not the closing.

What is the procedure to convert a SARL into a SA?

Converting a SARL into a SA in Luxembourg requires four steps in this order: drawing up a statement summarising the assets and liabilities of the company, obtaining the justifying report of the management body, holding the meeting under the attendance and majority conditions required to amend the articles of association, and recording the conversion in a notarial deed, failing which it is void.

The statement summarising the assets and liabilities is the document that sets the timetable. It must be drawn up at a date no more than six months before the date of the general meeting called to decide on the conversion, and it may be the annual accounts. In practice that six-month limit decides the month of the notarial appointment: a company closing on 31 December that wants to use its approved annual accounts must hold its conversion meeting before the following 30 June, failing which an interim statement is needed.

The conversion proposal is accepted only if it meets the attendance and majority conditions required to amend the articles of association. For a SARL, resolutions amending the articles are validly passed by a majority of the shareholders representing at least three quarters of the share capital, whereas ordinary resolutions are passed by a majority representing half of the capital. Where several classes of shares or units exist and the conversion alters their respective rights, a class vote is added.

That leaves the capital question, and it is the one that derails poorly prepared files. The minimum capital of a SA is EUR 30,000, fully subscribed and paid up to at least one quarter, whereas the SARL is incorporated with a minimum capital of EUR 12,000, fully subscribed and paid up at incorporation. A SARL with a capital of EUR 12,000 that wants to become a SA must therefore, in the same deed, raise its capital to at least EUR 30,000, either by a new contribution or by capitalising reserves or retained earnings where equity allows it.

Justifying report and auditor report: what makes the resolution void

Two reports frame the conversion of a company in Luxembourg, and their absence is not a curable irregularity: the absence of the justifying report, or that of the auditor report where it is required, renders the resolutions of the meeting void. The absence of a notarial deed, where that deed is required, is likewise a ground of nullity of the conversion itself.

The justifying report is drawn up by the management body of the business, the management for a SARL, the board of directors for a SA. It must be announced in the agenda of the meeting called to decide, and the statement summarising the assets and liabilities of the company, or the latest annual accounts as the case may be, is attached to it. Unless all shareholders and all holders of other voting securities waive it, this report is mandatory: the waiver exists, but it must be unanimous and documented, which in practice is out of reach as soon as one minority shareholder is absent.

The involvement of the approved statutory auditor has a precise purpose, worth stating because it is often misread. The auditor does not endorse the merits of the conversion: the auditor reports on the statement summarising the assets and liabilities and indicates in particular whether net assets have been overstated. Where net assets are lower than the capital shown in that statement, the report states the amount of the difference. It is a sincerity check on the capital of the target form, in the logic of the control of contributions in kind.

The exact scope of that obligation deserves careful reading. Guichet.lu lists the cases where the auditor report is required: conversion of a civil company, a general partnership, a common limited partnership or a cooperative company into a public limited company or a partnership limited by shares. The SARL does not appear in that list. We therefore do not settle here the case of a SARL becoming a SA, and we systematically have the point confirmed by the officiating notary before convening the meeting: the cost of an unnecessary report is far below that of a void meeting.

Shareholders do in any event receive a copy of the auditor report where one is drawn up, among the documents needed for the deliberation. This kind of sequence belongs to corporate secretarial work and is prepared several weeks before the deed.

SARL or SA: what the conversion actually changes

Moving from a SARL to a SA in Luxembourg changes four concrete things: the minimum capital, the free transferability of the securities, the composition of the management body and the regime for supervising the accounts. The form itself alters neither the tax regime of the company nor its limited liability, which are identical in both cases.

The most common reason for converting into a SA is transferability. The units of a SARL are not freely negotiable and may be transferred inter vivos to non-shareholders only with the approval of the general meeting of shareholders representing at least three quarters of the share capital, the articles being able to lower that majority to half of the units. A SARL is therefore a form of shareholder control, an asset in a family company and an obstacle as soon as an investor wants an exit route. The number of shareholders of a SARL is also capped at one hundred, whereas that of a SA is not.

The governance change is the second effect, and it is heavier than it looks. The board of directors of a SA comprises at least three directors, except where the company has a single shareholder, in which case a sole director is enough. A SARL run by a single manager that becomes a SA with two shareholders must therefore find and appoint three directors, with board meetings, minutes and representation rules that the management did not know. That is the recurring cost item files most underestimate, more than the notarial fees of the deed itself, whose order of magnitude compares usefully with our recurring service pricing.

Supervision of the accounts, finally, does not follow the same logic in the two forms. Supervision of a SA must be entrusted to one or more supervisory auditors, whether or not they are shareholders, whereas a SARL is only required to appoint one above a certain number of shareholders. In both cases, crossing the size thresholds switches the company from the supervisory auditor to a statutory audit by an approved statutory auditor: the switching rule, the thresholds and the two-consecutive-financial-years condition are set out in our article on choosing between an approved statutory auditor and a supervisory auditor.

Conversion and tax: neutral between capital companies

The conversion of a Luxembourg capital company into another capital company is in principle tax neutral: the operation is exempt from tax, the company resulting from the conversion takes over the accounts of the former one, the loss carry-forwards and tax credits the company enjoyed are maintained, and the holding periods of the securities continue to run for the shareholders.

Each of these four effects has a distinct practical reach. Taking over the accounts means there is no closing balance sheet and no opening balance sheet to draw up: book values are continued, without revaluation. Maintaining the loss carry-forwards is the decisive argument in companies that have accumulated carried-forward losses and change form to bring in an investor. And the continuity of holding periods for shareholders protects the application of the parent-subsidiary regime, whose twelve-month holding condition does not restart from zero.

The reasoning reverses entirely as soon as the target form is a partnership. The tax consequences of converting a capital company into a partnership are those of a liquidation of the company, with taxation of the liquidation profit, including the capital gains thereby revealed: the unrealised gains built up by the capital company could no longer be subject to corporate income tax after the conversion, and they are therefore taxable at the time of the conversion. At shareholder level, the operation is exempt where the shareholder is a capital company meeting the conditions of the parent-subsidiary privilege, and taxed as a dividend distribution otherwise.

Two caveats close the reasoning. The first is that moving to a tax-exempt capital company, such as a SICAV, makes the operation taxable: neutrality assumes the target form remains subject to tax. The second is that tax neutrality dispenses with none of the legal formalities of the previous section: a conversion that is tax neutral but legally void remains void. We therefore always cost both branches, legal and tax, before recommending a conversion rather than a new incorporation.

After the deed: business permit, social security, RCS and RESA

After the conversion deed, four formalities must be handled in Luxembourg within short deadlines: notifying the change of legal form to the competent minister within one month, a new operating declaration with the social security authorities, registration and filing of the deed by the notary, and publication in the electronic register of companies and associations.

Notification to the minister is the most forgotten formality, because it produces no awaited document. Changes to the legal form of a commercial company, as well as a change of its registered office, must be notified to the competent minister within one month at the latest from the moment those changes become effective.

This is not an application for a new permit: a new business permit is required where the corporate object is changed or extended, or where the manager on whom professional qualification and integrity rest is changed. A conversion accompanied by an extension of the object therefore combines both steps, and an amendment file is in principle processed within three months of receipt of the complete file.

On the social security side, the point is counter-intuitive and we flag it systematically. The employer registration number is valid for the entire life of the company, except where its legal form changes: in that case a new operating declaration is required. The continuity of the legal personality therefore does not carry over as such into the social security registers, and an omission here is paid in rejected wage declarations the following month, not in a fine.

The publicity deadlines, finally, belong to the notary but condition the enforceability of the new form against third parties. The notary has the deed registered with the tax administration within fifteen days of signature, then files it electronically with the trade and companies register no later than one month after signature. Publication in the electronic register of companies and associations takes place on the day of filing or on a date chosen by the filer, within fifteen days of the filing. Registrations and communications to the register are made, as a general rule, within the month of the event.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274). Sources were verified on 4 October 2026, the date on which every threshold, deadline, condition and legal reference cited here was cross-checked against an official source.

The sources consulted are as follows. From Guichet.lu: the "Change of legal form" page of the legal management and accounting section, for the absence of dissolution and of creation of a new legal personality, for the ability to change form where the articles do not prohibit it, for the statement summarising assets and liabilities drawn up less than six months before and capable of being the annual accounts, and for the justifying report drawn up by the management body and announced in the agenda.

The same page, for the purpose of the approved statutory auditor's report and the statement of the difference where net assets are lower than the capital, for the list of forms whose conversion into a public limited company or a partnership limited by shares requires that report, for the grounds of nullity based on the absence of a notarial deed or of a report, and for the two-year and two-approved-annual-accounts condition specific to a European company converting into a Luxembourg public limited company.

Still on Guichet.lu, the "Change of legal form" page of the tax section, for the neutrality of a conversion of a capital company into a capital company, the taking over of the accounts, the maintenance of loss carry-forwards and tax credits, the continuity of holding periods, the taxable character of a move to a tax-exempt capital company such as a SICAV, and the liquidation consequences of a move to a partnership, including the treatment at the level of a capital company shareholder.

For the two forms compared, the "Private limited liability company (SARL)" and "Public limited company (SA)" pages, for the minimum capital of EUR 12,000 and EUR 30,000, the paying up of at least one quarter for the SA, the range of 1 to 100 shareholders of the SARL, the transfer approval at three quarters of the capital reducible to half, and the board of at least three directors or the sole director where there is a single shareholder;

the "Supervision of a SA" page, for supervision entrusted to one or more supervisory auditors, whether or not shareholders; the "General meeting of the shareholders of a SARL or a SARL-S" page, for the majority of shareholders representing at least three quarters of the share capital where the articles are amended.

For the subsequent formalities, the "Initial application or amendment of a business permit" page, for the notification to the minister within one month and for the two cases of a new permit; the "Registration of the employer" page, for the new operating declaration required where the legal form changes; the "Amending and corrective filings with the RCS" page, for registration within fifteen days, filing within one month and publication in the electronic register within fifteen days of filing.

From Legilux: the amended law of 10 August 1915 on commercial companies, for the requirement of a notarial deed failing which the conversion is void, for the shareholders' decision on conversion, for the attendance and majority conditions required to amend the articles, and for the creation of a new legal personality in the sole case of the conversion of a special limited partnership.

Three points could not be verified in their primary source and are therefore not asserted here. The full text of the sources: the domains guichet.public.lu, legilux.public.lu and lbr.lu are blocked by the network proxy of our editorial environment, and these pages were read through indexed extracts using a search restricted to official domains; the citations above reproduce those extracts without extrapolation.

The exact numbering of the articles of the title devoted to conversions in the coordinated 1915 law: the rules cited are those stated by Guichet.lu and by the law, but we do not attach each rule to an article number we have not read. And whether the report of an approved statutory auditor is mandatory for a SARL converting into a public limited company: the SARL does not appear in the published list, and we conclude neither way.

These points can be verified in the coordinated text of the law of 10 August 1915 on legilux.public.lu, on the "Change of legal form" page of guichet.public.lu, and by a written question to the officiating notary for an individual case.

This article states the law as it stands at the date of publication and is not personalised legal or tax advice: the relevant target form, the reports required and the tax treatment depend on the form of departure, the composition of the shareholding, the content of the articles and the net position of the company concerned. Report an error to contact@financialservices.lu: the correction is dated in the article.