Luxembourg: Relocation of your company to, from or through Luxembourg — is it time for action?

In brief

The transposition of EU Directive 2019/2121 of 27 November 2019, amending EU Directive 2017/1132 regarding cross-border conversions, mergers and divisions ("Mobility Directive") into Luxembourg, will be a reality soon: the transposition deadline is set for 31 January 2023 and a draft bill was lodged in July 2022 ("Draft Bill") with the Luxembourg parliament to implement it into Luxembourg law.

While the Mobility Directive regime aimed to offer an internal market without internal borders to companies where social protection — including additional rules to provide for rights to information and participation for employees — and protection for members and creditors are promoted, it may prove more burdensome and less flexible, to some extent, than the current established practice in Luxembourg.


If you would like to move your company within or outside the EU without losing its legal personality under the current favorable Luxembourg regime, or if you would like to learn more about the Mobility Directive regime soon applicable to cross-border conversions, mergers and divisions, please get in touch with your usual Baker McKenzie contact.

Cross-border conversions to, from or through Luxembourg: key advantages of the current regime in Luxembourg

A cross-border conversion can be defined as the operation whereby a company, without being dissolved, converts the legal form under which it is registered in a departure country to a legal form in a destination country, and transfers at least its registered office to the destination country, while retaining its legal personality.

The main advantage of this operation is that the converted company continues to exist, its legal personality is maintained, and its assets and liabilities and the agreements it has concluded remain, in principle, unchanged.

Here are the key advantages of the current Luxembourg regime governing the cross-border conversions (also referred to, from time to time, as cross-border migrations):

Minimal documentation required

From a Luxembourg perspective, without this list being exhaustive, the completion of the operation is typically subject to the following:

  • Confirmation that the transfer of registered office and central administration to the destination country will not lead to the dissolution of the company, which will continue to exist under the laws of the receiving country without any disruption of its legal personality
  • Adoption of shareholder(s) resolutions under the form of a notarial deed to approve the migration and conversion of the company into a legal form, compliant with the destination country's legal framework
  • Completion of the relevant publications and formalities with the Luxembourg trade and companies register

Short timeframe implementation and limited costs

Companies may rely on a well-established legal and notarial practice in Luxembourg governing these cross-border conversions (which are not limited to EU member states).

Assuming that the company (i) has no employees, (ii) does not own specific assets (e.g., real estate) and (iii) does not have any permits/licenses, Luxembourg steps are usually completed within two weeks and no involvement from an independent expert is required.

Luxembourg recognized as a hub

By allowing transfers from and into EU and non-EU countries, Luxembourg has earned its reputation as a suitable EU hub for entities wishing to access or leave the EU market.

Upcoming Mobility Directive regime: main features

Based on the current Draft Bill, which is being discussed and is hence subject to amendments, the regime applicable to the EU cross-border conversions derived from the Mobility Directive should be introduced in Section 2 of Chapter VI — Title X of the Luxembourg law on commercial companies, dated 10 August 1915 as amended (Articles 1062-1 and seq).

Scope of the EU cross-border conversion regime

  • The conversion of limited liability companies (formed in accordance with the laws of a member state and having their registered office, central administration or principal place of business within the EU) into limited liability companies governed by the law of another member state will be covered by this specific regime. With respect to Luxembourg, only the following limited liability companies are in scope: the public limited company (SA), limited liability company (SARL) and limited partnership by shares (SCA).
  • Without being exhaustive, certain (i) undertakings for the collective investment of capital invested by the public and (ii) companies in liquidation where the distribution of assets has begun or that are subject to insolvency proceedings are excluded from the scope of this regime. In the same manner, the future EU cross-border conversion regime shall not apply to cross-border conversions falling within the scope of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the statute for a European company (SE).

A more complex procedure

A certain number of procedural steps will have to be complied with to complete a European cross-border conversion, including the following:

  • Draft terms of a cross-border conversion setting out the particularities of the envisaged conversion drawn up by the administrative or management body of the company
  • A report of the administrative or management body for members and employees explaining and justifying the legal and economic aspects of the conversion and its implications for future business. In certain circumstances, the report or parts of the report can, however, be waived. Where applicable, the company is required to comply with employee information, consultation and participation rights.
  • A report from an independent expert (réviseur d'entreprises) on the draft terms of conversion, made available to members at least one month before the date of the general meeting approving the operation, unless this report is waived by the members
  • Approval of, amendments to or rejection of the cross-border conversion plan and new articles of association of the company by the general meeting
  • Completion of the conversion steps is subject to two controls of legality, the first one in the departure member state and the second one in the destination member state. In Luxembourg, the notary has been designated as the competent authority to carry out both controls.
    • As part of the first control, the Luxembourg notary will scrutinize the legality of the operation and issue a pre-conversion certificate within three months from the date it receives all documents and information needed in connection with the approval of the cross-border conversion, attesting to compliance with all relevant conditions and to the proper completion of all procedures and formalities in the departure member state. The Luxembourg notary will not issue the certificate if it determines that the conversion is set up for abusive, fraudulent or criminal purposes. 

The pre-conversion certificate issued by the Luxembourg notary will be lodged with the Luxembourg trade and companies register, and it will be transmitted by the manager of the Luxembourg business register to the competent authority in the destination member state to ensure that the relevant provisions of national law concerning the incorporation of a registration of companies are complied with.

  • As part of the second control of legality, the Luxembourg notary will scrutinize the legality of the cross-border conversion as regards that part of the procedure governed by the law of the destination member state and approve the cross-border conversion. In particular, the Luxembourg notary will ensure compliance with the provisions of national law on the incorporation and registration of companies and, where appropriate, that arrangements for employee participation have been correctly determined.

Main benefits

  • Harmonization

These provisions issued from the Mobility Directive have the merit of providing harmonized rules across Europe and filling the absence of European provisions on cross-border transfers of corporate seats (other than those adopted for the European company (SE)).

  • New protective measures for shareholders, creditors and employees are as follows:
    • There will be an exit right for existing minority shareholders opposed to the cross-border operation, who will have the right to dispose of their shares and are entitled to adequate cash compensation. The right of withdrawal in question can only relate to all of the shares or units of companies held by a minority shareholder on the date on which the draft European cross-border operation is published.
    • Creditors will benefit from various protection rules, including a right to apply for adequate safeguards to the magistrate presiding over the court chamber district in the jurisdiction in which the debtor company has its registered office, sitting in commercial matters and in summary proceedings.
    • Shareholders, creditors and employees (or their representatives) will have the right to make observations before the general meeting is called to decide on the operation.

Cross-border conversions out of the scope of the Mobility Directive

Based on the terms of the current Draft Bill, the current Luxembourg regime concerning cross-border conversion has been granted, to some extent, a legal basis and should remain applicable to the cross-border conversions of certain types of companies falling outside of the scope of the Mobility Directive (e.g., SAS and SCS for Luxembourg), and to cross-border conversions to or from a jurisdiction outside of the EU.

Therefore, non-EU companies contemplating converting into Luxembourg companies and Luxembourg companies willing to convert into non-EU companies, as well as Luxembourg and foreign companies not incorporated under one of the limited number of legal forms falling within the scope of application of the Mobility Directive, should continue to be able to migrate from and to Luxembourg, without having to comply with the more complex and time-consuming future EU cross-border conversion regime. 

Recommended actions

EU companies falling within the scope of the Mobility Directive that are considering actively proceeding with a EU cross-border conversion involving Luxembourg as a departure or destination country may be well advised to anticipate the date of such conversion to still benefit from the current, more-efficient and less-complex, Luxembourg cross-border conversion regime.

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