Modernisation of the legal framework applicable to Luxembourg non-profit organisations and foundations

On Wednesday 28 June 2023, the Luxembourg Parliament adopted the bill of law n°6054 on non-profit organisations and foundations (the “Law”).

The Law modernises the legal framework applicable to Luxembourg non-profit organisations and foundations.

The main features of the law include:

• the Law simplifies the incorporation process and facilitates the administration of non-profit organisations by g. abolishing the obligation to file each year with the Luxembourg Trade and Companies Register (the “RCS”) a list of the members of the non-profit organisation. It will henceforth suffice for non-profit organisations to keep an up-to-date list of their members at their registered office;
• the management board and the members of non-profit organisations may now hold meetings remotely via telematic means;
• the Law reduces minimum initial endowment for foundations from EUR 250,000 to EUR 100,000, and grants the option of using up the assets of the foundations on condition that its net assets do not fall below EUR 50,000;
• the Law provides for a new legal framework for the restructuring of non-profit organisations and foundations, which allows them (i) to retain their legal personality without giving rise to a dissolution in case of their conversion, or (ii) to merge by transferring their assets and liabilities to the a new non-profit organisation or foundation or to the absorbing non-profit organisation or foundation via a dissolution without liquidation. The Law provides that members of a non-profit organisation that ceases to exist shall automatically become members of the organisation resulting from the merger;
• the Law creates a tailor-made accounting regime, that aims guaranteeing transparent accounting and thus meeting the requirements of FATF recommendation VIII. Within this framework non-profit organisations are categorised according to their size. Small non-profit organisations benefit from simplified accounting whereas large non-profit organisations, non-profit organisations recognised as being of public utility and foundations are obliged to submit their accounting documents to an independent (réviseur d'entreprises agréé); and
• in order to ensure that updated data is filed with and available to the RCS, in compliance with FATF recommendation VIII, a procedure for administrative dissolution without liquidation has been introduced. Two cumulative objective criteria must be met to trigger this procedure: failure to update the data within six months, and the absence of any filing with the RCS for at least five years. If no response is received within the statutory deadline, the procedure for administrative dissolution without liquidation shall be initiated by the Luxembourg Business Register.

In summary, the Law updates provisions of a law that has been being applied to Luxembourg non-profit organisations and foundations  since 1928, by simplifying a number of administrative procedures and abolishing certain obligations.

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