The bill n°6054 on non-profit associations (« NPA ») and foundations has been adopted by the Luxembourg Parliament on 28 June 2023 (the « Law »). It aims to simplify and modernize the legal framework for NPA and foundations and create greater accounting transparency in order to ensure a better control. The Law repeals the amended law of 21 April 1928 which until now governed NPA and foundations.
In substance, the Law introduces changes and amendments on the following points :
Simplification of administrative procedures relating to the incorporation and management of associations and foundations
The obligation to file annually a list of the association's members with the Registre de Commerce et des Sociétés (RCS) is abolished in favour of keeping an up-to-date register of members at the association's registered office (in electronic form, if need be).
The obligation for foundations to file and publish their provisional budget with the RCS / RESA has been abolished.
The approval procedure by the civil court of amendments to the articles of association or the dissolution procedure of the association, where a quorum of 2/3 of the members is not reached at the general meeting, has also been abolished.
Governance rules are more flexible. The Law introduces a framework for organizing the day-to-day management. Among other things, it will now also be possible to hold a general meeting remotely (videoconference) or a board meeting remotely (videoconference and written resolutions) and to use electronic means of communication to convene general meetings.
The Law gives members access to the minutes of the decisions taken by the general meeting and the board of directors.
Real estate ownership
Ownership of real estate not directly necessary to achieve the non-profit association’s and foundation’s purpose is now authorized.
An adapted accounting regime
The Law classifies associations according to their size and establishes 3 categories of associations (small associations, medium-sized associations and large associations, including associations recognised as being of public utility) based on the following 3 criteria: (i) the number of full-time equivalent employees, (ii) the total revenue, and (iii) the total assets at the end of the financial year.
For foundations, the proposed accounting regime corresponds in substance to the accounting regime applicable to associations classified as "large associations" whatever their size.
Only large associations, associations recognised as being of public utility and foundations are obliged to submit their accounting documents to an independent auditor (réviseur d’entreprises agréé).
New restructuring mechanisms: transformation and merger
The legal framework for restructuring associations and foundations through transformation and merger mechanisms has been adapted. This should enable a foundation or an association to retain its legal personality in the event of transformation and to transfer its assets and liabilities to the new association/foundation or the absorbing association/foundation, as the case may be, in the event of a merger. In the case of an association, the members of the disappearing association become members of the association resulting from the merger.
Adapting a foundation's initial endowment to the economic context
The amount of the initial endowment is set at 100,000 euros, with the possibility of using up the assets on condition that net assets do not fall below 50,000 euros, it being specified that pre-existing foundations will not be subject to the minimum endowment requirement of 100,000 euros.
Introduction of an administrative dissolution procedure
A procedure for administrative dissolution without liquidation has been introduced in order to have up-to-date data at the RCS. The RCS will now be able to open an administrative dissolution procedure if it notes (i) the absence of any update or confirmation of the non-necessity of updating data within 6 months and (ii) the absence of any filing in the association’s or foundation's file with the RCS for at least 5 years.
Associations and foundations have 24 months from the entry into force of the Law to align their articles of association with the Law. During the transitional period, associations and foundations will remain subject to the previous law.
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