Luxembourg regulatory update: Company Formation Reform and SFDR 2.0 signal a more streamlined future

Luxembourg is entering 2026 with a wave of regulatory evolution that stands to meaningfully reshape both the company formation landscape and the sustainable finance environment across the region. Two developments in particular, Draft Bill No. 8669 and the advancing SFDR 2.0 framework, reflect a broader legislative intent to simplify, modernise, and future‑proof the jurisdiction’s corporate and fund governance ecosystem.

A new era for SARL Incorporation: Draft Bill No. 8669

The Luxembourg government has taken a significant step toward easing early‑stage corporate administration through the introduction of Draft Bill No. 8669. Submitted to the Chamber of Deputies on 16 December 2025, the proposal would allow founders of SARL and SARL‑S entities to defer payment of the mandatory EUR 12,000 minimum share capital for up to 12 months after incorporation. While the capital must still be fully subscribed on day one, the cash itself would no longer need to be paid immediately.

This change directly targets long‑standing practical bottlenecks, including delays caused by pre‑incorporation bank account opening and capital‑blocking processes. By decoupling subscription from payment, the reform aims to accelerate company formations, offer promoters more flexibility, and reduce friction at a critical stage in the lifecycle of new ventures.

Importantly, the draft bill also introduces safeguards to maintain market integrity. Unpaid capital would be publicly disclosed, voting rights could be suspended if payments are not made following a valid call for funds, and enhanced liability rules would apply to founders and shareholders transferring unpaid shares. Contributions in kind, and any capital exceeding the statutory minimum, would still need to be fully settled at incorporation.

The proposed reform is currently under review by the parliamentary justice commission and represents one of the most pragmatic modernisations of Luxembourg’s company law in recent years.

SFDR 2.0: A more proportionate sustainable finance regime emerges

Alongside corporate law reform, the European Commission’s SFDR 2.0 proposals continue to progress through the EU legislative process. The next generation of the Sustainable Finance Disclosure Regulation signals a shift toward simplification, proportionality, and operational realism, particularly for private market participants.

SFDR 2.0 is expected to move the industry away from overly prescriptive portfolio‑level metrics that, in practice, have often been difficult to source or interpret meaningfully. Layered disclosure requirements, historically a source of operational burden and inconsistencies across the market, are set to be streamlined. The direction of travel prioritises clarity and usability, while better reflecting the data constraints and reporting maturity typical within private assets.

For industry participants, the coming months are about preparation. Firms are encouraged to begin assessing how proposed changes might interact with their existing disclosures, onboarding processes, and internal governance cycles. As final timelines, transitional provisions, and classification rules become clearer, having this groundwork in place will ensure a smooth transition into the updated regime.

The next three to six months are expected to focus on awareness, client conversations, and early gap assessments. Beyond that, the following year will likely involve refining templates, aligning internal processes, and mapping controlled implementation pathways ahead of formal application dates.

Your partner in Luxembourg’s evolving regulatory landscape

As Luxembourg continues to modernise its corporate and regulatory frameworks, staying ahead of the curve is more important than ever. These changes, from streamlined company formation rules to a more proportionate sustainable finance regime, will influence how clients structure entities, manage governance, and communicate sustainability commitments.

At Belasko, our teams are actively monitoring these developments and assessing their implications across onboarding, administration, regulatory reporting, and investment operations. With deep Luxembourg expertise and a track record of guiding clients through evolving compliance landscapes, we are well‑positioned to help you anticipate the impact, plan with confidence, and implement updates smoothly and efficiently.

Get in touch with Greg McKenzie ([email protected]) to discuss how we can support you.

This note is for general information only and reflects our understanding as at 23/01/2026. It does not constitute legal or regulatory advice.