Law of August 31st 2018 Concerning Societal Impact Companies

On September 14^th 2018, the Law of August 31^st 2018 (hereafter the “Law”) was published in the Luxembourg Memorial A. The Law entered into force on September 18^th 2018 allowing the use of the "SIS" sign by companies authorised as societal impact companies, introduced in Luxembourg by the law of December 12^th 2016 creating societal impact companies, and also amending some legislative provisions relating to SIS.

SIS are destined to become the main legal vehicle for the development of the social and solidarity economy in Luxembourg. The SIS should benefit both existing social and solidarity economy organisations (mainly in the form of non-profit organisations (associations sans but lucratif, hereafter “ASBL”), foundations and project leaders who wish to launch socially innovative activities. However, as some legislative provisions are exclusively applicable to agreements concluded with asbl or foundations, organisations currently constituted as asbl and foundations that chose to change their legal statute to the SIS legal regime were then deprived of a significant part of their funding.

In order to ensure that SIS whose capital consists 100% of impact shares benefit from the same financial support as asbl and foundations, the Law introduces the following amendments:

1. The amendment of Article L.133-1 of the Labour Code extends the benefit of the derogation from the ban on temporary lending of labour to such SIS. As a result, the SIS is authorised to carry out the activity of making employees hired under an employment contract available to third parties who use these employees and who exercise over them a part of the administrative and hierarchical authority normally reserved for the employer.
2. The amendment of the amended law of  February  25^th 1979 on housing assistance and the amended law of September 21^st  2006 on residential leases extending certain provisions to the SIS, including but not limited to:
   • SIS can rent housing and make it available to low-income households
   • Leases for residential use offered by SIS are not subject to the provisions of the amended law of September 21^st 2006 aforementioned, which notably allows them to offer "rental" housing at moderate cost.
3. The amendment of the amended law of July 19^th 1991 establishing an Adult Training Service extends the possibility of offering courses for adults to SIS.
4. The amendment of the amended law of January 6^th 1996 on development cooperation extends to SIS, the benefit of approval and therefore public support in the field of development cooperation and humanitarian action.

The amendment of the amended law of May 31^st 1999 establishing a national research fund (hereafter the “FNR”) in the public sector extends the benefit of FNR support to SIS.