Luxembourg Company Law Reform: Less than three months to adapt
In 2016, the Luxembourg Company Law of 10 August 1915 on commercial companies (the 1915 Act) was significantly amended by the law of 10 August of that same year (the New Law). Following the enactment of the New Law, the 1915 Act was further subject to a complete overhaul of the numbering and organisation of its different sections by virtue of the Grand-Ducal Regulation of 5 December 2017 (the Regulation), with both the New Law and the Regulation resulting in the current restated version of the 1915 Act (the Amended 1915 Act).
The end of the transitory period for adapting the articles of association of Luxembourg companies in light of the changes introduced by the New Law is now approaching, and will result in the mandatory provisions of the New Law becoming directly applicable, whereas the Regulation had already entered into force on 19 December 2017.
The transitory period of 24 months provided for in the New Law is expiring on 23 August of this year. From that date, the articles of association of all Luxembourg companies shall be fully governed by the Amended 1915 Act. The impact thereof concerns the full range of constitutional documents of Luxembourg companies established prior to the entry into force of the New Law (i.e. prior to 23 August 2016), which shall be affected in the following manner:
- in the event of statutory provisions contrary to the mandatory provisions of the Amended 1915 Act, the latter shall prevail ipso jure
- if a matter is not expressly dealt with in the articles of association, it shall be governed exclusively by the Amended 1915 Act
- if the articles of association refer expressly to a specific article of the 1915 Act, the relevant article of the Amended 1915 Act shall apply directly
- if any extra-statutory arrangements are in place, they should be revised in case of any conflict with the New Law, so as to secure their enforceability.
By way of illustration, the Amended 1915 Act now provides for a comprehensive procedure pertaining to the transfer of the shares in an SARL (i.e. société à responsabilité limitée – private limited liability company) to a third party. The Amended 1915 Act provides that several stages must be observed in order for the existing shareholders to approve in advance the envisaged transfer by especially imposing the orderly exit of the transferring shareholder within a maximum period of 6 months. Notwithstanding any statutory provision to the contrary, the shareholder willing to transfer his shares will in all cases be allowed to exit the company.
It is worth noting that the legislator allowed for any amendment to the articles of association of a company solely required in view of the renumbering or the repeal of a legal provision pursuant to the New Law, to be implemented by the board of managers/directors without the need for a general shareholders’ meeting. However, the directly applicable Regulation has not provided for any such faculty in favour of the management, implying that all changes, even those limited to the numbering of the articles, should now be made by decision of shareholders, at least for the companies for which this is required.
As there are less than three months left to implement the Amended 1915 Act, it is now time for Luxembourg companies to review and consider the amendment, if required, of their articles of association as well as of other extra-statutory arrangements of theirs (e.g. shareholders’ agreements, voting arrangements, etc.) and comply to, as well as benefit from, the modernised new legal framework of the Amended 1915 Act.
This article was written by Victor Regnard and Evgenia Kyriakaki. For more information please contact Victor on +352 26 48 68 48 or at victor.regnard@crsblaw.com.
Our thinking
Pei Li Kew
Pei Li Kew writes for Pharmacy Business on the link between pharmacy and IP
Pei Li Kew writes for Pharmacy Business on the link between pharmacy and IP
Mark Howard
Charles Russell Speechlys advises Acora on its acquisition of Secrutiny
Charles Russell Speechlys advises Acora on its acquisition of Secrutiny
Nick White
Charles Russell Speechlys advises Symphony Holdings Limited on the sale of its PONY trade mark portfolio for USD $28 million
Charles Russell Speechlys advises Symphony Holdings Limited on the sale of its PONY trade mark portfolio for USD $28 million.
Simon Ridpath
Simon Ridpath featured in the Lawyer’s Hot 100 list
Simon Ridpath features in The Lawyer’s Hot 100 list
Mark Howard
Charles Russell Speechlys advises Europa Oil & Gas (Holdings) plc on its £7m equity fundraising
Europa Oil and Gas is a renewable energy, oil and gas development and production company.
Simon Green
International Bar Association quote Simon Green on the future of the legal sector in Hong Kong
International Bar Association quote Simon Green on the future of Hong Kong's legal sector
Tobias Niehl
Luxembourg Client Briefing: Modernisation of Luxembourg Securitisation Law
Luxembourg has amended the Law of 22 March 2004 on securitisation.
Lesley O’Leary
Briefing publishes Lesley O’Leary 's comments on hybrid working and the impact on collaboration
Briefing publishes Lesley O’Leary 's comments on hybrid working and the impact on collaboration
Patrick Chan
Corporate Treasurer publishes Patrick Chan's comments regarding the No Consent Regime
Corporate Treasurer publishes Patrick Chan's comments on the No Consent Regime
Jamie Cartwright
Jamie Cartwright comments on the potential impact of the plastic packaging tax
Jamie Cartwright comments on the potential impact of the plastic packaging tax
Rebecca Burford
Charles Russell Speechlys partners with the Crafty Counsel community
Crafty Counsel brings together in-house legal professionals to share their experiences.
International Wealth Structuring for Latin American Families
The wealth structuring priorities of families in Latin America include a broad range of personal, financial and political risk issues.
Tobias Niehl
Luxembourg Client Briefing: Circular CSSF 21/790 – self-assessment for UCITS, part II funds, SIFs and SICARs; management letter; separate audit report
The Circular defines three supervisory tools.
Jonathan Morley
International Business Reports reported on the firm’s involvement advising Battery Ventures on the sale of Forterro to Partners Group for €1 billion
The firm has advised global, technology-focused investment firm Battery Ventures on the sale of Forterro to Partners Group for €1 billion.
David Hicks
David Hicks quoted by FT Adviser on why Succession sold up to Aviva
David Hicks explains that private equity backers have a time horizon for their investments.
Tobias Niehl
Luxembourg Client briefing: Circular CSSF 21/789 – Fund manager self-assessment, management letter, separate audit report
The content of the SAQ depends on the scope of licence of the Addressee.
Sarah Wigington
How will the new Economic Crime Levy impact residential development joint ventures?
The Economic Crime (Transparency and Enforcement) Bill is being created through Parliament this month.
Jonathan Morley
Charles Russell Speechlys is advising Battery Ventures on the sale of Forterro to Partners Group for €1 billion.
Battery Ventures is a the global, technology-focused investment firm.
David Coates
Charles Russell Speechlys advises on the acquisition of the Douglas & Gordon property sales business
Foxtons is a London listed property sales business.
Mark Howard
Public Company Update: Winter 2021
Welcome to the Winter 2021 Public Company Update.