Corporate Governance in Luxembourg

Luxembourg's main statutes on corporate governance include the Companies Act,2 the EU Market Abuse Regulation3 and the Securitisation Act.4 The Companies Act was revamped in 2016 to modernise Luxembourg corporate law, and a consolidated version of the Act was published in December 2017, following the renumbering of its articles.5

Other notable statutory instruments regulating corporate governance in Luxembourg include:

1. the Act of 13 July 2007 on Markets in Financial Instruments, as amended,6 introducing specific provisions on transparency for shares and transaction reporting to be applied from 3 January 2018, together with the EU Regulation on Markets in Financial Instruments (MiFIR);7
2. the Takeover Bid Act,8 providing for minority shareholder protection, rules of mandatory offers and disclosure requirements for companies whose shares are admitted to trading on a regulated market in a Member State of the EU;
3. the Prospectus Act,9 which requires the publication of prospectuses from companies intending to admit their shares to trading on a regulated market or to make a public offer;
4. the Transparency Act of 11 January 2008,10 as amended; and
5. the Shareholder Act of 24 May 2011,11 setting out a number of shareholders' rights and aiming to increase shareholder activism, which remains subject to further amendment as a result of the transposition into Luxembourg law (expected mid-2019) of the Second Shareholders' Rights Directive.12

Furthermore, the Act of 21 July 201213 introduced a squeeze-out right in favour of dominant shareholders and a sell-out right in favour of minority shareholders in companies whose shares are admitted to trading on a regulated market,14 and a year later, the Act of 6 April 2013 introduced a legal regime for dematerialised securities, and the Act of 12 July 2013,15 as amended, introduced into Luxembourg law a new structure: the special limited partnership. In 2013 and 2015, the accounting standards commission was reformed and certain rules regarding the annual accounts and consolidated accounts of companies were modified.16 Furthermore, in 2014, the Act on the Immobilisation of Bearer Shares17 instituted the requirement to deposit bearer shares with a recognised depositary and allowed access by judicial and tax authorities to information on the identity of bearer shares holders.

Also worth mentioning is the Act of 10 March 201418 providing for the possibility of forming a European Cooperative Society in conformity with the provisions of Council Regulation (EC) No. 1435/2003 of 22 July 2003. As a supplement to the general statutory law, the Luxembourg Stock Exchange (LuxSE) 10 Principles of Corporate Governance (LuxSE Principles)19 provide general principles, recommendations and guidelines on best practices relating to general corporate governance issues for all companies listed on the LuxSE and all Luxembourg companies whose shares are admitted to trading on a regulated market operated by the LuxSE.20

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Resources:

For further information on corporate governance in Luxembourg https://thelawreviews.co.uk/edition/the-corporate-governance-review-edi…

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Contact:

Luxembourg Stock Exchange

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