Corporate
29 February 2008
Introduction
A Draft bill of law relating to the modernisation of the amended law of 10 August 1915 on commercial companies was submitted to the Luxembourg Parliament on 8th of June 2007.
Its principal purpose is to further modernise Luxembourg corporate law.
Brief overview of the main changes proposed in the draft law:
Relating to the regime of the public companies limited by shares (sociétés anonymes)
New possibilities of differentiation between shareholders
-
- Possibility to issue below par value more shares of an already existing class.
- Possibility to grant multiple voting rights for certain shares.
- New rights for the shareholders
-
- Validity of contractual restrictions to the free transferability of shares;
- Introduction of a specific claim for minority shareholders;
- Amendments to the rules regulating the holding of and voting at shareholder’s meetings;
- Introduction of squeeze out and sell out rules for shareholders;
- Amendment to the share redemption and financial assistance rules.
-
- Management of the company
- Establishment of management committees (comités de direction);
- Amendments to the regime of conflict of interests at the level of the management bodies of the company;
- Confirmation of the possibility for the board to resolve by way of circular resolutions.
Relating to the private limited companies (sociétés à responsibilité limitée)
-
- New possibilities of differentiation between shareholders
- Possibility to issue founder shares and shares without voting rights
- New rights for the shareholders
- Introduction of squeeze out and sell out rules for shareholders
- Introduction of a regime for the redemption of the company’s own shares
- Introduction of financial assistance rules
- Management of the company and voting procedures
- Introduction of rules relating to board of managers
- Clarifications as to the provisions regulating the holding of and resolving at managers’ and shareholders’ meetings
Proposals for reforms
-
- A new form of commercial company, the sociétés par action simplifiée, inspired by the regimeof the French sociétés par action simplifiée could be introduced in the Luxembourg corporate law. This would allow a greater flexibility in drafting by-laws.
- Possibility of a future codification of the Luxembourg corporate law
Conclusion
The modernization of Luxembourg corporate law proposed by the draft law should improve its attractiveness for investors by introducing changes that were tested in other national legislations .On the whole it is a balanced evolution allowing for more differentiation between shareholders while improving their rights and a more flexible management.
Introduction
A Draft bill of law relating to the modernisation of the amended law of 10 August 1915 on commercial companies was submitted to the Luxembourg Parliament on 8th of June 2007.
Its principal purpose is to further modernise Luxembourg corporate law.
Brief overview of the main changes proposed in the draft law:
Relating to the regime of the public companies limited by shares (sociétés anonymes)
New possibilities of differentiation between shareholders
-
- Possibility to issue below par value more shares of an already existing class.
- Possibility to grant multiple voting rights for certain shares.
- New rights for the shareholders
-
- Validity of contractual restrictions to the free transferability of shares;
- Introduction of a specific claim for minority shareholders;
- Amendments to the rules regulating the holding of and voting at shareholder’s meetings;
- Introduction of squeeze out and sell out rules for shareholders;
- Amendment to the share redemption and financial assistance rules.
-
-
- Management of the company
- Establishment of management committees (comités de direction);
- Amendments to the regime of conflict of interests at the level of the management bodies of the company;
- Confirmation of the possibility for the board to resolve by way of circular resolutions.
- Management of the company
Relating to the private limited companies (sociétés à responsibilité limitée)
-
- New possibilities of differentiation between shareholders
- Possibility to issue founder shares and shares without voting rights
- New rights for the shareholders
- Introduction of squeeze out and sell out rules for shareholders
- Introduction of a regime for the redemption of the company’s own shares
- Introduction of financial assistance rules
- Management of the company and voting procedures
- Introduction of rules relating to board of managers
- Clarifications as to the provisions regulating the holding of and resolving at managers’ and shareholders’ meetings
- New possibilities of differentiation between shareholders
Proposals for reforms
-
- A new form of commercial company, the sociétés par action simplifiée, inspired by the regimeof the French sociétés par action simplifiée could be introduced in the Luxembourg corporate law. This would allow a greater flexibility in drafting by-laws.
- Possibility of a future codification of the Luxembourg corporate law
Conclusion
The modernization of Luxembourg corporate law proposed by the draft law should improve its attractiveness for investors by introducing changes that were tested in other national legislations .On the whole it is a balanced evolution allowing for more differentiation between shareholders while improving their rights and a more flexible management.
