Major Reform Of The Luxembourg Company Law: What's New?

Bill 5730 amending the Luxembourg Company Law (the Bill of Law n°5730 amending the law of 10 August 1915 on commercial companies, the Civil Code and the law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings) was voted by the Luxembourg Parliament yesterday, 13 July 2016. Subject to an exemption from a second vote granted by the Council of State (Conseil d'Etat), the new law is expected to enter into force in August 2016.

The new law offers more contractual freedom to shareholders, while providing greater legal certainty for all parties.

Below is a summary of the key changes to the Company Law. We are at your disposal to advise you on the amendments to be made to your current articles of association and to incorporate your new companies in accordance with the new law.

Grandfathering period: 24 months

The new law shall apply to any companies incorporated after its entry into force. Companies in existence before the new law's entry into force shall have 24 months to adapt their articles of association. Laws and regulations in force prior to the new law shall continue to apply to existing companies in respect of the provisions of their articles of association which are not compliant with the new law. However, for those provisions of the articles of association which are compliant with the new law, the new law shall be applicable immediately.

Key modifications of the Civil Code:

Determination of the respective rights of the bareowner and the usufructuary in case of a strip of shares: The new rules of the Civil Code apply to every civil and commercial company; furthermore certain specific rules on this subject have been introduced into the Luxembourg Company Law, Recognition of tracking shares: Tracking shares currently used will now be recognized as valid. Recognition of the "conventions de portage" in the form of put/call option agreements: Agreements, where shareholders organise the transfer or acquisition of shares, are no longer considered to be contrary to certain provisions of public order. Consecration of the dissolution-confusion: This applies in cases where all the shares are held by a single shareholder. Key modifications of the Luxembourg Company Law: New type of company: The amendment introduces the "société par actions simplifiée" (S.A.S.) which operates mostly on a contractual basis. The new S.A.S. will not be able to proceed to a public issuance of shares. Issue of...

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