Modernisation Of Luxembourg Company Law: Changes Affecting Private Limited Liability Companies (S.à r.l.)

The law of 10 August 2016 modernising the law concerning commercial companies of 10 August 1915 and amending the Civil Code as well as the law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of companies (the "Law"), entered into force on 23 August 2016.

The Law is immediately applicable for all newly incorporated companies. Existing companies have been granted a period of 24 months to adapt their articles of association.

The below is a summary of the main changes which affect private limited liability companies ("société à responsabilité limitée" ("S.àr.l.")):

1. Management

Introduction of the "board of managers" as a legal body of the company; Registered office may be transferred in any other municipality by a decision of the managing body if authorized in the articles; Introduction of day-to-day management; Possibility to take circular resolutions expressly recognised; Interim dividend mechanism; Introduction of conflict of interest rules . II. Share Capital

Minimum share capital reduced to EUR 12,000; No requirement to indicate the share capital in corporate documents; Possibility to issue beneficiary shares and sweat equity; Introduction of authorized share capital; Possibility to proceed to contribution in the form of industry and to receive shares without par value; Contribution in kind mechanism expressly recognised. III. Shareholding / Interest Holding

Issue of convertible instruments to non-shareholders subject to the approval of the existing shareholders; Issue of bonds to the public; Warrants/convertible bonds and their conversion into shares are recognized and regulated; Possibility to issue tracking shares and redeemable shares; Clarification of...