On 19 July 2023, the Luxembourg Parliament adopted the draft bill n°8007 (the "New Law") which mainly aims at rectifying certain clerical errors and addressing certain inconsistences and uncertainties notably in the Luxembourg law on commercial companies dated 10th August 1915, as amended (the “1915 Law”), the law of 19 December 2002 on the register of commerce and companies as well as the accounting and annual accounts of companies, as amended, and the law of 24 May 2011 concerning the exercise of certain shareholders' rights at general meetings of listed companies, without however making substantial changes. We have listed below some noteworthy changes to the 1915 Law pursuant to the New Law.


Any clause of a limited partnership agreement with respect to a special limited partnership (société en commandite spéciale – SCSp) providing for the allocation of profits or losses contrary to article 1855 of the Luxembourg Civil Code (1) will be deemed null and void. This would for example concern the following clauses:

  • Any clause where any partner would be exclusively allocated all the profits of the SCSp; or
  • Any clause which would exempt contributions by any partner to the capital of the SCSp from any contribution to losses.


For the sake of legal certainty and to harmonise the rules between the S.A. and S.à r.l., it is now crystal clear that (i) any shares for which the voting rights attached to them have been suspended by the management of a S.A. or S.à r.l., (ii) any shares for which the voting rights attached to them have been temporarily or permanently waived by their holder(s) and notified to a S.A. or S.à r.l. accordingly, and/or (iii) any redeemed shares of a S.A. or S.à r.l. held in treasury by the concerned company, shall not be taken into account when assessing the applicable quorums and majorities at general meetings.


Pursuant to article 100-14 of the 1915 Law, any Luxembourg company may proceed with the issuance of bonds, with or without the obligation to observe the provisions under articles 470-1 to 470-19 of the 1915 Law (relating e.g. to . bondholders’ representative(s) or rules for bondholders’ meetings etc.), and this irrespective of the applicable law. The New Law, with the deletion of article 470-20 of the 1915 Law, now clarifies expressly that this general rule applies as well to a S.A..


As regards the transfer of shares of an S.à r.l. to any third party, in the case where such transfer would not be approved by its shareholders representing at least ¾ of the S.à r.l.’s shares (2), the two following options have so far been available:

  • The shareholders may acquire those shares, or have them acquired, within three months from the shareholders’ refusal of the transfer, unless the transferring shareholder abandons such transfer of shares; or
  • The company itself may acquire and cancel those shares, however only with the approval of the transferring shareholder.

Both options were introduced in the context of the 2016 reform of the 1915 Law to offer any shareholder willing to leave the S.à r.l. a way out without the need for a liquidation of the same. However, the wording of the 2nd option above led to the unfortunate situation of a transferring shareholder having a veto right where the S.à r.l. wanted to redeem the relevant shares and reduce its share capital accordingly. The New Law removes such veto right and aligns the wording with that of the 1st option (i.e. the acquisition of the shares by the company is possible unless the transferring shareholder abandons the transfer, and it is no longer required that the company cancels the redeemed shares).


The physical presence of at least one shareholder - or his/her/its proxy - at the registered office of the company for the purpose of a general meeting of a S.à r.l. held via conference call/video is no longer required. An equivalent requirement does not exist for a S.A., and the relevant wording in the 1915 Law for a S.à r.l. was due to an oversight of the legislator.


Rule exemptions for S.à r.l. wholly owned by a single shareholder are clarified pursuant to the New Law. Therefore, the shareholder approval procedure for any transfer of shares of any such S.à r.l. to a third party under article 710-12 of the 1915 Law shall not apply in that case.


The New Law provides for the (long awaited) deletion of the double majority (3) required at the level of the shareholders to decide on the opening of a liquidation of a S.à r.l., i.e. the approval of at least half of the shareholders representing at least ¾ of the share capital. Instead, it will in principle be sufficient that the opening of a liquidation is decided by shareholders representing at least ¾ of the company’s share capital.


Concerning the statutory limitation of five years for any legal actions to be carried out against the management of a commercial company under the 1915 Law, the New Law now explicitly lists in this context the chairpersons and directors of simplified joint-stock companies (sociétés par actions simplifiée - SAS), who were for no specific reason not mentioned in the list of management bodies included under article 1400-6 (4) of the 1915 Law.


In addition to criminal sanctions for managers/directors in case of late submission of the annual accounts of a commercial company for shareholders’ approval or their late filings with the Luxembourg Trade and Companies’ Register (Registre de Commerce et des Sociétés, Luxembourg), the New Law clarifies that managers/directors may be also criminally liable in the event where they have not duly made available the annual accounts at the company’s registered office.



The New Law is a welcome step towards (even) more legal certainty and clarity under Luxembourg corporate law and will put an end to certain debates in the market since the 2016 reform of the 1915 Law with respect to the matters identified and clarified by the New Law.


The New Law will enter into force on the 4th day following its publication in the Official Journal of the Grand Duchy of Luxembourg.

We will keep you of course posted when the New Law will be published!


Should you need any further information, please liaise with Alexander Koch, Benoit Serraf, Emmanuel Lamaud, Adèle Rousseau, or Lorenzo Jung.


References

(1) Article 1855 of the Luxembourg Civil Code concerns leonine clauses (clauses léonines).

(2) Or at least half, depending on what is provided for under the articles of association in accordance with the 1915 Law.

(3) Such deletion was already implemented in the context of the 2016 reform of the 1915 Law as regards the approval of any amendments of the articles of association of a S.à r.l.