Luxembourg's legislative boom in corporate law

In the context of persistent global inflation, geopolitical complexities, and economic challenges, Luxembourg witnessed a surge in legislative activity, particularly in corporate law, over the past year.

Key reforms align with three objectives:

Clarifications and corrections

Law of 19 July 2023 addressed inconsistencies and uncertainties that emerged from the 2016 reform to the law of 10 August 1915 on commercial companies, as amended, introducing key amendments such as excluding redeemed shares and shares with waived or suspended voting rights from quorum calculations, clarifying procedures for single-member SARL and updating the procedure for approving the transfer of shares to non-shareholders in SARLs.

Modernisation and digitalisation

Law of 15 June 2023 focused on digitalising and modernising company law and the notarial profession, introducing measures like online incorporation of SA, SARL and SCA without physical presence, online payment for cash contributions, the use of electronic formats for notarial deeds, and the provision of new rules for notaries focusing on party identification, electronic signatures, and the establishment of a notarial electronic exchange platform.

Law of 26 July 2023 modernised the legal framework for the right of establishment by clarifying and introducing certain criteria for professional integrity, a “new chance” concept for directors after bankruptcy, altering business license issuance and display, and modifying the conditions of presence and qualifications that the business license holder shall meet.

Law of 7 August 2023 modernised insolvency law, introducing new preventive reorganisation procedures, measures for early financial difficulty identification, abolishing certain measures, and reclassifying fraudulent bankruptcy as an offense instead of a crime.

On 28 July 2023, draft bill 8286 was introduced to revise the Luxembourg accounting law, focusing on modernisation, extending the scope to non-commercial undertakings, extending the scope of enterprises which shall benefit from simplified measures, introducing requirements for special limited partnerships and abolishing the function of statutory auditor (commissaire aux comptes).

Reinforced frameworks

Law of 28 October 2022 streamlined administrative dissolution of shell companies violating criminal laws or provisions of the Commercial Code or the laws governing commercial companies.

On 27 July 2022, draft bill 8053 was introduced to transpose Directive (EU) 2019/2121 regarding cross-border conversions, mergers and divisions (Mobility Directive) into Luxembourg law.

Law of 14 July 2023 introduced a national screening mechanism for foreign direct investments (FDI) to safeguard security and public order by notifying certain critical activities' control to the Luxembourg Ministry of Economy.

On August 23 2023, draft bill 8296 was introduced to establish a merger control regime, requiring companies to notify their concentrations to the Luxembourg Competition Authority before implementation, making Luxembourg the final EU member to adopt such a regime.

On August 4 2023, Luxembourg introduced draft bill 8292, implementing and aligning with the EU Directive 2022/2523 which aims on ensuring a global minimum corporate income tax of 15% for multinationals or domestic groups with an annual turnover exceeding €750 million.

Law of 15 August 2023 implemented the public CbCR Directive (EU) 2021/2101 mandating disclosure of income taxes by certain enterprises. Concerned entities must file reports with the Luxembourg Trade and Companies Register, and non compliance may result in fines of €500 to €25,000 for board members.

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Luxembourg’s legislative boom in corporate law | Paperjam News