Luxembourg updates

Banking & Financial Services

Contributed by NautaDutilh
New bill brings Luxembourg to the forefront of distributed ledger technology
  • Luxembourg
  • 16 March 2021

Parliament recently approved Bill 7637, which modified the Law of 5 April 1993 on the financial sector and the Law of 6 April 2013 on dematerialised securities. The bill introduces important modifications with respect to the direct issuance of dematerialised securities using distributed ledger technology (DLT) and strengthens Luxembourg's position as one of the most DLT-friendly and important financial hubs in the European Union.

New CSSF platform for submission of prospectuses and related documents
  • Luxembourg
  • 09 March 2021

Submissions of documents under the EU Prospectus Regulation and the Law of 16 July 2019 on prospectuses for securities must now be made through the e-Prospectus platform developed by the Luxembourg Financial Supervisory Authority. The e-Prospectus platform covers submissions and tracking of applications and submissions of notification requests, among other things.

New act on professional payment guarantees
  • Luxembourg
  • 28 July 2020

The law of 10 July 2020 on professional payment guarantees, which aims to create greater freedom of contract while ensuring legal certainty in the provision of personal guarantees governed by Luxembourg law, recently entered into force. The new law is undoubtedly a welcome addition, especially in times of heightened uncertainty, and demonstrates once again Luxembourg's attractiveness as a forward-looking and business-friendly financial centre.

Impact of COVID-19 crisis on liquid and illiquid funds and their managers
  • Luxembourg
  • 07 July 2020

Due to the capital markets conditions caused by the COVID-19 crisis, liquid funds may need to activate their gating provisions in order to limit redemptions, in accordance with the terms of the fund's prospectus. Further, illiquid funds, such as private equity and loan-originating funds, should consider whether the COVID-19 crisis could constitute a material adverse effect under agreements or deals that have yet to close. This article examines the impact of COVID-19 on liquid and illiquid funds and their managers.

Investment funds: recommendations for fund managers
  • Luxembourg
  • 30 June 2020

The Luxembourg Financial Supervisory Authority and the European Securities and Markets Authority are closely monitoring the COVID-19 situation and have issued a number of recommendations for fund managers concerning remote working, risk management and compliance, disclosure and reporting requirements.


Corporate Finance/M&A

Contributed by NautaDutilh
Utopia SA – a test for squeeze-out procedures
  • Luxembourg
  • 08 October 2014

After three shareholders representing 99.24% of the share capital of listed company Utopia SA announced their intention to exercise their right of squeeze-out, the remaining minority shareholders commenced judicial proceedings in a bid to block the squeeze-out. The case may open the way for minority shareholders in listed companies to oppose squeeze-outs more frequently.


Employment & Immigration

Contributed by Castegnaro
Clarifications on short-time working system as of April 2021
  • Luxembourg
  • 24 March 2021

In a recent press release, the Ministry for Labour, Employment and the Social and Solidarity Economy and the Ministry of the Economy clarified how the short-time working system will be applied between 1 April 2021 and 30 June 2021. This article highlights the implications for different businesses, including industrial businesses and those in the vulnerable sectors relating to tourism and events.

Law on secondment of employees enters into force
  • Luxembourg
  • 24 February 2021

The Law of 15 December 2020 modifying the Labour Code in order to transpose the EU Posted Workers Directive recently entered into force. This article highlights the main new points of attention for employers and employees, including with regard to the extension of mandatory provisions that employers must respect, the principle of equal treatment in terms of remuneration and work postings organised by temporary agencies.

New convention on teleworking enters into force
  • Luxembourg
  • 17 February 2021

A new grand ducal regulation recently entered into force, declaring the convention on the legal framework for teleworking a general obligation. This article highlights the main points introduced by the teleworking convention, including with regard to its scope, the definition of 'teleworking', employers' provision of teleworking equipment and the equal treatment of traditional workers and teleworkers.

New procedure for leave taken for family reasons
  • Luxembourg
  • 10 February 2021

A new law recently modified the Labour Code, which now provides that employees can claim leave for family reasons if, among other things, they have a child under the age of 13 who must quarantine following a decision or recommendation of the competent national or foreign authority in order to limit the spread of an epidemic. In such circumstances, the employee's absence is justified by a certificate issued by the competent national or foreign authority confirming the decision or recommendation.

COVID-19: temporary exemption from maximum working hours
  • Luxembourg
  • 18 November 2020

The Law of 29 October 2020 recently entered into force, introducing a temporary exemption from Article L 211-12 of the Labour Code whereby maximum working hours can be increased to 12 hours per day and 60 hours per week. This exemption relates only to employees working in the health sector, employees working in the care sector and supervisory staff working in care homes for minors who are in custody. Employers must apply for authorisation from the minister of labour.


Insurance

Amendment to Insurance Contract Act in relation to Brexit
  • Luxembourg
  • 02 February 2021

The Act of 19 December 2020 implementing the Budget Act 2021 introduced into the Insurance Contract Act a new provision to secure the outcome of insurance policies underwritten by UK insurers post-Brexit. Among other things, the legislature has relieved any doubt as to the validity of insurance contracts in the event that an EEA or third-country insurance undertaking loses its approval to carry out direct insurance operations in Luxembourg while retaining its authorisation in its home state.

Application of EIOPA guidelines on outsourcing to cloud service providers by insurers and reinsurers
  • Luxembourg
  • 25 August 2020

The European Insurance and Occupational Pensions Authority recently issued new guidelines on outsourcing to cloud service providers which apply to insurers and reinsurers. The guidelines supplement the general regulatory framework based on the EU Solvency II Directive and EU Delegated Regulation 2015/35. The Insurance Commission has since confirmed that it will apply the guidelines in full. Therefore, Luxembourg insurers and reinsurers must abide by the guidelines.

Are administrative fines insurable in Luxembourg?
  • Luxembourg
  • 03 December 2019

As the insurability of administrative fines is not specifically provided for by the Insurance Contract Act, it may not be prohibited per se. Nonetheless, the industry is reluctant to offer insurance cover for administrative fines. Given the increasingly high penalties that can be imposed by administrative authorities following the entry into force of the EU General Data Protection Regulation, a legislative response would be appreciated at a supra-national level.

Luxembourg life insurance – a European adventure
  • Luxembourg
  • 23 July 2019

With more than 93% of premiums collected outside the Grand Duchy, Luxembourg life insurance has undeniably contributed to the dynamism of the European passport with regard to both freedom of services and freedom of establishment. Luxembourg life insurance is mainly a passported activity and thus marked by cross-border issues shaped by local developments that require constant monitoring, particularly when it comes to one of the sector's leading products: life insurance linked to investment funds.


Litigation

Contributed by Luther SA
Directors' liability: directors can be liable for tax obligation breaches that preceded their appointment
  • Luxembourg
  • 23 March 2021

Corporate law recognises a fundamental principle which is known as the 'organ theory' – that is, directors acting in their capacity as a company's corporate representative cannot be held personally liable for the corporate obligations arising from their position. However, there are exceptions to this principle with respect to tax law. The Administrative Court recently rendered a judgment which is a concrete example of the Luxembourg courts' approach in this regard.

Shareholder dispute: conditions for a joint venture's court-ordered dissolution
  • Luxembourg
  • 02 February 2021

In a notable case, the Luxembourg District Court ruled on a dispute between two joint venture partners which had arisen in relation to a serious disagreement on the management of a hotel group. The decision provides interesting insight into the duty of resigning managers, the rules governing the convening of shareholders' meetings and the consequences of their breach and the conditions for obtaining a court-ordered dissolution of a joint venture company due to a serious disagreement among its partners.

Shareholder dispute: court cancels capital increase due to breach of preferential subscription right
  • Luxembourg
  • 15 December 2020

In a notable decision, the Luxembourg District Court cancelled a company's capital increase on the grounds of a breach of the preferential subscription right of one of its shareholders. The decision gives interesting insight into the convening process for shareholders' meetings, the legal qualification of a debt contribution and its consequences, the outcome of a breach of a preferential subscription right and the prescription period applicable to the cancellation of shareholder decisions.

Luxembourg District Court rules on company wrongdoing as ground for piercing corporate veil
  • Luxembourg
  • 13 October 2020

The Luxembourg District Court recently ruled that a wrongful action committed by a company in the context of third-party attachment proceedings was justification to pierce the corporate veil. The decision confirms that the often-difficult task of proving that a company is fictitious is no longer the only possible way in which to thwart a debtor's fraudulent manoeuvres.

Unforeseeability theory developments in aftermath of COVID-19 crisis
  • Luxembourg
  • 04 August 2020

To counterbalance the negative economic impact that the COVID-19 lockdown measures have triggered, Luxembourg has introduced several regulatory and legislative measures to limit or at least mitigate the financial difficulties that many businesses may face in order to avoid bankruptcy. This article highlights the unforeseeability theory, which has not been used much in previous case law, but could be useful in the context of the unfolding COVID-19 pandemic.