Litigation, Luther SA updates

Luxembourg

Contributed by Luther SA
District court rules on interpretation of minority actions
  • Luxembourg
  • 10 March 2020

In a notable case, the Luxembourg District Court ruled on the requirements for bringing minority actions and whether a broad interpretation thereof is possible. The judgment exposes the common lack of legal recourse available to shareholders who hold equal parts in a company. Whereas majority shareholders can impose their will at general assemblies and minority shareholders can commence minority actions, the possibility for equal shareholders to take similar action would lead to a problematic stalemate.

Luxembourg District Court rules on prescription periods for invalidating shareholder decisions
  • Luxembourg
  • 17 December 2019

In Luxembourg, several time limits apply with regard to prescription periods. Notably, the inclusion of specific prescription periods in the Law of 10 August 1915 on Commercial Companies does not preclude the application of prescription periods as provided for in the Civil Code. The Luxembourg District Court recently reiterated this position in a judgment regarding prescription periods for invalidating shareholder decisions.

District court examines aspects relating to loan guarantees
  • Luxembourg
  • 29 October 2019

The Luxembourg District Court recently ruled on the equivalence of suretyships and autonomous guarantees. Although the court interpreted agreements using the traditional rules, this decision illustrates its pragmatic approach of analysing commitments to qualify guarantees.

Liquidator held liable for omitting claims arising from ongoing litigation
  • Luxembourg
  • 15 October 2019

In a 2018 decision, the Luxembourg District Court found a liquidator liable for damages which the plaintiffs had suffered as a result of the early closure of the liquidation while legal proceedings were still ongoing. The court held that since the liquidator had personally received the document instituting the proceedings, he should not have ignored any claims that might have arisen from the ongoing dispute. Notably, the court went even further by also holding the liquidation auditor liable.

Directors' liability in event of non-compliance with company tax obligations: case law reversal
  • Luxembourg
  • 30 July 2019

Under the General Tax Law, directors are held personally liable for the fulfilment of their company's tax obligations. Prior to a case law reversal, the Administrative Court took a strict approach towards directors and systematically held that they had breached their duties by failing to withhold, declare or pay company taxes. However, in 2017 the Administrative Court of Appeal held that the wrongful character of alleged tax breaches must be demonstrated by law and factually proved by the Tax Administration.


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