Global Trustee and Fiduciary Services News and Views

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Global Trustee and Fiduciary Services News and Views | Issue 47 | 2017 53
1 See
French version, last accessed on 22 November 2016.
2 See
French version, last accessed on 22 November 2016.
3 For the purposes of this article, the term “fund-specific
legislation” shall have the broadest meaning and be
understood to comprise the rules applicable to the manager
in addition to product rules.
4 Luxembourg Court of Appeal, 18 March 1993, R. no 13501.
It establishes that a legal entity may assume
a management position in all management
setups: as a director, general manager, member
of the management committee, member of the
management board (directoire) or supervisory
board (conseil de surveillance). In such case,
the legal entity must appoint a natural person
as a permanent representative in charge of the
execution of the functions in the name and for
the account of a legal entity. The same applies
to the appointment of a legal entity
as liquidator. The rules applicable to SAs will
also apply to SASs.
With regard to the corporate partnership limited
by shares (société en commandite par actions
or SCA), the Company Law Reform contains
an important exemption to the above rule.
Indeed, when legal entities are appointed as
general partners of an SCA, the latter are not
required to appoint a permanent representative.
This clarification is made to prevent previous
Luxembourg court rulings to the contrary from
becoming precedent.
New “simplified” convening procedures
The opportunities for the fund industry are not
limited to the managing bodies of companies.
The Company Law Reform harmonises and
simplifies the procedures for convening general
meetings of shareholders and the deadlines
applicable thereto. It standardises the deadline
for the publication of convening notices, fixing it
at 15 days prior to the relevant general meeting.
It establishes that the convening notices need
not be published on the Recueil Electronique des
Sociétés et Associations (RESA) where all shares
are issued in registered form only. In addition,
it provides that the holders of registered shares
may be convened to the general meetings
by means other than registered mail to the
extent that such alternatives are provided for
in the articles of association and accepted by
shareholders on an individual basis.
Balance
It is natural that the reform is not one-sided.
Luxembourg lawmakers have recognised that
a sound legal system requires a fair and subtle
balance between the interests of its stakeholders.
In exchange for increased flexibility and
structuring opportunities, the Company
Law Reform strengthens the protection of
minority shareholders through increased
transparency, and new rights have been added
to the toolbox for shareholder protection, e.g.
the right to pose written questions or initiate
expert investigations. While the majority
principle has prevailed in the 1915 Law to avoid
blocking situations and ensure the continuity
of a company’s business, minority shareholder
protection will henceforth be strengthened by
the introduction of the minority social action
(action sociale minoritaire), i.e. the right to
initiate an action against the management
(directors, members of the management or
supervisory board) by shareholders holding
10% of the voting rights of the company.
Additionally, holding 10% of the voting rights
becomes the uniform threshold for triggering
shareholders’ rights, be it for convening
the general meeting of shareholders, the
prorogation of the general meeting or the
initiation of a minority shareholder action.
It would be interesting to observe how these
new rights might be exercised by the minority
shareholders in practice. This may change
not only the climate of general meetings but
also, through the minority shareholder action,
increase the risk of directors being sued.
All in all, the Company Law Reform provides
plenty of opportunities for structuring the
shareholding and governance of the companies
while at the same time offering stability over
the long term.
Isabelle Lebbe
Partner
Giedre Plentaite
Senior Associate
Arendt & Medernach