Structures and applicable law
Types of transaction
How may publicly listed businesses combine?
Publicly listed businesses can combine through mergers and takeovers.
Statutes and regulations
What are the main laws and regulations governing business combinations and acquisitions of publicly listed companies?
The main Luxembourg laws and EU regulations that are applicable, or may be applicable depending on the activities carried out by the publicly listed companies, are:
- the Law of 10 August 1915 on commercial companies, as amended (the Company Law);
- the Law of 4 December 1967 on income tax, as amended (the Luxembourg Income Tax Law);
- the Law of 5 April 1993 on the financial sector, as amended;
- the Law of 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings, as amended;
- Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June2017 on the prospectus when securities are offered to the public or admitted to trading on a regulated market (the Prospectus Regulation) and the Law of 16 July 2019 on prospectuses for securities (the Prospectus Law);
- the Law of 19 May 2006 transposing Directive 2004/25/EC of the European Parliament and the Council of 21 April 2004 on takeover bids (the Takeover Law);
- the Law of 11 January 2008 on transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, as amended (the Transparency Law);
- the Law of 24 May 2011 on the exercise of certain rights of shareholders in general meetings of listed companies, as amended (the Shareholder Rights Law);
- the Law of 21 July 2012 relating to squeeze-out and sell-out (the Squeeze-out Law);
- the Law of 6 April 2013 relating to dematerialised securities, as amended;
- the Law of 12 July 2013 relating to the alternative investment fund managers, as amended (the AIFM Law);
- the Law of 28 July 2014 relating to the immobilisation of bearer shares and the holding of the register of registered shares and of bearer shares (the Immobilisation Law);
- the Law of 18 December 2015 on the failure of credit institutions and certain investment firms, as amended, transposing Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms (the BRRD Law);
- the Law of 23 December 2016 on market abuse (the Market Abuse Law) and Regulation (EU) 2016/1033 of the European Parliament and of the Council of 23 June 2016 on market abuse (the Market Abuse Regulation);
- the Law of 13 January 2019 setting up a register of beneficial owners;
- the Civil Code;
- the Luxembourg Labour Code;
- the Luxembourg Criminal Code;
- the rules and regulations of the Luxembourg Stock Exchange;
- circulars of the Luxembourg financial sector supervisory authority (CSSF); and
- further laws and regulations in relation to tax, labour law and the domiciliation of companies.
Cross-border transactions
How are cross-border transactions structured? Do specific laws and regulations apply to cross-border transactions?
In principle, cross-border mergers with foreign companies are allowed in Luxembourg on the condition that they are not prohibited by the provisions of the applicable foreign law.
Luxembourg has transposed the European Directives relating to cross-border mergers, notably Directives 2005/56/EC and 2007/63/EC, and most recently 2017/1132 . Cross-border mergers are subject to the Company Law. On 3 August 2011, the Luxembourg parliament amended the Company Law to transpose Directive 2009/109/EC on the reporting and documentation requirements in the event of mergers and divisions. Directive 2019/2121, amending Directive 2017/1132, is to be transposed by 31 January 2023.
A cross-border merger can be realised through a merger by absorption or by incorporation of a new entity, a merger by migration to Luxembourg or by migration from Luxembourg to another jurisdiction or through an upstream merger or a reversed merger.
Sector-specific rules
Are companies in specific industries subject to additional regulations and statutes?
Credit institutions, other professionals of the financial sector, insurance companies and investment funds are subject to specific regulations and specific approval rules by a supervisory authority.
There are also ownership restrictions on air carriers pursuant to Regulation (EC) No. 1008/2008 on common rules for the operation of air services in the Community.
Transaction agreements
Are transaction agreements typically concluded when publicly listed companies are acquired? What law typically governs the agreements?
In principle, where both companies are situated in different jurisdictions, the law applicable to the target company or target asset also governs the transaction agreements. However, depending on the nationality of the parties and interests involved in a multi-jurisdictional business combination, the parties often take advantage of the freedom to subject the transaction agreements to a law other than Luxembourg law.
Filings and disclosure
Filings and fees
Which government or stock exchange filings are necessary in connection with a business combination or acquisition of a public company? Are there stamp taxes or other government fees in connection with completing these transactions?
Generally, a business combination requires administrative filings and publications, such as:
- registration with the Luxembourg Register of Commerce and Companies (RCSL) and publications in the Recueil Electronique des Sociétés et Associations (RESA) (the online Official Gazette);
- notifications to the Luxembourg financial sector supervisory authority (CSSF) or the Luxembourg Stock Exchange;
- storage of information with the Luxembourg Stock Exchange in its capacity as the officially appointed mechanism under the Transparency Law;
- declarations to the Direct Tax Administration;
- declarations to the Joint Centre for Social Security; and
- registrations with the relevant professional chambers.
For mergers, the common merger proposal and the minutes of the extraordinary general meeting of the shareholders of the company located in Luxembourg approving the merger must be filed with the RCSL. They must also be published in the RESA.
In the context of a takeover falling within the ambit of the Takeover Law, the bidder must draw up an offer document to be submitted to the CSSF within 10 working days of the day the bid was made public.
The Luxembourg Stock Exchange also requires that it be notified in advance of events affecting securities that are admitted to trading on the Luxembourg Stock Exchange and of other information useful for the protection of investors.
A business combination that affects the securities of an issuer, the shares of which are admitted to trading on a regulated market and for which Luxembourg is the home member state, can trigger notification requirements of the shareholders and the issuer to the CSSF. When acquiring control over a listed company, alternative investment fund managers (AIFMs) are subject to notification requirements with the CSSF pursuant to the AIFM Law. Moreover, an issuer will have to disclose to the public, file with the CSSF and store with the Luxembourg Stock Exchange the total number of voting rights and capital at the end of a calendar month if the business combination affected the total issued capital and voting rights. An issuer would also be subject to notification requirements in an acquisition of its own shares if the acquisition would result in it holding a proportion of its own shares that reaches or exceeds the thresholds of 5 per cent or 10 per cent of the voting rights.
Further filings with the CSSF and disclosures to the public may be necessary under the provisions of the Market Abuse Regulation.
No stamp taxes or transfer duties are payable for the transfer of shares in Luxembourg.
Information to be disclosed
What information needs to be made public in a business combination or an acquisition of a public company? Does this depend on what type of structure is used?
The type of information to be made public largely depends on the type of structure used. If the business combination results in a modification of the articles of association of a Luxembourg company, these amendments must be filed with the RCSL and published in the RESA. Moreover, as part of the corporate resolutions and actions that must be taken, all mergers, divisions and similar operations must be filed with the RCSL and published in the RESA.
Disclosure requirements pursuant to the Prospectus Regulation, the Market Abuse Law, the Market Abuse Regulation, the Transparency Law (only in an admission of securities to a regulated market) and the rules and regulations of the Luxembourg Stock Exchange apply.
In connection with a takeover bid, the offeror is obliged to disclose, among other things, the following information:
- the decision to launch an offer;
- the approved offer document;
- information on an extension of the offering period, if required;
- information on a squeeze-out or sell-out; and
- forms of acceptance.
Moreover, the offeror and the offeree companies must provide the offer documents required to be drawn up under the Takeover Law to the representatives of their employees or directly to their employees.
Disclosure of substantial shareholdings
What are the disclosure requirements for owners of large shareholdings in a public company? Are the requirements affected if the company is a party to a business combination?
In accordance with article 8 of the Transparency Law, a shareholder who acquires or disposes of shares, including depositary receipts representing shares, of a company whose shares, including depositary receipts representing shares, are admitted to trading on a regulated market and for which Luxembourg is the home member state and to which voting rights are attached, must notify the company of the proportion of voting rights of the company held by the shareholder as a result of the acquisition or disposal where that proportion reaches, exceeds or falls below the thresholds of 5, 10, 15, 20, 25, 33.33, 50 and 66.66 per cent. The shareholder must also notify the CSSF. The voting rights shall be calculated on the basis of all the shares, including depositary receipts representing shares, to which voting rights are attached, even if the exercise thereof is suspended. The notification obligations also apply to certain financial instruments referenced to shares and those financial instruments shall be aggregated with the shares for the purposes of determining the above thresholds.
Under the AIFM Law, if an AIFM manages an alternative investment fund, which individually or jointly acquires control (which corresponds to holding more than 33.33 per cent of the voting rights of the relevant entity) over a company whose shares are traded on a regulated market, it must (1) notify the acquisition to the listed company, the shareholders of the listed company whose addresses and identities are available to the AIFM and the CSSF (the notified parties), and (2) disclose to the notified parties the identity of the AIFM, its conflict of interest policy and the policy for external and internal communication relating to the controlled company.
With regard to the Squeeze-out Law, the holder of the securities must disclose information to the company and the CSSF when it becomes a majority holder within the meaning of this law or it falls below the threshold of 95 per cent, or where it is a majority shareholder and acquires additional securities of the relevant company.
A prospectus published for the purposes of the Prospectus Regulation must also list the major shareholders of the issuer.
Law stated date
Correct on
Give the date on which the above content is accurate.
5 April 2022.