On 27 July 2022, bill of law n° 8053 was filed with the Luxembourg Parliament, with the aim of implementing into national law Directive (EU) 2019/2121 of the European Parliament and the Council of 27 November 2019 amending Directive (EU) 2017/1132 relating to cross-border conversions, mergers and divisions (the “Directive”).
Day #12 : mobility of companies
What are the objectives of the Directive?
- Improve freedom of establishment
- Protect employees, creditors and minority shareholders
- Discourage abuse
What does the Directive change?
It amends the merger process through the rectifications of imperfections in the existing legal framework (including but not only in respect to the scrutiny of the legality of a cross-border operation and to the protection of creditors and employees). It also introduces a procedure for cross-border conversions and cross-border divisions.
What is the Luxembourg legislator’s approach when implementing the Directive?
It intends to keep an attractive and competitive legal framework in line with Luxembourg’s traditional position in favour of cross-border mobility
Luxembourg will implement the whole Directive and nothing but the Directive, there will be no extension to transactions which are out of the scope of the Directive (such as cross-border operations with non EU countries).
What are the important aspects to be considered in the future?
- Scrutiny of the legality of the cross-border operation by the Luxembourg notary
- Exit right of shareholders not willing to participate in the operation
What are the innovations for Luxembourg?
Special limited partnerships or sociétés en commandite spéciale ("SCSp") were initially excluded from the application of the provisions relating to mergers, divisions and contributions, both national and cross border, due to their lack of legal personality, but the Luxembourg legislator considers that they should now benefit from the merger, division and contribution procedures in order to further strengthen the attractiveness of the special limited partnership. In order to ensure legal certainty, a cross-border operation which has taken effect may not be declared null and void.
What is the timing of implementation in the Luxembourg legal system?
The official transposition deadline as provided in the Directive is 31 January 2023. It has to be noted that the Luxembourg legal process for adopting the bill is still in its early stages and that changes to the draft bill may still occur.
