Luxembourg's Companies Act 'reform bill' adopted in
July 2016 includes formal confirmation of measures which provide
increased flexibility for companies.
On 13 July 2016, the Luxembourg Parliament formally adopted the
so-called 'reform bill' that aims to modernise the
Luxembourg Companies Act of 10 August 1915. The Bill serves to both
confirm unwritten practice in the current legal framework and
introduce a number of new rules aimed at increasing the flexibility
of doing business in Luxembourg; making the country even more
attractive as an international business centre.
Formal confirmation of practice
Formal confirmation of practice measures put in place makes the
following now possible in Luxembourg:
One-step dissolution. However, this
implies additional conditions which will be outlined in the next
update in this series
Tracking shares, ie. shares that are
linked to a specific asset of the company, are allowed (art. 1853
Warrants/convertible bonds and their
conversion into shares now officially recognised and regulated
Redeemable shares now officially
recognised for S.à r.l. (art. 182 (2))
Founder shares now officially
recognised for S.à r.l. (art. 183 (1) 2°)
Interim dividends now officially
recognised for S.à r.l. (art. 198bis)
Circular resolutions now officially
recognised (art. 64 (1) S.A., art. 191bis (2) S.à r.l.).
While the law states that such circular resolutions are deemed as
having been taken at the registered office of the company, this
view is unlikely to be shared by foreign tax authorities, so tax
substance considerations do not change.
*All references to articles mentioned above are
references to the law of 10 August 1915 unless expressly
For existing companies, a period of transition is granted. They
have 24 months, in particular, to amend their Articles in order to
comply with the new formal confirmation of practice regulations. If
their only changes required are related to an update of references
as the article number in the law changed, the update of the
articles may be done by Board resolution.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Confidentiality of corporate documents and information is one of
the key attractions of incorporating a company in the BVI. A
company search of the BVI Registrar of Corporate Affairs will only
disclose certain information and documents.
The primary sources of regulation of M&A in the British Virgin Islands are the Business Companies Act, 2004 (the "Companies Act") and common law.
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