We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
It's a key question that companies should be asking
as the number of mandates held by individual directors continue to
be scrutinised - what value do the directors bring to your
Board?
Substance regulations in Luxembourg are becoming increasingly
stringent and one ongoing issue of concern is the level of scrutiny
applied to directorship mandates. A circular from the Commission de
Surveillance du Secteur Financier (CSSF) in August of 2018 pointed
to the number of mandates that directors should, ideally, be taking
on and the number of hours they need to dedicate to those mandates.
The topic was raised in the context of regulated entities however
as with many issues highlighted by the CSSF they do have a –
usually positive – knock-on effect on unregulated vehicles
and overall industry best practices.
Many Luxembourg companies should be prompted to ask if they are
getting real value from their Board composition – and in what
ways.
The company director
Board member and directorship comes with responsibilities and
liabilities. Those in the job for a long time can attest to the
long list of associated duties:
representation of the company
responsibility for the financial
statements and taxes
acting in good faith using
confidentiality, common sense and applicable company articles and
laws to look after the interests of the company and its
stakeholders.
The role means taking ultimate responsibility for actions and
omissions.
Directors in Luxembourg – whether they fulfil their role
in addition to their day job or as a full-time function
(independent directorship on multiple mandates) – have duties
beyond the usual legal and regulatory compliance framework. As
Board responsibilities evolve and complex vehicles launch,
directors must show "added value" and fulfil a more
challenging and supportive function by providing the necessary
diverse expertise. Directors need to harness their experience, have
deep knowledge of all applicable regulations and understand the
potential impact to the structure they sit on. Being attuned to the
potential effect of local regulation is where local and resident
directors really make their mark.
Luxembourg associations such as ALFI (Association of the
Luxembourg Fund Industry) and ILA (Institut Luxembourgeois des
Administrateurs) make it possible for directors to undertake best
practice training, access relevant literature and participate in
workshops that help them stay up to date. However an overloaded or
inactive director poses a real risk, as they are essentially a
missing pair of eyes on your board. By accepting an appointment,
directors have a duty to meet expectations by contributing,
committing and actively participating in line with governance and
other procedures in place. The law requires directors to exercise
their duties in line with the degree of care, diligence and skill
of a reasonable prudent person in a comparable position.
Every director should – in theory – run an annual or
biennial gap analysis or good governance matrix exercise to really
identify individual core areas of expertise, decisions made
throughout the year and how valuable everyone's contribution
really was
Key questions to ask
Is your board composition still relevant? Are there any gaps to
fill? Do you need to bring in any more Luxembourg residents who
truly have their feet in the local market, and are across the
latest regulations such as GDPR, MDR, UBO, ATAD and so on?
Talk to us
What makes TMF Luxembourg directors different is our expertise
particularly in the private equity and real estate space. A good
proportion of our local specialists sit on boards. They are not
overloaded with directorship mandates and can effectively apply
their expertise – gained through daily work on multiple
client cases – to the boards they sit on. Our experts are
active directors who understand company operations and compliance,
know how to bridge gaps and propose effective solutions.
TMF Group provides its staff with constant training to keep up
with the latest developments in corporate governance. Our large
pool of directors help to make sure that client compliance is taken
care of.
If you want to discuss the added value a TMF Luxembourg director
can bring to your board, contact us today.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Cyprus Investment Program had come under attack in recent weeks, after it was reported that persons with close links to their home country's authoritarian regime had been granted Cypriot ...
Minority or deadlocked shareholders in a Cypriot company may become oppressed, defrauded or unfairly prejudiced by the controlling or majority shareholders.
We refer to our alert from June 2019 for guidance on the requirements of the Economic Substance (Companies and Limited Partnerships) Act, 2018 and the definitions of Legal Entity, Relevant Activity and Financial Period.
Jersey has made no secret of the fact that it strives to be a leading jurisdiction for private wealth management and that it is open for family office business.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
