Regulatory uptick from the EU and Luxembourg keeps market players busy implementing novel rules and preempting potential hurdles and litigations. The flurry of legislation poised to affect Luxembourg businesses highlights the significance of implementing solid governance policies.
In the rapidly evolving landscape of regulations, the appointment of an ESG Head is no longer an option but a necessity, as outlined in our previous article on Paperjam News (The Head of ESG – Ensuring that ESG becomes the company's DNA | Paperjam News).
A flurry of legislation is poised to affect companies in Luxembourg, key legislative developments that will impact financial players include, amongst others:
1. Bill n° 7945 implementing Directive (EU) 2019/1937, protecting whistleblowers, which has now been adopted by the Luxembourg Parliament. It mandates procedures for reporting breaches, safeguards whistleblowers from retaliation, and introduces additional reporting channels. The text extends beyond the Directive to cover also national law violations, potentially leading to disputes in international contexts.
2. Bill n° 7650 on the introduction of collective recourse procedures in Luxembourg consumer law, following the adoption of Directive (EU) 2020/1828. This bill aims to guarantee access to justice for all by offering collective redress.
3. Bill n° 7968 on the digitization of certain aspects of a Luxembourg company's life cycle, possibly allowing incorporation of certain commercial companies through an online notarial process.
4. The long-awaited Luxembourg Insolvency legislation reform, bill of law n° 7989 which was introduced a decade ago, is also anticipated to be adopted this year. The reform will be offering more restructuring options for debtors and prioritizing business preservation over liquidation.
5. The upcoming implementation of the Directive on corporate sustainability reporting (CSRD) of 14 December 2022 will require companies to publish detailed information on sustainability matters; and
6. A potential upcoming Luxembourg merger control regime.
These legislative changes underline the imperative need for both companies and management to stay abreast with regulatory developments to mitigate the risk of liability, penalties, and reputational damage.
Given that both Luxembourg companies and their management can be personally held accountable for any harm resulting from violations of Luxembourg law, staying updated on the ever-changing regulatory environment is not only recommended but necessary.
Tracking the evolving regulatory landscape may be a complex task, but it is essential. To navigate this regulatory maze and to prevent misconduct and promote ethical practices, it is recommended to consult your lawyer before facing litigation. As the saying goes, "it is better to be safe than sorry".
Luther has a dedicated ESG Practice that works cross-department and cross-border to address these challenges.
Originally Published by PAPERJAM
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