The public health emergency and economic slump precipitated by the Covid-19 pandemic has prompted the authorities to amend various rules and regulations applicable to companies in Luxembourg to enable them to cope with existing and future difficulties affecting their business.
We have summarised below the most important developments.
Prohibition on holding physical meetings
In the current circumstances, with the circulation of people drastically restricted in the European Union and worldwide, the holding of both meetings of management boards and boards of directors of a company and of general meetings of shareholders has been significantly affected.
On 20 March, the Luxembourg government issued a grand-ducal decree offering practical solutions to the difficulty in conducting meetings on the part of companies and other legal entities. Other shareholders' rights, including the right to information and convening formalities, remain applicable.
Impact on shareholders
Regarding general meetings of shareholders, Article 1(1) of the decree states that, irrespective of any contrary provision in a company's articles of association, or of the number of participants present or represented, a company is entitled to hold any general meeting of shareholders without conducting a physical meeting, and summon shareholders to attend meetings.
They may exercise their rights via remote voting, either in writing or in electronic form, provided that the full text of resolutions or decisions to be taken has been published or communicated to them. Alternatively, they may exercise voting rights through a proxy appointed by the company, such as a lawyer, auditor, notary or board member, or by videoconference or any other telecommunications channel allowing the identification of each participant.
Shareholders who participate by these means are deemed to be present for the calculation of the quorum and majority at the meeting.
Should it be necessary to hold an extraordinary general meeting in front of a notary, please note that this is still feasible despite the exceptional circumstances. We can assist you should you need to organise a meeting urgently.
Impact on governance bodies
According to Article 1(2), irrespective of any contrary provision in a company's articles of association, other governance bodies may hold meetings without a physical presence through written circular resolutions, or by videoconference or any other telecommunications channel allowing the identification of each participant. Members who participate by these means are deemed to be present for the calculation of the quorum and majority.
Feel free to contact us if you need our assistance to organise such meetings and prepare relevant documentation to reflect the situation resulting from the Covid-19 pandemic.
Exceptional extension of annual accounts approval and filing
A company's annual accounts should normally be approved by shareholders within six months of the end of the financial year. Under Article 1(3), irrespective of any contrary provision in a company's articles of association, companies are exceptionally authorised to convene their annual general meeting at the latest on a date within six months after the end of its corporate year, or on a date up to 30 June 2020. This decision may be of relevance to a company that has a statutory fixed date for its AGM.
If you have already convened the annual general meeting, according to Article 1(4), you can still inform your shareholders of your intention conduct to the meeting in accordance with the provisions of Article 1(1) as above, provided you do so no later than three business days before the scheduled meeting.
The company's annual accounts should normally be deposited within one month of their approval with the Luxembourg register of commerce and companies. The Luxembourg Business Register announced on March 18 that companies will have an additional period of four months to file their annual accounts, at the standard administrative fee – that is, with no late filing penalty.
We are currently assisting clients with the approval of their annual accounts as smoothly as possible, from organising approval to deposit of the accounts with the Luxembourg Business Register. Please contact us should you need our assistance.
Direct Taxation Authority offers flexibility over liquidity problems
On March 17, Luxembourg's Direct Taxation Authority (Administration des contributions directes or ACD) announced that in the event that a company or other legal entity is facing liquidity problems due to Covid-19, they may apply for cancellation of quarterly advance payments of income tax and municipal business tax, for the first or second quarters of 2020, or a delay to the deadline for payment of income tax, municipal business tax or net worth tax.
The ACD has placed online two forms to be completed by entities wishing to benefit from one of these measures, at: https://impotsdirects.public.lu/fr/formulaires/contribuables.html
Requests for cancellation of tax advances and payment deadline delays will be accepted automatically for eligible taxpayers which have advances or tax assessments due.
In addition, the deadline for submitting tax returns has been extended until June 30 for legal entities and individuals, as well as for taxpayers wishing to request, modify or revoke their individual tax election.
The full text of these regulations or announcements is available as follows:
Grand-ducal decree: http://www.legilux.lu/eli/etat/leg/rgd/2020/03/20/a171/jo
Luxembourg Business Register announcement on the home page of its website: https://www.lbr.lu
Direct Taxation Authority newsletter: https://impotsdirects.public.lu/fr/archive/newsletter/2020/nl17032020.html
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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.