The law dated 25 November 2020 (the 25 November 2020 Law), amending the law of 23 September 2020, comprises the latest set of measures adopted by the Luxembourg legislation to ensure that companies will continue to benefit from simpler formalities for adoption of corporate resolutions.
The 25 November 2020 Law extends the effects of the law of 23 September 2020 concerning the holding of meetings in companies and other legal entities (the 23 September 2020 Law) until 30 June 2021.
For a fulsome overview of the measures introduced by the 23 September 2020 Law, make sure to check our newsletter available here.
What flexibilities does the 23 September 2020 Law, as amended by the 25 November 2020 Law, offer?
The 25 November 2020 Law does not amend the ratione materiae of the 23 September 2020 Law. Therefore, Luxembourg companies will continue to have the option to hold shareholder and board meetings and adopt resolutions without the physical presence of the relevant body's members.
As regards general meetings, irrespective of whether such measures are expressly allowed by the company's articles of association and regardless of the expected number of participants in said general meeting, companies are allowed to request their shareholders to cast their votes:
- in writing or in electronic form allowing the identification of shareholders provided that the full text of the resolutions or decisions to be taken has either been published or sent to the attention of shareholders in advance of the vote; or
- via videoconference or other means of telecommunication allowing the identification of shareholders.
A shareholder may also attend the meeting by a proxy designated by the company. This in means that the right of a shareholder to attend a meeting by proxy needs to be given to a shareholder in addition to the alternatives at (i) and (ii) above.
Special reference is made to listed entities which are subject to the Law of 24 May 2011 on the exercise of the general meetings for listed companies where a shareholder or any other participant has designated an agent different to an agent designated by proxy as mentioned above but in line with article 8 of such law. In such case, this agent can only participate to the general meeting by the means provided at paragraphs (i) and (ii) above.
As regards the resolutions adopted by other corporate bodies, notwithstanding any provision to the contrary in the company's articles of association and although not explicitly allowed by the company's articles of association, the members of such bodies may:
- adopt resolutions by way of circular resolutions; or
- attend a meeting held by video conference or other telecommunication means allowing the identification of the participants.
The shareholders or members of other corporate bodies which participate in decision-making through the alternatives presented here above will be deemed present for the calculation of the applicable quorum and majority requirements.
The 25 November 2020 Law also brings an important change in terms of management obligations to declare insolvency, by providing for an extension to the period of time during which an undertaking has to apply for insolvency. Pursuant to the changes introduced by the 25 November 2020 Law, an undertaking which meets the criteria set out in article 440 of the Luxembourg Commercial Code (i.e. is unable to pay its debt(s) which are due and payable) has until 30 June 2021 to declare insolvency. The management of such an undertaking is therefore not bound by the shorter one-month period set out in article 440 of the Luxembourg Commercial Code.
To whom does the 23 September 2020 Law, as amended by the 25 November 2020 Law, apply?
The 23 September 2020 Law initially applied to all Luxembourg companies. The Law's scope also included legal entities, not covered by the definition of "companies" as per article 8 of the Luxembourg commercial code, such as: non-profit associations (associations sans but lucratif) and foundations (fondations), agricultural associations (associations agricoles), mutuelles, (European) economic interest groups (groupements (européens) d'intérêt économique), unions (syndicats), Fond du logement, Institut of company auditors (Institut des réviseurs d'entreprise) and National association of chartered accountants (Ordre des experts comptables) granting the latter, when applicable, with the same possibilities and alternatives for holding their general meetings and/or their management or other statutory meetings.
In addition to the above, the 25 November 2020 Law extends the scope of entities eligible to benefit from the 23 September 2020 Law's flexibilities to the following entities:
- the Order of Architects and Consulting Engineers (l'Ordre des Architectes et inénieurs-conseils);
- the mutual insurance associations (les associations d'assurance mutuelles);
- the Diekirch Bar Association and the Luxembourg Bar Association (l'Ordre des avocats du Barreau de Diekirch et l'Ordre des avocats du Barreau de Luxembourg) ;
- the Chamber of Notaries (la Chambre des Notaires) ; and
- the Chamber of Judicial Officers and the Council of the Chamber of Judicial Officers (la Chambre des huissiers de justice et le Conseil de la Chambre des huissiers de justice).
Until when does the 23 September 2020 Law, as amended by the 25 November 2020 Law, apply?
The 25 November 2020 Law extends the application of the measures provided for by the 23 September 2020 Law until 30 June 2021 included.
Companies therefore benefit from the flexible measures provided by the 23 September 2020 Law, as amended by the 25 November 2020 Law, allowing the attendance at meetings via remote means and the adoption of resolutions without physical meetings until mid of next year.
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.