In a decision on 27 April 2023, the Luxembourg Supreme Court sent a strong message to the international legal community. The Court asserted that foreign law receivers and/or judicial managers of Luxembourg companies' shares must strictly adhere to the publication requirements under the Law of 19 December 2002 concerning the Trade and Companies Register (RCS) as amended. If they do not, their corporate decisions are voidable.
In this case, a Milan court ordered the preventive seizure of all shares of a Luxembourg public limited company (LuxCo) in 2016, as part of a criminal investigation against its sole shareholder. The seizure was executed by Luxembourg judicial authorities through international criminal assistance and was registered in LuxCo's share register.
In 2018, the Milan court appointed a lawyer as the judicial administrator of the seized assets and directed him to take possession of the shares by registering his appointment in LuxCo's share register. The same court later instructed the lawyer to decide on LuxCo's liquidation and appoint a liquidator.
The indicted sole shareholder initiated summary proceedings to prohibit the judicial administrator from voting on LuxCo's dissolution and liquidation.
The president of the Luxembourg District Court, as an interim measure, initially ruled in favour of the request, but the Luxembourg Court of Appeal overturned the decision. The Court of Appeal ruled that the Italian courts had validly appointed the judicial administrator as the administrator of LuxCo's shares with the power to exercise the attached voting rights.
During the appeal procedure, the sole shareholder argued that the judicial administrator's capacity as LuxCo's administrator had not been registered with the RCS, in violation of RCS Law. Consequently, the judicial administrator could not validly make a shareholder decision. The Luxembourg Court of Appeal rejected this argument, but the Luxembourg Supreme Court ultimately overturned the decision, which held that the Court of Appeal had violated article 13 of the RCS Law.
The decision emphasises the need for foreign law appointed receivers and/or judicial managers to ensure their appointment is properly registered and published in accordance with the Luxembourg RCS Law to avoid potential challenges to their authority and the decisions they make. This will notably contribute to greater legal certainty in cross-border litigations and restructuring proceedings involving Luxembourg companies.
Originally published by Lexology
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