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On December 19, the Luxembourg Parliament adopted a law requiring the Luxembourg Business Registers (the LBR) to refuse registration in the Luxembourg Trade and Companies Register (the RCS) and to demand the cessation of duties of any person subject to a management disqualification, including where the disqualification originates from another EU Member State.
Companies must anticipate and document their due diligence checks, then act within 30 days of an LBR notification, failing which the matter will be referred to the public prosecutor, with a risk of governance disruption and reputational harm.
On December 19, draft law n°8342 (the Law) was adopted, completing the transposition into Luxembourg law of Directive (EU) 2019/1151 of the European Parliament and of the Council of June 20, 2019, amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law (the Directive). A partial transposition had already been implemented by the law of July 7, 2023, notably for online company formation. It remained to incorporate Article 13i of the Directive, relating to "disqualified directors," for which the transposition deadline ran until August 1, 2023. The Law, albeit late, completes this transposition in Luxembourg. It entered into force on December 23.
The new framework aims to prevent fraudulent or abusive behavior by directors by barring persons subject to a management disqualification—resulting from a court decision taken in Luxembourg or another EU Member State—from accessing management functions.
1. Disqualifications triggering refusal of RCS registration or a request to cease functions
The regime covers two categories of disqualifications, which have identical effects on RCS registrations. On the one hand, disqualifications ordered in Luxembourg, in particular:
- under Article 444-1 of the Commercial Code (prohibition on carrying out a commercial activity and holding management, control, or binding functions, notably in cases of bankruptcy accompanied by gross fault)
- under Articles 7(8), 14(7), and 18 of the Criminal Code (prohibitions on exercising certain professional or social activities in the event of crimes or offenses).
On the other hand, disqualifications ordered in another EU Member State, targeting the exercise of the functions of a legally provided corporate body or of a member of such a body vested with the power to bind the company vis-à-vis third parties and to represent it in legal proceedings, within a Luxembourg SA, SCA, or SARL.
2. LBR process: refusal of registration, cessation of functions, and third-party information
The LBR applies a uniform sequence, regardless of the EU Member State from which the disqualification originates.
At the point of taking office, the LBR refuses RCS registration of any person subject to a relevant disqualification. When the disqualification is detected after registration, the LBR notifies the registered entity by registered mail, requesting that it remedy the situation within 30 days from the date the request is sent. The notification is issued within three business days following the LBR's confirmation of the disqualification. For the purpose of informing third parties, the LBR records a remark (mention) in the entity's RCS file, which is maintained until the resignation, removal, or expiry of the mandate of the person concerned.
If the entity has not taken the necessary measures within 30 days, the LBR forwards the file to the public prosecutor.
3. Practical impacts and actions to take
This tightening entails heightened vigilance during the appointment, renewal, and continued tenure of directors. Before any RCS filing, companies should verify the absence of any management disqualification—with domestic or EU source—affecting any person who will be entrusted with authority to bind and represent the company.
If notified by the LBR, companies must act without delay: arrange for resignation or removal, appoint a replacement if necessary, and file the changes with the RCS to avoid referral to the public prosecutor.
4. Key takeaways
The Law establishes an effective mechanism for excluding disqualified directors, based on intra-EU recognition of disqualification decisions and on enhanced LBR powers to refuse registration, publicize information in the RCS, and report to the public prosecutor.
Companies are well advised to adapt their verification and governance processes to anticipate registration refusals, ensure ongoing compliance, and reduce exposure to litigation and reputational risks.
