Luxembourg implements the EU Mobility Directive on cross-border conversions, mergers, and divisions

The New Law will in particular amend the law of 10 August 1915 relating to commercial companies, as amended, to create two separate legal regimes dealing with cross-border conversions, mergers and divisions:

1. a general legal regime for domestic and non-EU cross-border mergers, divisions and conversions, and EU cross-border conversions, mergers and divisions that do not fall within the scope of the Directive; and
2. a special legal regime for EU cross-border conversions, mergers and divisions which in Luxembourg will apply to société anonyme, société à responsabilité limitée and société en commandite par actions only.

The general legal regime essentially adheres to the existing regime for domestic and cross-border operations with some changes to reflect certain features introduced by the Directive, such as a simplified procedure in case of a merger between sister companies. This is meant to reinforce Luxembourg’s attractiveness for domestic and cross-border restructurings. 

The special legal regime for European cross-border conversions, mergers and divisions is essentially a de minimis transposition of the Directive. Key features of this special legal regime are outlined below:

• more information and involvement of the stakeholders (i.e. shareholders, creditors and employees) of the companies involved in such transactions;
• the right for those shareholders who vote against such transactions to sell their shares;
• a clearer set of rules regarding creditors’ protection; 
• an increase of the Luxembourg notary’s control obligations and liability related to the issuance of the certificate confirming the legality of these transactions; and
• an overall potential increase in the time required to complete such transactions compared to the time required for transactions under the current regime.

The New Law will enter into force on the fourth day following its publication with the Luxembourg Official Gazette. It further provides for a transitory period pursuant to which it will apply to any cross-border conversions, mergers and divisions for which a cross-border conversion plan, merger plan or division plan (as the case may be) is published on or after the first day of the month following the entry into force of the law.

Authored by Alexander Koch, Emmanuel Lamaud, and Benoit Serraf.
Hogan Lovells (Luxembourg) LLP is registered with the Luxembourg bar.