Agefi Luxembourg - avril 2025

Avril 2025 9 AGEFI Luxembourg Economie / Fiscalité F or a country that prides itself on being a business-friendly jurisdiction, Luxembourg took its sweet time transposing the EUMobility Directive (Direc- tive (EU) 2019/2121) and is the last country within the EU to do so. But, as of 17 February 2025, the Grand Duchy has finally caught up, aligning its legal framework with the rest of the EU. What is it about? The new law, which came into force on 2 March 2025, modern- izes the rules governing cross-bor- der mergers, divisions, and conversions. The goal: Greater legal certainty, enhanced corporate mo- bility - and, of course, more paperwork. Because an EU directive without a hefty dose of bureau- cratic complexity is like the Yeti – often imagined, but not really observed in real life. What’s new? The transposition of the Mobility Directive intro- duces a structured legal process, aligning Luxem- bourg’s corporatemobility ruleswithEUstandards. The reform removes legal uncertainties around cross-border restructurings, particularly where na- tional rules lacked harmonization. Companies un- dertaking mergers, divisions, or conversions now have clearer procedural requirements, ensuring greater transparency and legal predictability. The directive also reinforces protections for minority shareholders, employees, and creditors. Luxembourg’s transposition introduces a distinc- tion between two legal regimes: a General Regime (for domestic and non-EU/EEAcross-border oper- ations) and a Special Regime (for EU/EEA cross- border operations). The latter comes with a fresh set of compliance obligations that will make cor- porate restructurings even more exciting for lawyers, notaries, and accountants alike. The new rules apply to all operations whose com- mon draft terms are published on or after 1 April 2025 - and yes, despite theApril Fools’ timing, this one is no joke. Cross-border conversions: no longer an illegal alien Historically, Luxembourg law lacked a dedicated legal framework for cross-border conversions (this now being the technical term used by the directive insteadof “migration”) of companies that keep their legal personality, even though suchoperationswere acknowledged in practice. Under the new rules, Luxembourg companies now benefit from a structured and legally recognized process for cross-border conversions. But before popping the champagne, note that the process is now more regulated than ever, particularly for EU/EEA cross-border conversions. Such oper- ations are indeed now subject mutatis mutandis to the same formalities as those set out for EU cross-bordermergers anddivisions. This includes the preparation and publication of draft terms, a management report, a report from an independent expert, and le- gality controls. Cross-border conversions with non-EU/EEA countries, while now explicitly recognized, re- main less regulated and will continue to be governed pri- marily by Luxembourg’s well-establishedlegalandno- tarial practice. Mergers &divisions: the art of complicated breakups Cross-bordermergers anddivisions have long been a reality inLuxembourg, but thenewlawintroduces a clearer andmore structured legal framework. Fornon-EU/EEAoperations,theframeworkremains largely unchanged but introduces refinements for procedural efficiency, greater transparency, and stakeholder protections. Key changes include en- hanced rights for shareholder decision-making and theextensionofsimplifiedproceduresforsidestream mergers, making the process more adaptable while maintaining legal certainty. ForEU/EEAoperations,thechangesaremoreexten- sive, as these operations are now subject to stricter formalities aimedat protectingstakeholders anden- suring legal certainty. This reform has particularly notable consequences for cross-border divisions, as divisions of private limited liability companieswere previouslynot harmonizedwithin theEU/EEA. The new law introduces several key safeguards: - Shareholders : Minority shareholders now benefit fromarighttochallengeshareexchangeratiosifthey consider them unfair and, in some cases, may even opt for a right of cash-out. - Creditors : Stronger creditor protections include a three-month period to seek appropriate safeguards if they believe their interests are at risk. - Employees : The lawenhances employee informa- tion and consultation rights, ensuring that they are properly informedandgivenanopportunity topro- vide feedback on the proposed transaction. - Regulatory Scrutiny : Competent authorities now playagreater role inoverseeing transactions, verify- ing compliance, and preventing abusive restructur- ings (see below). The scrutinyprocess implemented can take up to sixmonths in total, significantly pro- longing timelines and adding yet another layer of regulatory complexity to cross-border operations. While these changes increase transparency and protect stakeholders, these also mean that compa- nies will have to jump through more hoops before completing their operations. The double-legality check: the anti-abuse edition Companies engaging in EU/EEA cross-border op- erations must undergo two legality reviews, with a heightened focus on preventing abuse. The first check takes place at home, where authori- ties (in Luxembourg: the notary) assess compliance withnational legal requirements andensure the op- eration isnot abusiveor fraudulent. InLuxembourg, to pass this stage, companies must submit a com- prehensive file that typically includes a manage- ment representation letter certifying and justifying compliance with legal obligations, certificates from relevant authorities proving tax andcorporate com- pliance, and detailed supporting documentation. If anything appears questionable, the notary can re- quest further clarifications, additional supporting documents, or, in some cases, an independent ex- pert’s assessment. This process can take time, and companies should prepare for the possibility of fol- low-up inquiries before receiving the green light to proceed to the next stage. Once the home country gives the green light, the company is not in the clear just yet. Itmust thenun- dergo a second scrutiny round in the destination country, where local authorities (in Luxembourg: the notary) conduct their own review to ensure compliance with national legal requirements. For that purpose, the authorities can rely on the pre- merger certificate(s) issuedbycompetent authorities in the home country as conclusive evidence that all pre-operation procedures and formalities required under the lawof the originatinghome countryhave been properly completed. With this double-layered review, speed is definitely not the priority (or at least, that’s the theory). While the law allows for a scrutiny period of up to six months, the actual timeframe will largely depend on the quality and completeness of the documenta- tion submitted to the competent authorities. InLux- embourg, the Chamber of Notaries has issued an assurance thatwhere a clear, detailed, andwell-sup- ported representation letter is provided along with all necessarydocumentsdemonstrating compliance with legal requirements, the legality control should not require anextended timeframe.Awell-prepared andcompletefile should therefore result ina review completedwithin days or, at most, a fewweeks. Conversely, incomplete submissions may lead to further verifications, additional information re- quests, or, in rare cases, consultationswith indepen- dent experts, all of which can extend the process. Companies may therefore not need to pack a six- month supplyof patience just yet.Awell-organized file and proactive preparation should keep the pro- cess moving along efficiently. Missed opportunities and unansweredquestions Despite thepositive aspects of thenewrules, several uncertainties remain. The treatment of cross-border dissolutions without liquidation ( TransmissionUni- verselle de Patrimoine ou Dissolution-confusion – TUP ) under Article 1865 bis of the Luxembourg Civil Code is still unclear, raising questions about whether additional regulatory burdens will apply. Similarly, the absence of specific provisions on tri- angular mergers is a missed opportunity. Besides, the lack of clarity regarding publication require- ments for certaindocumentsmeans companiesmay be left waiting for guidance - most likely from the Luxembourg Business Registers (LBR), which will ultimately need to clarify how these obligations shouldbe implemented inpractice.And then there’s the EU Business Registers Interconnection System (BRIS), a platform that promises seamless commu- nication between European registers but has in the past delivered efficiency levels comparable to that of a carrier pigeon. While the transposition of the Mobility Directive brings progress, businesses should be prepared for lingeringuncertaintiesandthepotentialneedforfur- ther regulatory clarifications. Until then, amix of pa- tience and awell-thought-out legal strategy appears to be the best way forward. Conclusion: a step forward— with a fewextra hoops The new law undoubtedly modernizes Luxem- bourg’s approach to cross-border restructurings, in- troducing legal certainty and enhanced stakeholder protections. Companies now have a clearer frame- work to follow, reducing the risk of legal disputes andinconsistenciesintheimplementationofrestruc- turing operations. By aligning Luxembourg’s rules withEUstandards,thelawstrengthensthecountry’s position as a key jurisdiction for international busi- ness operations. However, the added regulatory scrutiny andprocedural requirementsmay result in longer transaction timelines and increased compli- ance costs. Businessesmust adapt to these newobli- gations, ensuring that their cross-border operations align with the stricter documentation, disclosure, and oversight mechanisms. Looking ahead, further refinementstoaddressunresolvedquestionsanden- sure smoother implementation will be crucial to maximizing the effectiveness of this reform. In short, corporate mobility in Luxembourg has gained a stronger legal foundation and new safe- guards, alongsidemore administrative hurdles. But on the bright side, at least we finally got there. Eventually. For a more detailed breakdown of the new requirements and practical guidance for implementation, check out our website www.vdblaw.com Jérémy DA SILVA REIS Senior Associate, Corporate / M&A VANDENBULKE Better late than never: Luxembourg transposes the EUMobility Directive Corporate Finance Investment Funds s E E h>< ŝƐ Ă ƉƌĞŵŝĞƌ >ƵdžĞŵďŽƵƌŐ ůĂǁ Įƌŵ ƐƉĞĐŝĂůŝnj ŝŶŐ ŝŶ ŽƌƉŽƌĂƚĞ͕ ĂŶŬŝŶŐ Θ &ŝŶĂŶĐĞ͕ ĂŶĚ /ŶǀĞƐƚŵĞŶƚ &ƵŶĚƐ͘ ǁĂƌĚĞĚ Ζ ƵƌŽƉĞĂŶ ^ƉĞĐŝĂůŝƐƚ >Ăǁ &ŝƌŵ ŽĨ ƚŚĞ zĞĂƌΖ ďLJ dŚĞ >ĂǁLJĞƌ͕ >ŽŶĚŽŶ͘ www.vdblaw.com 20 ĞůĞďƌĂƟŶŐ LJĞĂƌƐ ŽĨ ŵĂŬŝŶŐ Ă ĚŝīĞƌĞŶĐĞ