Law of 23 September 2020: flexibility for adoption of corporate resolutions extended until year end
Since the beginning of the COVID-19 pandemic, the Luxembourg legislator has taken numerous measures and adopted several laws aimed at supporting companies during difficult times and exceptional circumstances. Some of these measures ensured increased flexibility for the holding of corporate meetings and adoption of resolutions, as well as extended deadlines for the approval of annual accounts. Most recently, the legislator has ensured that companies will continue to benefit from simpler formalities for adoption of corporate resolutions until 31 December 2020.
During the three-month emergency period, the Grand-Ducal Regulation of 20 March 2020 introducing certain measures concerning meetings of companies and other legal entities (the Regulation) granted the flexibility to companies to adopt shareholder and board resolutions via remote means. The application of the Regulation ended on 24 June 2020, being the date on which the state of emergency declared by the Luxembourg government ended.
The following laws succeeded the Regulation:
- the law dated 22 May 2020 extending the deadlines of the filing and publication of the annual accounts, the consolidated accounts and the related reports during the state of crisis (the 22 May 2020 Law); and
- the law dated 20 June 2020 extending the measures regarding the meetings held by companies and other legal entities (the 20 June 2020 Law).
The legislator has, on 23 September 2020 (and pursuant to a fast-tracked adoption procedure), adopted a new law on measures concerning the holding of meetings in companies and other legal entities (the 23 September 2020 Law) (i) extending the flexibilities contained in the 20 June 2020 Law regarding the possibilities for a company’s bodies to hold meetings without physical presence until 31 December 2020 and (ii) repealing the 20 June 2020 Law.
The effects of the 20 June 2020 Law continue until 1 October 2020, being the date on which the 23 September 2020 Law will come into force.
What flexibilities does the 23 September 2020 Law offer?
As of 1 October 2020, 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.
To whom does the 23 September 2020 Law apply?
The 23 September 2020 Law applies to all Luxembourg companies. The Law’s scope also includes 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) and grants the latter, when applicable, with the same possibilities and alternatives for holding their general meetings and/or their management or other statutory meetings.
Until when does the 23 September 2020 law apply?
The period of application of the 23 September 2020 Law is clearly stated in article 5 of such law: the 23 September 2020 Law enters into force on 1 October 2020 and will remain in effect until 31 December 2020 included. As a result, all companies benefit from the flexible measures provided by the 23 September 2020 Law allowing the attendance at meetings via remote means and the adoption of resolutions without physical meetings until 31 December 2020.
Ira VladiAssociate Attorney at law
Ira Vladi, associate, is a member of the Corporate Practice Group in our Luxembourg office. She advises both Luxembourg based and foreign clients on Luxembourg corporate law matters, and more specifically, international restructurings, mergers & acquisitions and corporate finance transactions.T: +352 466 230 648 E: [email protected]