On 24 November 2023, Draft law No. 8342 (the “Draft Law”) was submitted to the Luxembourg Parliament, completing the transposition of Directive (EU) 2019/1151 of 20 June 2019 (the “Directive”) by integrating its Article 13decies (the “Article”) in Luxembourg Law. The Draft Law strengthens the protection of individuals interacting with companies by enabling the LBR to carry out verifications of persons proposed for a position as director and refuse, or even deregister, the ones subject to a management ban but also by improving the quality of information published in the the Luxembourg Trade and Companies Register (the “RCS”).
This article provides additional insights and developments on the topics discussed in our January newsletter, particularly regarding corporate transparency and director verification.
Purpose of the Article
The Article lays down rules to protect individuals interacting with companies and to avoid any abusive or fraudulent behaviour by:
requiring Member States to establish provisions in relation to the dismissal of directors; and
allowing Member States to verify whether a person proposed for a position as director is subject to a management ban in another Member State.
Key propositions of the Draft Law
Verification by the Luxembourg Business Register of any person proposed for a position as director
The Draft Law proposes to enable the Luxembourg Business Register (the “LBR”) to proceed with the verification, through the Business Registers Interconnexion System (the “BRIS”), of any person proposed for a position as director in a:
public limited company (société anonyme);
partnership limited by shares (société en commandite par actions); and
limited liability company (société à responsabilité limitée).
Rejection and deregistration of directors subjected to a management ban in other Member States
The Draft Law proposes to enable the LBR to refuse, or deregister, the inscription in RCS of any person subject to a management ban in another Member State.
In its opinion published on 21 May 2024, the Council of State (Conseil d’Etat) contests § 4ter of the Draft Law and raises the issue of the recognition of foreign management bans, especially because the LBR will have to determine whether the foreign ban is 'comparable' to the conditions provided in Article 444-1 of the Code de Commerce, which creates legal insecurity.
Enhancing information quality in the RCS
In order to improve the quality of the information transmitted to the Member States by the LBR trough the BRIS, the Draft Law proposes to add additional details to the information already published in the RCS, such as the personal or professional address, the name and the surname as well as the place and date of birth of the person subject to a management ban in Luxembourg.
Scope of the Draft Law
The Draft Law’s provisions may apply to the position of director, in a public limited partnership, but also to any position providing the power to bind a company, such as the position of manager, in a limited liability company, auditor (commissaire), statutory auditor (réviseur d’entreprise) or approved statutory auditor (réviseur d’entreprise agréé).
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