General Regimes: confirming (and polishing) the existing rules in the Company Law
As mentioned in the introductory part to this contribution, the entry into force of the Law, on 2 March 2025, has introduced separate legal regimes in each of Chapter II of Title 10 (on mergers), chapter III (divisions) and in the new chapter VI (cross-border conversions) of the Company Law, as a result of which this now provides for both General Regimes and the European Regimes.
For mergers, divisions and internal conversions, the General Regimes generally reflect the procedures already set out in the Company Law prior to the implementation of the Mobility Directive, with the addition of few new provisions only. Conversely, the Law has introduced some new rules clarifying certain procedural rules applicable to cross-border conversions (other than European ones).
The following is an overview on the specificities of the different General Regimes introduced by the Law.
General Regime regarding Mergers
The definition of mergers by absorption has now been extended to also apply to:
Upstream mergers, whereby a company transfers by way of dissolution without liquidation the whole of its assets and liabilities to its parent company (Article 1020-5 (1)); and
Side-step or side-stream mergers, referring to mergers between companies that are either wholly owned by a sole shareholder or owned by shareholders in identical proportions. In such cases, one company may transfer all its assets and liabilities to the other through a dissolution without liquidation, without requiring the issuance of new shares by the resulting company) (Article 1020-5 (2)).
General meetings are now empowered to decide to modify the merger plan and make the effectiveness of the restructuring subject to certain conditions or time-limits (Article 1021-3). Furthermore, companies having a sole shareholder are exempted from the requirement to obtain an expert report on the restructuring plan (Article 1021-6).
As per the existing rule, the merger will take effect between the merging companies on the date that correlating decisions have been taken by such merging companies (Article 1021-13).
Mergers other than cross-border mergers will only take effect against third parties on publication of the extraordinary general meeting minutes of the absorbing company that approves the merger or, if no such general meeting takes place, of the publication of a certificate by a notary attesting to the satisfaction of all merger requirements (Article 1021-14).
The date of the effectiveness of a cross-border merger remains determined by reference to the legislation of the country governing the company that results from the merger (new Article 1021-16 (1)).
In the case of the absorption of a Luxembourg company by a foreign company, the deletion of the Luxembourg company from the Luxembourg trade and companies register may be carried out on proof of the merger having taken effect, for example by way of an opinion of a foreign notary or lawyer (Article 1021-16 (2)). Thus, the new regime extends proofs beyond notification by a foreign trade register is no longer the only means of proof, as it was previously.
General Regime regarding Divisions
As in the case of mergers, general meetings are now empowered to decide to modify the division plan and make the effectiveness of the restructuring subject to certain conditions or time-limits (Article 1031-3) and companies having a sole shareholder are exempted from the requirement to obtain an expert report on the restructuring plan (Article 1031-6).
As per the existing rule, the division will take effect between the companies participating in the division on the date that correlating decisions have been taken by such companies (Article 1031-14 (1)).
It is now expressly foreseen that the division will only take effect against third parties on publication of the extraordinary general meeting minutes of the company that is being divided (Article 1031-15 (1)).
The date of the effectiveness of a cross-border division is now determined by reference to the legislation of the country governing the company that is being divided (Article 1031-14 (2)).
General Regime regarding Cross-Border Conversions
As mentioned, the general regime applicable to internal conversions remains substantially unchanged (Articles 1010-1 through 1010-12). A new regime governs cross-border conversions of Luxembourg established companies into entities of a non-EU member state jurisdiction, and vice versa. The new regime does not apply to conversions falling within the scope of Regulation (CE) 2157/2001 on European Companies (société européenne) (Article 1061-1(2)).
The conversion of a Luxembourg entity into a non-EU foreign entity may be carried out without dissolution, liquidation or winding up of the Luxembourg entity and, if relevant, without loss of legal personality, subject to this being permissible under the foreign law (Article 1061-1). In such case, the transformation shall be carried out under the rules governing the change of the Articles or constitutive documents of the Luxembourg entity (Article 1061-3 (1)).
Conversely, the transformation of an entity established in a non-EU jurisdiction into a Luxembourg entity may be carried out under the conditions governing the incorporation of the type of company or entity in Luxembourg (Article 1061-3 (2)).
The law of the departure state governs the procedures and formalities to be completed before the conversion, while the law of the destination state governs those to be completed after proof that the prior formalities have been duly fulfilled (Article 1061-2).
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