Acquiring a company in Luxembourg is governed by the M&A Act & controlled by the CSSF, Luxembourg’s main financial regulator. So, let’s see what other legal prerequisites potential purchasers will have to comply with to get the green light for their M&A deal.
Luxembourg: M&A Deals
If a target company’s BOD wants to prevent buyers from acquiring shares, it must comply with one of the basic principles of the M&A Act, which requires them to act in the best interests of their company. However, pursuant to Directive 2004/25/EC, taking steps aimed at preventing acquisition of a Luxembourg-registered company is optional & can be undertaken at the discretion of a target company’s senior management. If the company’s senior management wishes to take protective measures, they will have to receive prior approval of the company’s stakeholders.
Basically, concluding an M&A deal in Luxembourg requires potential purchasers to keep in mind the following basic principles:
- holders of securities of identical class must be ensured equal treatment;
- holders of securities must be provided enough time & information to be able to make an informed decision on an M&A deal in Luxembourg;
- buyers & sellers must refrain from creating false securities markets;
- buyers mustn’t encounter any hurdles when proceeding with .
Can the Conclusion of Private M&A Transactions in Luxembourg be Influenced by Government Agencies?
When it comes to non-regulated industries, Luxembourg authorities have no power to block or limit any mergers or takeovers. When it comes to takeovers, sellers may set certain criteria, such as acquiring a certain amount of the target company’s capital/shares or obtaining approval from the authorities to conduct an M&A transaction in Luxembourg.
Minority Shareholder Rights: Conducting an M&A Transaction in Luxembourg
Squeezing out minority shareholders in Luxembourg is regulated by the corresponding provisions of the M&A Act. According to it, crowding out can take place after making a takeover bid or during the conclusion of an M&A deal in Luxembourg. Holders of a majority stake may request that minority shareholders sell them the remainder of the shares at a reasonable price.
Once a decision on squeezing out is taken, sellers & buyers must make it public & inform relevant regulatory bodies of it. Majority shareholders must appoint qualified independent experts who will prepare a report for determining a price to be paid to minority shareholders. If there’s a disagreement about the squeezing out of shareholders or selling of shares in Luxembourg, the CSSF will be making a decision based on the 2nd report.
So, let’s sum up: selling & purchasing companies in Luxembourg are governed by the M&A Act; should a company want to purchase shares of minority shareholders, such a transaction is regulated by the Squeezing Out Act.
Concluding an M&A transaction in Luxembourg requires thorough preparation & indepth knowledge of the local M&A legislation. If you don’t have time to delve deep into the subject of M&A regulation in Luxembourg, we advise you to retain services of competent legal professionals. And the best place to start is IQ Decision UK. Our legal experts will be happy to advise you on M&A transactions in Luxembourg, helping you overcome any legal hurdles that you might encounter in that regard.