Concluding an M&A Deal in Luxembourg

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.

Conclusion

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.