Buying & selling companies in the Grand Duchy of Luxembourg is done by signing an SPA between sellers & buyers. Conducting a typical M&A deal in the Grand Duchy of Luxembourg also involves holding an auction organized by sellers’ financial advisors.
Signing an M&A deal in Luxembourg is preceded by DD (usually lasts from 3 to 4 weeks), whose results are reflected in a DD report. Potential purchasers seeking to cut DD-related costs can have DD performed within a 1- or 2-week period. In this case, they’re provided with a simplified DD report.
Once an offer is accepted, a 2nd stage commences during which purchases are provided with documentation required for concluding an M&A deal in Luxembourg. Normally, those include an SPA & SHA (should target companies’ shares be owned by sellers). It takes from 7 to 21 days to complete this stage.
Once all the required formalities have been completed, transaction-related documents containing a deadline for signing a deal get signed. The remainder of the time is normally spent on dealing with regulation & antitrust-related issues.
Luxembourg: Closing M&A Deals
At this stage, all documents relating to purchasing companies in Luxembourg are drafted, an asked price paid & translation-related formalities completed. Transaction-related documents normally include SPAs & SHAs (if senior managers are involved, MIAs might be concluded as well). At this stage, financial documents (i.e. those relating to extending credits) get finalized, too. Authenticity of legal documents must be confirmed by affixing a seal; no notarization is required.
Luxembourg: Regulation of M&As
Conducting transactions involving equity capital & transferring assets owned by commercial companies in Luxembourg is governed by the country’s Civil Code.
Laws of other countries (mainly American or British ones) normally govern transaction-related documentation. Luxembourg-based lawyers must make sure that the said documentation is compliant with the relevant requirements & observe formalities for their transfer to Luxembourg (if a company to be sold is a Luxembourg-registered entity).
Selling target companies’ instruments or assets is mandatory. Doing so requires sellers & purchasers to conclude an agreement specifying assets to be sold & their price. Observing transfer-related formalities (i.e. registering in & updating registers) is required if 3rd parties raise any objections.
Under local legislation, different types of ownership are allowed (this mainly applies to registering trusts & establishing private funds in Luxembourg).
Transactions Involving Numerous Sellers
Conducting transactions with equity capital in Luxembourg requires issuing a POA (that assures representation of minority stakeholders & eliminates the need for affixing numerous signatures to transaction-related documentation). Transactions involving minority stakeholders are normally governed by SHA or AoA (sometimes, both of them regulate them). Selling a PLC’s stakes to 3rd parties requires getting approval of the majority of stakeholders. No forcing out of minority stakeholders is allowed, unless provided for in the AoA.
Liabilities & Assets
Pursuant to the local legislation, sellers & purchasers are permitted to determine which assets/liabilities are going to be sold & which excluded. Depending on which of them are going to be sold, approvals or notifications might be required.
Transferring Shares: Limitations
Owning companies & assets thereof by foreign investors isn’t prohibited. However, strict AML regulations are applicable to companies or individuals engaged in the conclusion of M&A deals in the Grand Duchy of Luxembourg. Thus, they must determine a transaction’s ultimate beneficiary & origin of the money utilized for financing a deal. There’s no regulating M&A deals; hence, government authorization isn’t required for closing an M&A deal in Luxembourg. Purchasing CSSF-regulated companies may require a notice or authorization.
Transferring PLCs’ stakes to 3rd parties may require stakeholders’ approval or conclusion of SHA. Transferring contracts/debts normally may require consent of 3rd parties/lenders as well. Usually, agreements with banks contain clauses relating to change in control. Under them, transferring assets of financed companies requires securing prior approval of creditors.
Apart from updating stakeholder registers, transferring a PLC’s shares also requires registration with Luxembourg’s RCS. Compliance with specific regulations may be required if a CSSF-regulated company is sold.
Should you have any questions regarding the article’s topic or require assistance with concluding M&A deals in the Grand Duchy of Luxembourg, please, do not hesitate to contact IQ Decision UK. Our team of qualified experts are going to be happy to provide a consultation on M&A deals in the Grand Duchy of Luxembourg.