What protections are there for minority shareholders under local law? Can additional protections be given?

 

The Company Law provides for certain minimum minority shareholders rights as follows:

 

• Right in a SA, SAS or SCA for shareholders representing 10% of the company’s voting rights to initiate a liability claim against the management;

• Right in a SA, SAS or SCA for shareholders representing 10% of the company’s share capital to request the adjournment of a general meeting of the shareholders or to request that certain items be added to the agenda of the general meeting of the shareholders;

• Right to information;

• Right in any company for shareholders representing 10% of the share capital and/or the voting rights to ask questions to the management body on certain operations of the company or one of its affiliates;

• Right in S.à r.l. of prior approval on transfer of shares to non-shareholders for shareholders representing more than 25% of the share capital;

• Majority thresholds in certain companies for decisions to amend the company’s articles of incorporation or to transfer its seat in another jurisdiction;

• Rights and protection against dilution in share capital increases in cash (preferred subscription rights)

 

Additional rights may be granted to minority shareholders in the articles of incorporation based on the contractual bargaining among the shareholders.

 

Are there any statutory restrictions on quorum or voting requirements at shareholder meetings? Must quorum or voting rights be proportionate to shareholdings?

 

Although the principle of one share equal one vote generally applies in Luxembourg, the Company Law was amended in August 2016 to introduce a type of plural vote in the SA, SAS and SCA, allowing the companies to implement plural votes commensurate to the shareholders’ interest in the company’s share capital.

 

Depending on the nature of the decisions to be taken by the general meeting of the shareholders, the Company Law provides for the following general rules, unless otherwise restricted by the company’s articles of incorporation:

 

• Ordinary general meetings of shareholders in SA, SCA and SAS are held without quorum and decisions are adopted by the majority of the votes of the shareholders present or represented;

 

• Ordinary general meetings of shareholders in S.à r.l. must be adopted by shareholders representing more than half of the company’s share capital on a first call. On a second call, the decisions will be validly adopted by the majority of the votes, regardless of the portion of the company’s share capital represented.

 

Rights to vote may be suspended by the management under certain conditions. A shareholder may also renounce to his voting right, temporarily or definitively.

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 Are specific voting majorities required by law for any corporate actions (for example, increasing share capital, changing the company's constitution, appointing and removing directors, and so on)?

 

Any decision related to shares, share capital, rights of the shareholders, change of the company’s name, requires the amendment of the company’s articles of incorporation.

 

An amendment to the company’s articles of incorporation is passed by means of an extraordinary general meeting of the shareholders passed in front of a Luxembourg notary and decisions are adopted as follows:

 

• For the SA, SCA or SAS : amending the company’s articles of incorporation requires, on a first call, the approval of 2/3rd of the shareholders representing half of the company’s share capital. On a second call, the decisions are adopted by the majority of the shareholders present or represented, without need to comply with quorum requirements.

 

• For the S.à r.l. amending the company’s articles of incorporation requires the approval of the shareholders representing 3/4 of the company’s share capital.

 

The decision to appoint and remove a director or manager in a company is a matter resolved in accordance with the majority requirements of the ordinary general meeting of the shareholders (see Question 16).

 

Can voting majorities required by law be disapplied to protect a minority shareholder (for example, through class rights or weighted voting)?

 

Quorum requirements and voting majorities provided by law can only be increased and implemented through the company’s articles of incorporation. They cannot be reduced.

 

In certain type of companies, non-voting shares may be issued.

Beneficiary interest (parts bénéficiaires) with or without voting rights may be created in the company’s articles of incorporation.