Directors of a Luxembourg public limited-liability company (SA) and managers of a Luxembourg private limited-liability company (S.à r.l.) must ensure that the company is properly run from its registered office in Luxembourg.
The board is responsible for managing the company and, in order to do so, may call meetings to discuss ongoing business and transactions. Under Luxembourg company law, the board must meet at least once a year to approve the annual accounts and submit them for approval to the general meeting of shareholders.
It is generally recommended that the board meet in Luxembourg on a quarterly basis and any time a substantial transaction so requires, with as many directors/managers as possible in attendance.
Furthermore, a general meeting of shareholders must be held at least once a year, within six months from the close of the company's financial year, generally between March and June, to approve the company's financial statements. Shareholder meetings may also be called to approve amendments to the articles of association, reorganisation measures (merger or demerger), an increase or reduction in the share capital, liquidation, etc. Shareholder meetings of a Luxembourg company must be held in Luxembourg.
Due to the COVID-19 outbreak, many businesses have been obliged to adopt a restrictive travel policy and to limit travel to what is strictly necessary, which could impact the organisation of physical board meeting at the company's registered office.
Many Luxembourg limited liability companies and other entities provide already in their articles of association the possibility to organize board meetings via video or voice call or to take decisions in writing. Also in most contemporary articles of association the possibility is provided to organize shareholders virtually via modern means of communication. Written shareholders decisions are possible for Sàrls but not for SA's under the Luxembourg companies act of 10 August 1915 as amended.
The Luxembourg government now responded to the COVID-19 outbreak by passing a grand ducal regulation on 20 March 2020 introducing additional measures concerning the holding of meetings by companies and other legal persons (Règlement grand-ducal du 20 mars 2020 portant introduction de mesures concernant la tenue de réunions dans les sociétés et dans les autres personnes morales, the "Grand Ducal Regulation"). The Grand Ducal Regulation facilitates the holding of virtual board meetings and shareholder meetings, also for companies whose articles do not foresee such possibility in their articles.
Is it possible to hold board meetings without all members attending in person?
In the Grand Ducal Regulation, the Luxembourg legislature provides for the possibility for all companies to hold virtual board meetings. Notwithstanding provisions to the contrary in a company's articles of association, members of the board of a Luxembourg company may attend a meeting by way of conference call, video conference or similar means of communication allowing them to be identified. Decisions of the board may also be adopted unanimously in writing.
It is recommend that recourse to these means be justified at the meeting and documented in the minutes or, as the case may be, in the written resolutions, by way of reference to COVID-19 and the Grand Ducal Regulation.
Is it possible to hold a shareholder meeting without the shareholders attending in person?
The Grand Ducal Regulation provides that until 30 June 2020, companies may decide not to hold a physical shareholder meeting. If a Luxembourg company decides not to hold a physical meeting of shareholders, the company may allow its shareholders to participate in and exercise their voting rights at the meeting in the following manner:
- by voting remotely in writing or by electronic means, provided the resolutions or decisions to be taken have been published or sent to the shareholders in advance;
- by means of a person designated by the company to act as a proxy; or
- by video conference or any other means of communication allowing shareholders to be identified.
If a shareholder of a listed company appoints a proxy holder other than the proxy designated by the company, the proxy holder designated by the shareholder may only participate in the meeting in accordance with points (1) to (3) above. Shareholders attending as described above are deemed present or validly represented for the purpose of determining the quorum and majority at the meeting.
Companies are allowed to proceed as described above for any meeting scheduled to be held before 30 June 2020. Companies that have already sent out a convocation notice and wish to apply this procedure are obliged to publish the decision to this effect and to notify their shareholders by the same means or through the publication of a notice on their website no later than three (Luxembourg) business days before the meeting. For an S.à r.l. with fewer than 60 shareholders, a general meeting is not required to take decisions, others than those amending the articles. Shareholder resolutions may be adopted in writing and circulated for signature by e-mail, and electronic copies of the signed resolutions collected.
If the articles of association do not allow for the foregoing options, what should we do?
The articles of association can be amended to allow for one of these options. The amendment must be adopted at an extraordinary general meeting of shareholders held before a Luxembourg notary.
Unless all shareholders are in attendance (in person or by proxy), a meeting must be called with at least eight calendar days' notice (if all shares are in registered form) or thirty days' notice for listed companies. Shareholders may in any case grant a proxy to represent them at the meeting before a Luxembourg notary.
Unless the articles provide for more stringent conditions:
- an amendment to the articles of an SA requires, at the first meeting, a quorum of 50% of the share capital and approval by a majority of two thirds of the vote cast. If the quorum is not met, a second meeting shall be called at which the amendment shall be adopted if approved by two thirds of the vote cast, regardless of the number of shares present or represented.
- an amendment to the articles of an S.à r.l. shall be adopted by shareholder(s) representing at least 75% of the share capital.
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