Luther SA

Luxembourg

We think and advise from a business perspective. We are aware of the importance of efficient resource management and the significance of planning that is viable and farsighted. We also always bear in mind the business and financial implications of our advice. This applies to both litigious and structuring advice.

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Updates

Litigation

Liquidator held liable for omitting claims arising from ongoing litigation
Luxembourg | 15 October 2019

In a 2018 decision, the Luxembourg District Court found a liquidator liable for damages which the plaintiffs had suffered as a result of the early closure of the liquidation while legal proceedings were still ongoing. The court held that since the liquidator had personally received the document instituting the proceedings, he should not have ignored any claims that might have arisen from the ongoing dispute. Notably, the court went even further by also holding the liquidation auditor liable.

Directors' liability in event of non-compliance with company tax obligations: case law reversal
Luxembourg | 30 July 2019

Under the General Tax Law, directors are held personally liable for the fulfilment of their company's tax obligations. Prior to a case law reversal, the Administrative Court took a strict approach towards directors and systematically held that they had breached their duties by failing to withhold, declare or pay company taxes. However, in 2017 the Administrative Court of Appeal held that the wrongful character of alleged tax breaches must be demonstrated by law and factually proved by the Tax Administration.

Court of Appeal specifies consequences of rescinding contracts
Luxembourg | 21 May 2019

The buyer of an apartment signed a long-term lease and agreed to live in the apartment for at least 12 years. However, in contravention of this commitment, the buyer moved out and rented the property to a tenant. The seller sued the buyer, seeking to have the contract rescinded. In its decision, the Court of Appeal ruled that the contract had been divided into a contract of sale and a lease contract, and that the retroactive rescission principle would have a different effect on each of these.

Court of Appeal rules on enforcement of pledge versus insolvency proceedings and fraud
Luxembourg | 16 April 2019

A Court of Appeal decision appears to have definitively removed any possibility of effectively challenging a transfer of ownership of pledged assets in an enforcement scenario on the basis of fraud, including manifest fraud by the pledgee. This is in contrast to a 2013 Luxembourg District Court decision and the general practice to date, which has been to consider the facts on a case-by-case basis.

Luxembourg District Court defines conditions of minority abuse at shareholders' meetings
Luxembourg | 09 April 2019

In a notable decision, the Commercial Section of the Luxembourg District Court clearly defined – for the first time – the concept of minority abuse at shareholders' meetings under Luxembourg law. Further, the court detailed the conditions which must be met in order for conduct to qualify as minority abuse. This decision is of particular interest, as the alternative conditions for determining whether minority abuse has taken place are much broader than those initially set out in Luxembourg law.

Court of Appeal rules on testimony of executive board members
Luxembourg | 12 March 2019

In a dispute between a public limited liability company and one of its employees, the Court of Appeal issued a decision concerning the testimony of executive board members of a party to a dispute. The court's decision contradicts case law that seemed to have overcome this problem with regard to public limited liability companies. Hence, the courts remain divided as to whether the testimony of a director who individually has no power to represent their legal entity will be taken into consideration.

Court of Appeal rules on interpretation of court decisions
Luxembourg | 16 October 2018

The plaintiff in a recent Court of Appeal case concerning the enforcement of a pledge on shares given to a bank as part of a financing believed that the court's original decision was unclear. It consequently asked the court to clarify whether the decision ordering the return of the shares entailed that the plaintiff should be considered a shareholder from the date on which the bank had unlawfully acquired the shares or effectively returned them to the plaintiff.

Court of Appeal rules on prorogation of general shareholders' meetings
Luxembourg | 09 October 2018

The Court of Appeal recently ruled on the prorogation of general shareholders' meetings. Although this decision confirms the existing case law on prorogation, it is notable as it is the first time that a court has ruled that a prorogation request can be made before, and not only during, a shareholders' meeting. Ultimately, the decision strengthens the rights of minority shareholders.

New law on court enforcement of European account preservation orders
Luxembourg | 25 September 2018

The EU European Account Preservation Orders (EAPO) Regulation states that attachment orders must be enforced through the courts in accordance with the procedures applicable to the enforcement of equivalent national orders in the member state of enforcement. As Luxembourg's existing legislation proved to be poorly adapted to the execution of EAPOs, it recently implemented the EAPO Conversion Law in order to introduce a specific court enforcement procedure applicable only to EAPOs.

Court of Appeal rules on loss of credit capacity in bankruptcy
Luxembourg | 18 September 2018

The Court of Appeal recently ruled on the loss of credit capacity in the context of bankruptcy. This was the first time that the availability of company funds in a third-party account was seen as a sufficient reason to avoid the loss of credit capacity. Thus, the court has finally clarified the notion of the loss of credit capacity referred to in Article 437 of the Code of Commerce in a way that is restrictive and favourable for debtors.

Court of Appeal rules on procedural standing of shareholders to challenge corporate decisions
Luxembourg | 19 June 2018

The Court of Appeal recently ruled that shareholders have a right to seek an annulment of decisions made by their company's board of directors. This decision sets a precedent for challenging board decisions on the grounds of the Companies Law, thereby increasing legal certainty by filling the gaps left by the law. However, it also marginally limits the scope of such challenges by excluding former shareholders from initiating new proceedings.

Appeal court questions law on exchange of tax information on request
Luxembourg | 12 June 2018

The Luxembourg Administrative Court of Appeal and the European Court of Justice (on referral for a preliminary ruling) recently considered whether the Luxembourg law on the procedure applicable to the exchange of information on request in tax matters complied with EU Directive 2011/16/EU and the Charter of Fundamental Rights of the European Union. In particular, the courts examined whether the Luxembourg law complied with the right to an effective remedy set out in the EU directive and the charter.

Court of Appeal rules on discharge of managers
Luxembourg | 05 June 2018

The principal way in which managers can protect themselves from liability is by obtaining a grant of discharge from shareholders. The Court of Appeal recently stated that although discharge is voted on at a general shareholders' meeting after the adoption of the company's annual accounts, the mere approval of the accounts does not automatically entail discharge. Rather, the court made clear that a decision to discharge a management body must be subject to a separate deliberation.

Luxembourg District Court rules on conditions for enforcing pledges
Luxembourg | 29 May 2018

Following a recent Luxembourg District Court decision concerning the conditions for the enforcement of a pledge, collaterals consisting in a pledge on the shares of a company can be enforced even outside of a default payment (ie, even if the secured debt is not due and payable). In the case at hand, the pledge agreement provided that the pledge was enforceable in case of non-compliance with a binding financial ratio.

Luxembourg District Court rules on judicial management reports
Luxembourg | 08 May 2018

The Luxembourg District Court has clarified the requirements and procedures regarding judicial management reports provided for in the law on commercial companies, as amended. The ruling provides valuable insight into shareholders' right to request information on management decisions. While the reduced threshold suggests a trend in Luxembourg law towards shareholder empowerment, as well as the accountability and transparency of managing bodies, the ruling appears to be pro-management.