LUXEMBOURG Law and Practice Contributed by: Ana Nicoleta Andreiana, Christophe Boyer, Noémi Gémesi and Tom Hamen, Loyens & Loeff
the board remains aligned with the interests of the majority or founding shareholders. • Employ debt financing to recapitalise the company, potentially making the balance sheet less attractive to a hostile bidder due to increased liabilities. • Repurchase existing shares to consolidate control and reinforce the position of the majority share- holder. • Sell key assets to friendly third parties or execute spin-offs to reduce the attractiveness of the target to a hostile acquirer. • Acquire new assets to increase the valuation of the company, thereby raising the financial threshold for a hostile takeover. • Embed change-of-control provisions in critical contracts to trigger adverse consequences – such as termination rights or accelerated payments – in Luxembourg law does not provide for formal domina- tion or profit-sharing agreements like those seen in jurisdictions such as Germany. Instead, governance influence is typically achieved through a sharehold- ing stake (at least 10%) which can grant meaningful minority protections or enhanced rights to the bid- der, such as the right to convene a general meeting of shareholders and add items on the agenda of the meeting, the right to ask questions on the manage- ment of the company, and the right to request the adjournment of a general meeting of shareholders. If the bidder reaches 95% ownership, they may initiate a squeeze-out procedure, compelling minority share- holders to sell at a price determined in accordance with applicable legal provisions. 4.12 Irrevocable Commitments the event of an unsolicited acquisition. 4.11 Additional Governance Rights In friendly public takeovers, it is common practice to secure irrevocable commitments from principal shareholders. These agreements are typically negoti- ated during the pre-offer phase of a voluntary bid and serve to reinforce deal certainty. While a breach of such commitments may give rise to liability, remedies are generally limited to damages rather than specific performance.
Additionally, under the Takeover Law, the announce- ment of a competing bid automatically releases share- holders who have already accepted the initial offer from their prior acceptance. However, this statutory release does not affect any contractual arrangements that may have been entered into separately. 4.13 Securities Regulator’s or Stock Exchange Process Upon deciding to launch an offer, the bidder must notify the CSSF and immediately disclose the bid to the public. Within ten business days the bidder must file an offer document with the CSSF. Upon receipt of a complete offer document, the CSSF has 30 busi- ness days to approve and publish the offer document. Once the offer document has been approved, the bid- der may officially launch its tender offer. In case of a mandatory bid, the consideration offered must be a fair price. The CSSF, as part of its supervi- sory powers, is entrusted with assessing the fairness of the price. The Takeover Law sets forth a series of criteria and rules applicable to such assessment. The CSSF does not set the timeline of the offer; the timetable is determined exclusively by the provisions of the Luxembourg Law. According to the Takeover Law (Article 13 (c)), where a competing bid is made, the timeframe for acceptance of the initial bid is automatically extended and ends simultaneously with the competing bid upon occur- rence of the later date of acceptance of the competing offers. 4.14 Timing of the Takeover Offer The offer document may include conditions prece- dent, such as the requirement to obtain regulatory or antitrust approvals by a specified deadline. If these approvals are not granted within the prescribed time- frame, the offer acceptance period may be extended, in accordance with the Takeover Law. In such a case, the initial ten-week acceptance period may be extend- ed, provided that the offeror gives at least two weeks’ prior notice of its intention to close the offer. It is common for the parties to obtain regulatory approvals after the announcement but before the
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