LUXEMBOURG Law and Practice Contributed by: Ana Nicoleta Andreiana, Christophe Boyer, Noémi Gémesi and Tom Hamen, Loyens & Loeff
5.2 Primary Securities Market Regulators The CSSF is the primary regulator for public M&A transactions in Luxembourg. The CSSF oversees compliance with the Takeover Law. Its responsibilities include reviewing and approving the offer document, monitoring disclosure obligations, and supervising the conduct of takeover bids for companies whose shares are admitted to trading on a regulated market in Luxembourg. 5.3 Restrictions on Foreign Investments Since September 2023, a mandatory foreign direct investment (FDI) filing is required for non-EU/EEA investors acquiring control (≥25%) in entities active in critical sectors (eg, energy, transport, water, health or finance). The filing is suspensory – the transaction cannot close until cleared by the Ministry of the Economy, with an initial review period of up to two months. Portfolio investments (ie, passive holdings without control) are excluded from the screening regime. 5.4 National Security Review/Export Control The FDI screening is the main review process. There are no blanket restrictions based on the investor’s country of origin. However, investments from non- EU/EEA jurisdictions may face heightened scrutiny, particularly if the transaction could affect security or public order, or due to the application of AML/KYC regulations. Luxembourg enforces EU-aligned export control regu- lations, particularly for: • dual-use goods (civilian items with potential mili- tary applications); • defence-related products; and • goods linked to torture or capital punishment. These controls are overseen by the Ministry of the Economy. Exporting such items typically requires pri- or authorisation, and companies must ensure com- pliance with both EU regulations and international embargoes or sanctions.
launch of the offer, as the CSSF may approve the offer within 30 days following its notification and subse- quent disclosure to the public. 4.15 Privately Held Companies In Luxembourg, privately held companies are most commonly acquired through a share purchase, where the buyer acquires all shares in the target company, thereby taking on its assets, liabilities and operational risks. An alternative is an asset deal, in which only specific assets and selected liabilities are transferred, which allows the buyer to “cherry pick” individual assets and liabilities of the target company. For share deals, due diligence is important, cover- ing legal, tax, environmental (including permits and zoning) and commercial aspects. Key considerations include tax exposures, ongoing litigation, customer and supplier contracts, insurance coverage, and com- pliance with technical and regulatory standards. A widely used tool in Luxembourg M&A transactions is warranty and indemnity (W&I) insurance. This insur- ance coverage provides protection from loss due to breaches of warranties and the tax indemnity as included in the acquisition agreement. Buyers have additional comfort, while sellers can limit their post- closing liability and release proceeds earlier. 5. Overview of Regulatory Requirements 5.1 Regulations Applicable to Energy and Infrastructure Companies Setting up a Luxembourg holding company ( société de participations financières – SOPARFI) is generally straightforward and not subject to sector-specific rules if it only holds foreign participations. If the holding company intends to operate in Luxem- bourg in regulated sectors (energy, utilities or infra- structure), additional licences are required, eg, from the Ministry of the Economy, and possibly environ- mental or construction permits.
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