LUXEMBOURG Trends and Developments Contributed by: Anna Gassner, Philipp Mössner, Andrea Carraretto and Etienne Weryha, GSK Stockmann SA
pany with a Luxembourg or foreign bank. In some jurisdictions, financial institutions are unable to open bank accounts for future companies, which can com - plicate the process. The bank on-boarding process must therefore be considered, in particular in terms of timing and the documents to be provided, as this may delay the timeline for setting up a JV vehicle. The management of the JV vehicle Once the basis of the shareholding structure has been established, the parties often negotiate and agree upon the management structure of the JV compa - ny. Under Luxembourg law, the management of an SARL is generally entrusted to a board of managers, since a sole manager is unusual for JVs. The board of managers considers and approves the actions of the company in accordance with, among other things, its corporate object and its corporate interest. The appointment of managers The members of the board of managers are appointed by the shareholders of the company, either in con - nection with the incorporation of the JV before a Lux - embourg notary, at a subsequent general meeting of shareholders, or by means of written shareholder resolutions. Under Luxembourg law, the individual shareholders only have a nomination right, but not an appointment right. This means that JV parties cannot agree in the JV agreement that a single shareholder can directly appoint, without a shareholders’ resolution, one or more manager(s). In practice, the JV parties grant the shareholders the right to nominate a specified number of future managers in the JV agreement. This is cou - pled with an undertaking in the JV agreement from all other shareholders to appoint the nominated manag - ers by way of a shareholder resolution. For sharehold - ers who do not have the right to nominate a manager, under Luxembourg law it is also possible and com - mon to appoint an “observer” to the meetings of the board of managers. An observer is not a manager and therefore does not have voting rights. However, an observer usually has the right to receive the relevant documentation presented in the board meetings and to attend these meetings.
The majorities Once the principles governing the composition of the board of managers are agreed, the JV parties nor - mally negotiate the board of managers’ quorum and majorities for approvals. As a general rule, the board of managers can validly meet when at least half of the members are present or represented, while board resolutions can be approved with the favourable vote of at least half of the managers attending the meeting. Luxembourg law offers some flexibility in this respect. A very common structure used in the context of a JV agreement is the organisation of the managers into different classes (eg, class A and class B managers), which is not automatically connected to the potential share-class structure of the shareholding. Organising the management into classes allows a certain amount of flexibility, eg, in terms of quorum and majorities. For example, the JV agreement may provide that a meeting of the board of managers can only be validly constituted if at least one manager from a certain class is in attendance. Similarly, it is possible that a resolution can only be approved with the favour - able vote of at least one manager from each class or that only one class A and one class B manager may jointly represent the company vis-à-vis third parties. This structure can be particularly useful for minority shareholders, who usually have the right to nominate only one manager. A board of managers divided into different classes may allow the manager nominated by a minority shareholder to have a “veto” right on cer - tain matters or prevent a manager from entering into agreements with third parties without the knowledge of the managers appointed by the other JV parties. The governing law of the JV agreement A JV agreement regulating a Luxembourg SARL does not necessarily need to be governed by Luxembourg law. The parties may choose a different governing law based on their preferences, for example, if they are more familiar with the provisions of their home juris - diction or if the main assets of the JV are located in a different country. Although the choice of the governing law is generally free, submitting the JV agreement to a law other than
104 CHAMBERS.COM
Powered by FlippingBook