LUXEMBOURG Law and Practice Contributed by: Anna Gassner, Philipp Mössner, Andrea Carraretto and Etienne Weryha, GSK Stockmann SA
While often overlooked in practice, the SAS, intro - duced in Luxembourg in 2016, presents a compel - ling alternative to the SARL. It provides a high level of confidentiality to shareholders, with their identities and shareholdings remaining undisclosed in the RCS. Moreover, except for mandatory or public order provi - sions, it permits extensive customisation, particularly concerning management structures, voting features (such as shares with multiple voting rights), and profit and loss sharing through the issuance of preference or ratchet shares. The SCA, SCS and SCSp legal structures are typically favoured for investment-focused JVs (involving silent investment partners) where some participants prefer not to be as deeply involved in the management deci - sions as they would be in a different legal structure and, as such, prefer a limited partner position. From a regulatory perspective, when a JV is estab - lished for investment purposes, it must be confirmed that the JV vehicle does not qualify as an alternative investment fund subject to the EU Alternative Invest - ment Fund Managers Directive (AIFMD). If the JV vehi - cle has characteristics that place it within the scope of alternative investment funds as defined in the AIFMD, the regulatory requirements applicable to the invest - ment vehicle and its manager will be significantly different from those applicable to an unregulated JV vehicle. 3. JV Regulation 3.1 Legal Framework and Regulatory Bodies In Luxembourg, the main set of rules applicable to the JV vehicle are derived from Luxembourg civil law and the LCC. However, depending on the nature of the JV and the sectors in which it operates ‒ especially if the JV vehicle qualifies as an investment fund ‒ public authorities will need to be involved, such as the Lux - embourg Financial Supervisory Authority ( Commission de Surveillance du Secteur Financier – CSSF) or the Luxembourg Insurance Commission ( Commissariat aux Assurances ). If a JV is structured as an alternative investment fund (AIF) in Luxembourg, it falls into the regulatory frame -
work established by the Alternative Investment Fund Managers (AIFM) Law and the AIFMD. This requires, inter alia, seeking authorisation from and registration with the CSSF, and adhering to, inter alia, investment restrictions and transparency requirements. According to the Law of 2 September 2011, which regulates access to various professions, any econom - ic activity carried out on a regular basis, subject to a few exceptions, requires a prior business permit from the Ministry of Economy. This permit must be held by a natural person on behalf of the relevant company. The individual must satisfy the following conditions: • professional integrity; • the necessary professional qualification relevant to the planned activity: • establishment in Luxembourg ‒ the business permit is only granted if there is a physical presence in Luxembourg that includes infrastructure suitable for the nature and scale of the concerned activity; • effective and permanent management of the busi - ness by the business permit holder, who must: (a) be physically present in the establishment at all times to ensure effective day-to-day manage - ment of the business; and (b) be effectively connected to the business (as an owner or legal representative of the business); and • compliance with tax and business obligations ‒ the permit holder must not have evaded business and tax obligations (including withholding tax) in their previous or current business activities, whether these activities were carried out in their own name or through a company run by said permit holder. 3.2 Anti-Money Laundering Compliance The key AML legislation applicable in Luxembourg is the Law of 12 November 2004 on the fight against money laundering and terrorist financing (the “AML Law”), as last amended on 29 July 2022. The AML Law implements the Fourth AML Directive (EU 2015/849) as amended by the Fifth AML Direc - tive (EU 2018/843), and establishes the obligation for entities and individuals listed in Article 2 of the AML Law to:
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