LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The scope of application of the 2003 Law has been extended to all professionals who can perform the functions of fiduciaire, whatever their origin, and con - sequently the office of their authority of control and supervisory authority, and is not limited to profes - sionals approved and supervised by the Luxembourg authorities, such as credit institution or investment firm, or those of another member state of the Euro - pean Economic Area. In other words, a fiduciary agreement concluded with a foreign bank having no establishment in Luxembourg or in the European Economic Area could be subject to Luxembourg law. This could also be the case with an agreement concluded by the Luxembourg branch of a credit institution whose the headquarter is located outside the European Economic Area. 6.2 Fiduciary Liabilities The fiducie estate is distinct from the personal estate of the fiduciaire and is distinct as well from any oth - er fiducie estate. The assets composing the fiducie estate may be seized only by creditors whose rights have arisen in connection with this fiducie estate and do not form part of the personal estate of the fiduciaire in case of liquidation or bankruptcy of the latter or any other situation of competition between its personal creditors. To put it another way, the assets entrusted to the fidu - ciaire – the fiducie estate – is clearly and strictly sepa - rated from the personal estate of the fiduciaire. For each fiduciary agreement, a separate fiducie estate is created, separated from both the personal estate of the fiduciaire and all other fiducie estates entrusted to the fiduciaire. The trustee must also account for the fiducie estate separately from its personal estate and other fiducie estates. The fiducie is not subject to official publication. This particularity may entail certain risks such as when of third parties seeking recourse against a fiduciaire act -
ing on its own behalf (or on behalf of other fiducie estates) seize assets forming part of a fiducie other than the one on which their claim arose. It would then be necessary to request the release of this seizure. The fiduciary agreement will be enforceable against third parties as from its conclusion and the proof of the agreement must be submitted in writing. However, there is an obligation to proceed with publi - cation for buildings as well as for assets for which the status of owner must be recorded in a public regis - ter. In this case, this transfer will only be enforceable against third parties when the publication or registra - tion is made. In terms of third-party effectiveness, it should also be noted that the contractual limitations on the powers of the fiduciaire are only enforceable against third parties who have knowledge thereof. As result, the debtor is validly discharged from its obligations by paying the fiduciant as long as they are not aware of the transfer. More generally, a third party who is unaware of the existence of a fiducie agreement would therefore not be bound by its terms. But, in any case, no limitation of liability is possible in the event of gross negligence or wilful misconduct from the parties. According to the Law of 10 July 2020 creating a register of fiduciaries and trust, the fiduciaires must report detailed information about the beneficial own - ers of the fiducie to this register established with the Luxembourg Administration de l’enregistrement, des domaines et de la TVA . In this respect, any fiducie for which a fiduciaire is established or resides in Luxem - bourg must be entered in the register. 6.3 Fiduciary Regulation The fiducie cannot be constituted by a simple unilat - eral act as is the case for the trust. The rules of the mandate provided by the Luxembourg Civil Code, excluding those based on representation, are applicable to the relations between the fiduciant and the fidiciaire to the extent that they are not dero - gated by the 2003 Law or by the will of the parties.
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