LUXEMBOURG Law and Practice Contributed by: Philipp Mössner, Anna Lindner, Chara Papagiannidi and Maria Gusinski, GSK Stockmann SA
and resolve on the cancellation of the shares and sub- sequent reduction of the subscribed capital. 4.2 Buybacks An SA may acquire its own shares, either itself or through a person acting in its own name but on the company’s behalf, subject to the following conditions. • The authorisation to acquire shares shall be given by the general meeting of the shareholders, which shall determine the terms and conditions of the proposed acquisition and in particular the maxi- mum number of shares to be acquired, the dura- tion of the period for which the authorisation is given (which may not exceed five years) and, in the case of acquisition for value, the maximum and minimum consideration. The board of directors or the management board, as the case may be, shall ensure that the conditions mentioned in the follow- ing two points are respected at the time of each authorised acquisition. • The acquisitions – including of shares previously acquired by the company and held by it, and of shares acquired by a person acting in their own name but on the company’s behalf – may not have the effect of reducing the net assets below the amount mentioned in Article 461-2, paragraphs 1 and 2 of the LSC. • Only fully paid-up shares may be included in the transaction. • The acquisition offer must be made on the same terms and conditions to all the shareholders who are in the same position, except for acquisitions that were unanimously decided by a general meet- ing at which all the shareholders were present or represented. Listed companies may repurchase their own shares on the stock exchange without an acquisition offer having to be made to the share- holders. In addition, a management report shall be drawn up by the board of directors and submitted to the com- pany’s annual general meeting of the shareholders, indicating the main reasons and terms and conditions of any share buyback carried out in the financial year just ended.
It is also possible for an S.à r.l. to buy back its own shares, subject to certain conditions, similarly to an SA.
5. Dividends 5.1 Payments of Dividends
Dividends of an SA or S.à r.l. are subject to and paid following approval of the annual financial statements and respective resolution by the shareholders at the AGM. However, each year at least 5% of the net prof- its shall be allocated to the creation of a legal reserve. This allocation shall cease to be compulsory when the legal reserve has reached an amount equal to one tenth of the corporate capital, but shall become com- pulsory again if the legal reserve falls below such one tenth. No interim dividends may be paid unless the articles of association authorise the board of directors or the management board, as applicable, to do so. In addi- tion, any such payment shall be subject to the follow- ing conditions: • interim accounts shall be drawn up, showing that the funds available for distribution are sufficient; • the amount to be distributed may not exceed the total profits made since the end of the last finan- cial year for which the annual accounts have been approved, plus any profits carried forward and sums drawn from reserves available for this pur- pose, minus losses carried forward and any sums to be placed in reserve pursuant to requirements of the law or of the articles of association; • the decision of the board of directors or the management board, as applicable, to distribute an interim dividend may not be taken more than two months after the date on which the interim accounts have been drawn up; and • in their report to the board of directors or the management board, as applicable, the (internal or external) auditor shall verify whether the conditions are satisfied.
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