LUXEMBOURG Law and Practice Contributed by: Philipp Mössner, Anna Lindner, Chara Papagiannidi and Maria Gusinski, GSK Stockmann SA
6. Shareholders’ Rights as Regards Directors and Auditors 6.1 Rights to Appoint and Remove Directors The initial directors of an SA (one-tier structure) are appointed by the constitutive document of the SA. Following incorporation, directors are appointed and can be removed at any time by decision of the general meeting. The members of the management board of an SA (two-tier structure) are appointed by the super- visory board and may be removed by the supervisory board, or by the general meeting if such option is pro- vided by the articles of association. The term of office of any director or member of the management board may not exceed six years, but they may be re-appointed after the expiration of such term (unless the articles of association provide other- wise). Both the appointment and removal of a director or management board member shall be filed with the Luxembourg Trade and Companies Register and pub- lished with the Recueil Electronique des Sociétés et Associations in order to be valid vis-à-vis third parties. If there is a vacancy of the office, the remaining mem- bers may appoint a replacement on a provisional basis, unless the articles of association provide oth- erwise. The general meeting shall make the definitive appointment. The managers of an S.à r.l. shall be appointed by the constitutive document and subsequently by the general meeting. Contrary to an SA, they can be appointed for a limited or unlimited period of time, and a manager may be removed for legitimate reasons only, unless otherwise provided for in the articles of association. 6.2 Challenging a Decision Taken by Directors Shareholders may contest a decision taken by the board of directors and bring an action for nullity against the company if a decision of the board was adopted, for example, with formal irregularities while convening the meeting, or if the board adopted a reso- lution on a matter reserved to the shareholders by law or by the articles of association. Please also see 2.11 Challenging a Resolution .
6.3 Rights to Appoint and Remove Auditors Auditors are appointed and removed by the general meeting of shareholders. Before the end of their term, auditors may only be dismissed for proper grounds.
7. Corporate Governance Arrangements 7.1 Duty to Report
Companies incorporated under Luxembourg law must draw up a management report of the board of direc- tors or of the management board, as applicable, which must include at least a fair review of the development of the company’s business, its performance and its position, together with a description of the principal risks and uncertainties that it faces. For a company whose securities are admitted to trading on a regu- lated market of an EU member state, the management report shall include a corporate governance statement as a specific section of the management report, con- taining the following details, amongst others: • at least a reference to the corporate governance code to which the company is (voluntarily) subject; • all relevant information about the corporate gov- ernance practices applied beyond the require- ments under law; • a description of the main features of the company’s internal control and risk management systems in relation to the financial reporting process; • the composition and operation of the administra- tive, management and supervisory bodies and their committees; and • a description of the diversity policy applied in rela- tion to the company’s administrative, management and supervisory bodies with regard to aspects such as age, gender or educational and profes- sional backgrounds. Shareholders may inspect the management report at the company’s registered office eight days before the general meeting of the shareholders of the company in relation to the approval of the company’s annual accounts. In addition, companies (Issuers) listed and/or admitted to trading on the Official List of the Luxembourg Stock
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