LUXEMBOURG Law and Practice Contributed by: Philipp Mössner, Anna Lindner, Chara Papagiannidi and Maria Gusinski, GSK Stockmann SA
Exchange (LuxSE) are subject to the X Principles of Corporate Governance of the LuxSE (X Principles). Pursuant to the X Principles, Issuers are required to: • disclose a Corporate Governance Statement in their annual reports, which describes all major events concerning their corporate governance; and • publish a corporate governance charter describing the main aspects of their corporate governance policy, notably the company’s structure, the inter- nal regulations for the board of directors, its com- mittees and the executive management, and other important points (eg, concerning remuneration). Finally, the Issuer shall disclose its directors’ remu- neration in a remuneration report and a remuneration policy (Articles 7bis, 7ter of the Shareholder Rights Law). Such disclosures shall be made publicly avail- able on the Issuer’s website for a period of ten years (reports) or for at least as long as they are applicable (policies). A controlling shareholder does not owe any particular duties to the minority shareholders under Luxembourg law. Nevertheless, shareholders must generally act in good faith and not abuse their dominant position in the company in order to impose a decision that is contrary to the interests of the company. 9. Insolvency 9.1 Rights of Shareholders If the Company Is Insolvent In the case of bankruptcy, all measures of enforcement against the company are, in principle, suspended sub- ject to certain limited exceptions for creditors that are secured by mortgages ( hypothèques ), pledges ( gages ) or financial collateral arrangements governed by the Collateral Law. Shareholders are treated as subordi- nated creditors and will be paid pro rata out of the remaining proceeds, if any, unless they have other contractual arrangements in place as creditors. The 8. Controlling Company 8.1 Duties of a Controlling Company
concept of equitable subordination is not recognised under Luxembourg law.
10. Shareholders’ Remedies 10.1 Remedies Against the Company
Shareholders’ legal remedies against the company are generally limited. In particular, a shareholder could make a claim against the company due to the breach of an agreement between the company and such shareholder (contractual liability), or to invoke the company’s extra-contractual liability (tort liabil- ity) based on Articles 1382 and 1383 of the Luxem- bourg Civil Code. Shareholders can also make a claim against the directors or on behalf of the company, subject to certain conditions, as described in 10.2 Remedies Against the Directors and 10.3 Derivative Actions . 10.2 Remedies Against the Directors Shareholders may take direct enforcement actions against the board of directors or the supervisory board/management board of an SA in the following cases. • If such entities are responsible for a breach of the applicable law or the articles of association of the company. This action can also be sought by a single shareholder if they have suffered a distinct violation differing from all other shareholders. • Shareholders can seek civil enforcement actions against members of the board of directors or the supervisory board/management board in case of fault (tortious conduct). This action can also be sought by a single shareholder based on Articles 1382 and 1383 of the Civil Code. However, the person(s) invoking it must have suffered personal damage. • Finally, criminal offences may give rise to enforce- ment actions by the shareholders. In addition, the members of the board of directors or the supervisory board/management board are liable towards the company for the execution of their man- date and the faults committed during the execution of such mandate. A claim for mismanagement can be initiated by the company following a decision taken
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