LUXEMBOURG Law and Practice Contributed by: Philipp Mössner, Anna Lindner, Chara Papagiannidi and Maria Gusinski, GSK Stockmann SA
in a general meeting of the shareholders. However, shareholders can also bring an action against a direc- tor on behalf of the company, subject to certain condi- tions (please see 10.3 Derivative Actions ). The above also applies for an S.à r.l. 10.3 Derivative Actions Shareholders can bring an action against the direc- tors or the members of the management board or the supervisory board, as the case may be, on behalf of the company for mismanagement. This minority action may be brought by one or more shareholders holding at least 10% of the voting rights at the gen- eral meeting that decided upon the discharge of the directors. The shareholders initiating the action must not have voted in favour of granting such discharge. If the action is successful, the minority shareholders will enable the company to obtain compensation for the loss suffered by the company. The minority action is available to shareholders of an SA, SCA or SAS, but not to shareholders of an S.à r.l. 11. Shareholder Activism 11.1 Legal and Regulatory Provisions There is no specific regulation concerning shareholder activism. However, Luxembourg law provides certain minority rights to shareholders, notably: • shareholders holding at least 5% of an issuer’s subscribed capital have the right to put items on the agenda of the general meeting and to table draft resolutions for items included or to be includ- ed on the agenda of the general meeting (Article 4 of the Shareholder Rights Law); • shareholders holding at least 10% of the votes at the general meeting having resolved on the dis- charge may bring a minority action against the directors, the members of the management board or the supervisory board on behalf of the company (Article 444-2 of the LSC); • shareholders owning at least 10% of the share capital or voting rights are entitled to request information on management decisions with respect to operations of the company and its subsidiar- ies, and may apply to have one or more experts
appointed if the management does not respond (Article 1400-3 of the LSC); and • shareholders representing at least 10% of the capital have the right to request the convening of a general meeting (Article 450-8 of the Companies Law) or the adjournment of any general meeting (Article 450-1 (6) of the LSC). The involvement of institutional investors as well as activist shareholders is encouraged by policy mak- ers and is considered a fundamental requirement to achieve good corporate governance within corpora- tions. Under the Shareholder Rights Law, institutional investors shall develop and disclose their engagement policy and publicly disclose how their equity invest- ment strategy aligns with the profile and duration of their liabilities, and how it contributes to the medium- and long-term performance of their assets. 11.2 Aims of Shareholder Activism The key aims of activist shareholders may vary depending on their long-term or short-term interests in the company. For example, short-term activist share- holders may focus more on maximising their short- term financial interests, whereas long-term investors may seek to monitor the company’s corporate govern- ance structure and address any corporate deficiency issues. 11.3 Shareholder Activist Strategies Activist shareholders may follow different strategies depending on whether they pursue short-term or long- term shareholder engagement, such as: • requesting comprehensive information before or at a general meeting; • proposing additional items on the agenda of a gen- eral meeting (eg, to remove current directors and to nominate new directors); • convening a general meeting; • criticising the company’s management and perfor- mance publicly and/or during a general meeting; • short selling the company’s shares; or • acting in concert with other shareholders for a hostile takeover.
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