LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Hawa Mahamoud and Eva Jean, GSK Stockmann
3.9 Recent Legal and Commercial Developments Blockchain III Law
of a control agent, an EU investment firm or credit institution selected by the issuer, which will maintain the securities issuance account, verify consistency between issued and registered securities on the DLT network, and supervise the securities custody chain at the account holder and investor levels. The bill is set to simplify the issuance and reconciliation of demate- rialised securities by enabling direct crediting of secu- rities to investor accounts. It is in line with the Govern- ment’s objective of strengthening the attractiveness and competitiveness of the financial centre by creat- ing a welcoming legal framework for digital securities, offering greater flexibility, security and transparency to issuers and investors. Reorganisation Proceedings On 1 November 2023, the Luxembourg law of 7 August 2023 on business preservation and modernisation of bankruptcy law (the “Reorganisation Law”) entered into force, in view of the provisions of the Directive (EU) 2019/1023 of the European Parliament and of the Council, of 20 June 2019, on preventive restructuring frameworks, on discharge of debt and disqualifica- tions, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt. The novelties introduced by the Reorganisation Law are presented in further detail in 7.4 Rescue or Reor- ganisation Procedures Other Than Insolvency . 3.10 Usury Laws In principle, the interest rate may be freely deter- mined between the parties to a loan agreement and may exceed the legal interest rate. However, if the interest rate is manifestly usury, a Luxembourg court may reduce it to the applicable legal interest rate. In accordance with the Civil Code, interest charged on a loan can be usurious if it is clearly disproportionate to the market interest rate, and the weakness, pre- dicament or inexperience of a borrower is exploited. In addition, if the borrower is a consumer, informa- tion must be provided regarding the effective annual global interest rate ( taux annuel effectif global ) and on the interest amount charged for each instalment of the loan.
The Luxembourg law of 15 March 2023 with imple- menting Regulation (EU) 2022/858 of 30 May 2022 on a pilot scheme for market infrastructures based on distributed ledger technology (the “DLT Pilot Regime”) was published in the Luxembourg official journal (Mémorial A) on 17 March 2023 (the “Blockchain III Law”). The Blockchain III Law’s main goals are to explicitly acknowledge distributed ledger technology (DLT) in the financial industry and to provide financial- market participants with complete legal certainty so that they may fully capitalise on the potential present- ed by this new technology. The Blockchain III Law amends several laws relating to the financial sector. The FSL was amended to clarify that the definition of “financial instrument” also includes financial instru- ments issued by means of DLT as defined in Article 2 (1) of the DLT Pilot Regime. Following the amend- ments introduced by the Blockchain III Law, the Col- lateral Law (as defined below) clarifies that pledges on securities accounts maintained within or through secured electronic registration mechanisms, including distributed ledgers or electronic databases, fall under its scope. It is now confirmed that the validity and per- fection of collateral created under the Collateral Law will not be affected by the technical means by which the pledged security is created or held. The provisions of this law complete and complement the provisions of the Luxembourg law of 1 March 2019 and of the law of 22 January 2021, which created a legal framework explicitly recognising the possibility of using distributed ledger technology for the issuance and circulation of securities, as well as for the custody of book-entry financial instruments. Blockchain IV Law The Luxembourg law of 20 December 2024 was published in Mémorial A on 27 December 2024 (the “Blockchain IV Law”) and came into force on 31 December 2024. It broadens the legal framework for distributed ledger technology (DLT) to include equity securities alongside debt securities and introduces a control agent role for the issuance of dematerial- ised securities. A key innovation is the introduction
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