LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Hawa Mahamoud and Eva Jean, GSK Stockmann
3.11 Disclosure Requirements Save for specific rules imposed by the LFS on group financial support agreements, which regulate the pro- vision of financial support from one party to another in the event that at least one of the parties to the agree- ment fulfils the conditions for early intervention, there is generally no obligation to disclose financial con- tracts in Luxembourg. Issuers of financial instruments offered to the public, and/or admitted to trading to a regulated market, being subject to the Prospectus Regulation, are obliged to disclose material contracts. More specifically, the Pro- spectus Regulation requires that a brief summary of all material contracts that are not entered into in the ordinary course of the issuer’s business, which could result in any group member being under an obligation or an entitlement that is material to the issuer’s ability to meet its obligations to security holders in respect of the securities being issued, should be included in the body of the prospectus. Subject to the Law of 23 December 2005 (the “Relibi Law”), as a matter of principle, there is no withholding tax in Luxembourg on payments of principal, interest or other sums made by a borrower to a lender (unless such payment of principal and interest is not at arm’s length). As a consequence, payment obligations of borrowers to lenders would be made free of any with - holding tax. However, as per the Relibi Law, payments of inter- est or similar income made, or ascribed, by a paying agent established in Luxembourg to, or for the benefit of, a Luxembourg resident individual lender will be subject to a withholding tax of 20%. 4. Tax 4.1 Withholding Tax If the individual lender acts in the course of the man- agement of their private wealth, the aforementioned 20% withholding tax will operate a full discharge of income tax due on such payments.
4.2 Other Taxes, Duties, Charges or Tax Considerations No other taxes, duties, charges or tax considerations are imposed on lenders while making or transferring loans to, or taking security or guarantees from, debt- ors based in Luxembourg, save that the registration of the loan/security/guarantee documentation will be required where such documentation is physically attached to a public deed or to any other document subject to a mandatory registration in Luxembourg. Furthermore, should the taking of security imply the transfer of rights on immovable property located in Luxembourg or aircraft or boats registered in Luxem- bourg, such transfers would be subject to an ad valo- rem registration duty. 4.3 Foreign Lenders or Non-Money Centre Bank Lenders There are no particular tax concerns with regard to foreign lenders and non-money centre banks. We refer in this regard to the answers provided in 4.1 With- holding Tax and 4.2 Other Taxes, Duties, Charges or Tax Considerations . However, under specific condi- tions, interest payments made to lenders established in jurisdictions included on the EU list of non-cooper- ative jurisdictions for tax purposes are not deductible in Luxembourg. Under Luxembourg law, credit support can take vari- ous forms, from the most traditional forms of contrac- tual undertakings pertaining to civil contract law to a highly lender-friendly financial collateral regime. Security Governed by the Collateral Law The Law of 5 August 2005 on financial collateral arrangements, as amended (the “Collateral Law”), provides for various techniques to grant security in guarantee for financial debts; namely, pledges, trans- fers of title for security purposes (including by way of fiduciary transfer) and repurchase agreements. The collateral under these arrangements can take the form of any “financial instruments and claims”. A variety of assets may consequently be used as financial collat- eral. Typical collateral will take the form of shares of 5. Guarantees and Security 5.1 Assets and Forms of Security
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