LUXEMBOURG Law and Practice Contributed by: Marcus Peter and Kate Yu Rao, GSK Stockmann SA
all enterprises involved in the concentration exceeds EUR60 million; and (ii) at least two of the enterprises participating in the concentration generate an individ - ual turnover in Luxembourg of at least EUR15 million. The 8296 Bill was expected to be converted into law in the course of 2025; however on 3 June 2025, the Council of State issued an opinion formally opposing the 8296 Bill in its current form, citing significant struc - tural, legal and drafting deficiencies that fail to meet constitutional standards of legal certainty. Lastly, on 23 January 2025, the bill of law No 8053, transposing Directive (EU) 2019/2121 on cross-bor - der conversions, mergers and divisions, has been adopted by the Luxembourg Parliament (the “Merger Control Law”) and entered into force four days after its publication in the Luxembourg Official Journal. The provisions will facilitate corporate mobility within the EU by harmonising domestic legislation with regard to cross-border conversions, mergers and divisions. Fur - thermore, the Merger Control Law enhances the pro - tection of creditors, particularly those with outstand - ing claims, without undermining the transaction, while also introducing the right of withdrawal for minority shareholders with voting rights and establishing the right of employees to be informed about the impact of the forthcoming transaction on their employment conditions. Most Common Ways to Acquire a Company The most common ways to acquire a company in Lux - embourg are either by buying shares in the company operating the target business (a share purchase) or by buying the target business itself (an asset purchase). In a share purchase, the shares of the company are transferred to the buyer by the shareholders of the target company by means of a share purchase agree - ment, with all the target company’s assets and liabili - ties being acquired by the buyer. In an asset purchase, the parties (ie, the buyer and the company itself) enter into an asset purchase agreement which specifies the assets, liabilities and obligations to be transferred to the buyer as a result of the acquisition. Since an asset purchase leads to a change of ownership of the assets themselves, more consents and approvals are likely to be required compared to a share purchase.
Another means of acquiring control over a company is by a merger. Under the Companies Law, a merg - er can be carried out by absorption of one or more companies by another or by incorporation of a new company. In respect of a merger by absorption, one or more companies transfer to another pre-existing absorbing company, following dissolution without liq - uidation of the absorbed companies. In respect of a merger by incorporation of a new company, several companies transfer to a new company that they form, similarly leading to a dissolution without liquidation of the absorbed companies. The absorbing compa - ny (whether pre-existing or newly incorporated) will assume all the assets, liabilities and obligations of the absorbed companies. In addition, the Merger Control Law introduces two additional categories of merger by absorption into domestic legislation: • upstream merger, where a company transfers by way of dissolution without liquidation the entirety of its assets and liabilities to its parent company; and • side-stream merger, where a company transfers by way of dissolution without liquidation the entirety of its assets and liabilities to an existing company without the issue of new shares by such existing company on the condition that one person is the direct or indirect shareholder of all shares in the merging companies or that the shareholders of the merging companies hold their shares in the same proportion in all of the merging companies. Alternative Means of Acquisition Growth by way of strategic partnerships/alliances can be considered as alternative means of acquisition. If a company already has a mature service, it can grow its business by selling a franchise or licence to another company. It is also common in Luxembourg that the parties pool their resources by setting up a joint ven - ture entity. A joint venture entity is a business arrange - ment of international investors coming together from different regions of the world. By setting up a separate new joint venture entity, the parties may protect their main businesses against the risk of failure of such joint investment.
779 CHAMBERS.COM
Powered by FlippingBook