LUXEMBOURG Law and Practice Contributed by: Marcus Peter and Kate Yu Rao, GSK Stockmann SA
company in compliance with the rules set out in the articles, but do not need to be made public under the Transparency Law. 4.4 Dealings in Derivatives Dealings in derivatives are allowed in Luxembourg. 4.5 Filing/Reporting Obligations An announcement is required for a public takeover bid in Luxembourg when a certain threshold of sharehold - ing is reached by the bidder, as described in 4.2 Mate- rial Shareholding Disclosure Threshold . Furthermore, certain rules also require ongoing or even earlier noti - fications to supervising authorities, as mentioned in 2.2 Primary Regulators . 4.6 Transparency In principle, the disclosure requirements depend on the nature of the transaction and the character of the target company. If the shares or other securities of the target company are listed on a regulated market, different disclosing requirements will apply (see 2.2 Primary Regulators ). Also, if targets to be acquired are supervised by the financial supervisory authority, that authority needs to grant approval to the acquisi - tion before it can be implemented. Negotiations with a target company can be kept confi - dential provided that the parties comply with the rules set out in Regulation (EU) No 596/2014 (the “Market Abuse Regulation”), which encompasses insider deal - ing, unlawful disclosure of inside information and mar - ket manipulation. In any case, the bidder and the target company are required to announce a public bid no later than at the time of reaching an agreement (conditional or uncon - ditional) on the bid. Normally this happens when the bidder and the target company sign a document con - taining the terms and conditions of the bid. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal In the case of bid information, which qualifies as insid - er information within the meaning of the Market Abuse Regulation, the parties may be required to make dis -
closures earlier in case such bid information is leaked. In general, the target company must also inform the public as soon as possible of inside information that directly concerns that company, whenever such infor - mation arises, in a manner that enables fast access and complete, correct and timely assessment of the information by the public. 5.2 Market Practice on Timing At the moment, there is no applicable information in relation to market practice on timing in Luxembourg. 5.3 Scope of Due Diligence With regard to legal due diligence, it is normally the responsibility of the buyer to send a detailed infor - mation request to the seller for information about the constitution of the target, as well as the relevant infor - mation on the target’s property and employees, its existing contracts and licences, etc. In practice, the target company creates a virtual data room where the buyer will have access to documents of any kind per - taining to the target company covering all the areas of due diligence – ie, legal, tax and commercial. There are also certain mandatory requirements for the docu - ments to be published under the law of 19 May 2006 implementing Directive 2004/25/EU on takeover bids, as amended (the “Takeover Law”). In terms of the timing to conduct due diligence, there might be differences between public and private deals. In particular, when a significant amount of information has already been made public, listed target compa - nies may expect the bidder to conduct due diligence in a shorter period of time. Conversely, in the case of antitrust hurdles, the bidder may require the con - duct of detailed due diligence over several months. However, technology advancements, including the increasing integration of AI software to conduct legal due diligence, are enabling rapid review of large docu - ment sets and helping to complete the due diligence process more swiftly and efficiently. The due diligence process is also influenced by sev - eral other factors, including changes in the legislation and market dynamics (eg, ESG impact as described in 3.1 Significant Court Decisions or Legal Develop - ments ). Pandemics, economic conditions and geo - political tensions further underscore the importance
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