LUXEMBOURG Law and Practice Contributed by: Johan Terblanche, Baptiste Aubry and Michelle Barry, Maples Group
July 2022 established a Luxembourg financial sanc - tions committee, which is responsible for monitoring the implementation of financial sanctions issued by the United Nations Security Council, the EU and the Luxembourg Ministry of Finance. There has also been an increased focus on sanctions evasion risk following the Russian invasion of Ukraine. Antitrust regulations would, in the same way, be applied in accordance with the relevant rules in the appropriate jurisdictions.
get may be the subject of or that might affect the target. In addition to legal due diligence, tax due diligence is an essential process for investors and companies con - sidering mergers, acquisitions or partnerships. While red flag tax due diligence allows for a quick assess - ment of major potential concerns and is increasingly becoming the norm, conducting a comprehensive tax due diligence is key not only for gaining an in-depth insight into the tax implications of a transaction but also for facilitating effective post-acquisition restruc - turing. 4.2 Vendor Due Diligence Vendor due diligence is an intricate part of practice in private equity transactions in Luxembourg. Advis - ers will usually rely on vendor due diligence reports if the adviser is of the opinion that the third party who conducted the due diligence is reliable, but at least some independent verification is now the rule rather than the exception. Auction sales are very, very rare in Luxembourg, and vendors typically only provide a summary corporate due diligence report. There is generally more focus on financial data for auction sales. In Luxembourg, the landscape of private equity acquisitions has remained relatively stable, with most acquisitions by private equity funds being carried out through private treaty sale and purchase agreements negotiated between the parties. This remains the pre - ferred method, as auction processes remain relatively rare given the jurisdiction’s role as a holding platform rather than the operational seat of target companies. Where Luxembourg entities are involved, they are typi - cally used as holding, pooling or acquisition vehicles, while the target companies are located in other juris - dictions. 5. Structure of Transactions 5.1 Structure of the Acquisition
4. Due Diligence 4.1 General Information
In Luxembourg, legal due diligence is usually of sec - ondary importance to financial and tax due diligence, but it is still carried out and typically consists – in addition to the usual practice of verifying corporate existence, the compatibility of corporate objects, and solvency – of reviewing the corporate governance and past and current activities of the target for compliance with Luxembourg laws and regulations. The due diligence is usually conducted first via a review of the publicly available documentation (ie, the documents that are required to be filed at, and are available for download from, the Luxembourg Trade and Companies Register), followed by a thorough review of the documentation made available in the data room. Key areas of focus for legal due diligence include: • company corporate documents – this encompass - es the review of the company’s articles of incorpo - ration, minutes of shareholders’ and board meet - ings, and any other essential corporate documents to ensure they are up to date and in order; • regulatory status – ensuring that the company is in compliance with all relevant regulations, includ - ing those specific to its industry, and that it has all necessary licences and permits to operate; • financing arrangements – reviewing the company’s financing structures, including existing loans, credit facilities and security interests, to understand the financial obligations and any potential liabilities that may affect the transaction; and • litigation – conducting investigations into any past, present or potential future litigation that the tar -
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