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Creditor Protection in Private Companies - The Luxembourg Experience
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- By Isabelle Corbisier, Associate Professor, University of Luxembourg
- Edited by Diederik Bruloot
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- Book:
- Belgian and European perspectives on creditor protection in closed companies
- Published by:
- Intersentia
- Published online:
- 21 November 2019
- Print publication:
- 26 July 2019, pp 103-120
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Summary
SUMMARY
Luxembourg law applying to the limited company (SàRL) does not appear to be particularly focused on the protection of the company's creditors even though one may not say that this protection appears to be significantly neglected. Most policy choices made in Luxembourg gravitate around the promotion of the SàRL as a flexible investment vehicle where the protection of the majority shareholder(s)/investor(s) would be adequately met.
As a consequence the law applying to the Luxembourg SàRL continues to be rooted in a rather conservative minimum capital requirement the amount of which does not appear to be a disturbing factor for investors and a recent company law reform focused on opening up financing techniques and tools rather than on a significant increase of creditor protection.
KEYWORDS
Private limited liability company; Luxembourg; Creditor Protection
INTRODUCTION AND CONTEXT
LUXEMBOURG COMPANY LAW
The provisions of Luxembourg's company law are to be found (marginally) in the Civil Code (Articles 1832–1873), applicable only when they are not derogated from by the Law of 10 August 1915, relating to commercial companies (LCC) as subsequently modified.
In December 2017, the numbering of all the articles of the LCC was modernized/changed. In the following contribution we shall refer to the new numbering followed by the old numbering (“ex”) as, of course, all previous descriptions of Luxembourg company law refer to the LCC's old numbering.
INITIALLY (1915) LUXEMBOURG's LCC WAS ALMOST ENTIRELY COPIED FROM BELGIAN LAW
Belgian law remains a source of reference for company law practitioners in Luxembourg. Considering the fact that Luxembourg is an international financial centre attracting investors mainly based in other jurisdictions, other legal systems do exercise some influence on Luxembourg company law as well, such as the French, Swiss, Anglo-American and German ones. However, more specifically relating to the private company (or limited liability company, SàRL), Belgian law's influence was always quite limited as this company form was introduced in Luxembourg in 1933 (French law was then used as a reference), namely before it became part of the Belgian company law system in 1935.
14 - Luxembourg
- from B - Europe
- Edited by Andreas M. Fleckner, Max-Planck-Institut für ausländisches und internationales Privatrecht, Germany, Klaus J. Hopt, Max-Planck-Institut für ausländisches und internationales Privatrecht, Germany
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- Book:
- Comparative Corporate Governance
- Published online:
- 05 July 2013
- Print publication:
- 11 July 2013, pp 604-647
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Summary
General information on corporate governance
Definition of corporate governance
There is no legal definition of “corporate governance” in Luxembourg. The only notable academic definition can be found in A. Steichen:
“corporate governance” or “gouvernement d'entreprise” . . . can be defined as “all the mechanisms which have for effect to organize the powers and to influence the decisions of managers, or to say it differently, which govern their conduct and define the area left to their discretion.” “Le corporate governance traite donc non seulement du mode d'organisation de la gestion sociale, mais également de son contrôle.”
The Ten Principles of Corporate Governance of the Luxembourg Stock Exchange (“TPCG”), which are mainly based on the (non-mandatory/flexible) “comply-or-explain” principle, formulate the following definition:
In a wide sense, “corporate governance” covers the organization of the control and management of a company. The term is also used in a narrower sense, to refer to the relationship between shareholders and management, and in particular the operation of the company's board.