On 16 March 2021, the bill number 7791 (the “Bill”) amending the law of 10 August 1915 on commercial companies, as amended (the “Company Law”), has been submitted to the Luxembourg Chamber of Deputies (Chambre des Députés) with the aim to clarify the position of the legislator on the applicability of the financial assistance rules to the private limited liability company (société à responsabilité limitée or S.à r.l.).
The Company Law clearly provides that a public limited liability company (société anonyme) may not (except under specific conditions) directly or indirectly, advance funds or grant loans or provide security with a view to the acquisition of its shares by a third party.
The question of whether the same rules should apply to S.à r.ls has however been debated by practitioners. The implementation of the law of 10 August 2016 modernizing the Company Law has generated additional uncertainties due to a clerical error in Article 1500-7 (formerly 168 second bullet point).
In 2016, it was initially proposed to extend the rules relating to financial assistance to companies taking the form of a S.à r.l. It had therefore been envisaged to introduce two new Articles in this respect (Article 190octies and Article 190septies) in the Company Law. Article 168 second bullet point (former numbering), which provides for criminal sanctions related to financial assistance, was adapted accordingly.
After further discussion, it has been decided to remove Articles 190octies and 190septies from the 2016 bill. However, Article 168 second bullet point (new Article 1500-7), which refers to corporate units (parts sociales) was kept, which tends to suggest that financial assistance rules also apply to S.à r.ls.
To correct this clerical mistake, the Bill aims to amend Article 1500-7 by deleting the references to corporate units. The Luxembourg Chamber of Commerce has already given a positive opinion thereon.
The suggested revised version of Article 1500-7 would therefore read as follows:
“The same penalties shall apply to any person who, in his capacity as director, commissaire (supervisory auditor), manager or member of the supervisory committee, knowingly:
This clarification should put an end to the question of the applicability of the financial assistance rules to S.à r.ls, to the great happiness of the practitioners.
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