On August 17th 2015, draft law No 6860 (the “Draft Law”) was introduced to the Luxembourg Parliament. The Draft Law will transpose
i. Directive 2013/15/EU (the “Transparency and Prospectus Amendment Directive”) and
ii. the first article of Directive 2014/51/EU amending Directives and Regulations in respect of the powers of European Supervisory Authorities.
The Transparency and Prospectus Amendment Directive must be transposed into Luxembourg national law by November 27th 2015.
The provisions of Chapter 1 of the Draft Law concern amendments to the Luxembourg law of January 11th 2008 on transparency requirements for issuers of securities (the “Transparency Law”). The proposed amendments to the Luxembourg law of July 10th, 2005 on prospectuses for securities, as amended (the “Prospectus Law”) are dealt with in Chapter 2 of the Draft Law, and finally Chapter 3 deals with the entry into force of one of the new requirements under the Draft Law.
Chapter 1 of the Draft Law
A few of the main changes to the Transparency Law are as follows:
- The definition of “issuer” will be extended to include “natural persons” and to clarify that in the case of depository receipts admitted to trading on a regulated market, the issuer means the issuer of the securities represented, whether or not those securities are admitted to trading on a regulated market.
- The definition of Home Member State will be modified in order to clarify and simplify the determination of the Home Member State of an issuer of a third country. Importantly, for issuers who have not yet informed the competent authorities of their choice of Home Member State within three months from the date that issuer’s securities are first admitted to trading on a regulated market, the Home Member State shall be the Member State where the issuer’s securities are admitted to trading.
- The annual financial report required under Article 3 of the Transparency Law and the half-yearly financial reports required under Article 4 of the Transparency Law will need to remain available to the public for ten years (instead of five years).
- The half-yearly financial reports required under Article 4 of the Transparency Law must be made public at the latest three months after the end of the relevant period, instead of two months;
- Interim management statements/quarterly financial reports under Article 5 of the Transparency Law will no longer be required.
- To reinforce transparency as regard payments made to governments, issuers whose securities are admitted to trading on a regulated market and who have activities in the extractive and logging of primary forest industries will be required to disclose in a separate report on an annual basis, payments made to governments in the countries in which they operate; such payments shall be reported on a consolidated level.
- It will be clarified that the notification requirements of the acquisition and disposal of major holdings, do not apply to voting rights attached to shares acquired for stabilisation purposes provided that the voting rights attached to those shares are not exercised or otherwise used to intervene in the management of the issuer.
- The definition of financial instruments will be extended for the purposes of the major-holdings notification requirements under Article 8 of the Transparency Law to cover all instruments with similar economic effect to holding shares and entitlements to acquire shares.
- An issuer who proposes to amend its articles of incorporation shall no longer be required to provide a draft of such amendment to the CSSF in advance, as currently required under Article 18(1) of the Transparency Law.
- The sanctioning powers of the CSSF will be extended and strengthened.
Chapter 2 of the Draft Law
The Draft Law provides for an amendment of the definition of home Member State in the Prospectus Law so as to ensure consistency between the Transparency Law and the Prospectus Law. The new definition of Home Member State in the Prospectus Law will provide for more flexibility where the securities of an issuer of a third country are no longer admitted to trading on the regulated market in its Home Member State but instead are admitted to trading in one or more other Member States.
Chapter 3 of the Draft Law
Finally, pursuant to Article 22 of the Draft Law, the requirement for reports on payments made to governments under the new Article 5 of the Transparency Law, will apply for financial years commencing January 1st 2016 or during the course of 2016.