COVID-19: Impact on Corporate Governance for the Luxembourg Companies

In light of the Covid 19 crisis in order to allow Luxembourg companies to function normally and hold their meetings without physical presence to prevent the spreading of the virus at such meetings while avoiding any breach of the provisions of their articles of incorporation or of the law, the Luxembourg Government declared a state of emergency on 18 March 2020 for a period of three months in accordance with article 32, paragraph 4, of the Constitution and passed legislation introducing a series of measures including those relevant to maintaining the good corporate governance of Luxembourg companies. These measures have applied with immediate effect and will remain into force until further notice of the Luxembourg Government.

Among the measures introduced by the Government, certain rules introduce the possibility for the meetings of companies to be held exclusively in digital form without requiring the physical presence of their members and will therefore be able to conduct such meetings in a manner that protects the health and safety of their shareholders and board members and thus regardless notwithstanding any provision to the contrary in the articles of association of the relevant company and regardless of the number of participants relating to (i) general meetings (ii) meeting of board of directors/managers (iii) annual general meetings and (iv) additional delay to file annual accounts including.

Luxembourg based companies may organize:

(i) General Meetings of Shareholders

A company may, irrespective of the intended number of participants in its general meeting, hold any general meeting without a physical meeting, and may require its shareholders or members and other participants in the meeting to attend the meeting and exercise their rights exclusively by:

1) by voting remotely in writing or by electronic means, provided that the resolutions or decisions to be taken have been published or sent to them in advance;

2) by means of a proxy designated by the company; or

3) by video conference or any other means of communication allowing shareholders' identification.

It should be further noted and important to bear in mind that:

proxyholders appointed by the shareholders may only participate as set forth above.
shareholders attending as described above are deemed to be present or validly represented for the purpose of the quorum and majority at such meeting. This provision is also applicable to the meeting of bondholders.

(ii) Meeting of board of directors/managers

Board of directors/managers, even if the articles determine otherwise, may hold their meetings without a physical meeting by way of:

written circular resolutions (unless not foreseen in the articles); or
video conference or other means of telecommunication enabling the identification of the members of the body participating in the meeting.

Again participants through such aforementioned means will be considered present for the purposes of determining the quorum and majorities of the meeting. The above applies to the meetings of supervisory boards or any other bodies of a company.

(iii) Annual General Meetings of Shareholders

Furthermore, it should also be noted that the companies are allowed to convene their annual general meeting (to approve among other their annual accounts), irrespective of any contrary provisions in their articles of association, at the later of the following two dates:

  • a date that is within six months after the end of its financial year, or
  • a date that is within a period ending on June 30, 2020.

Any company which has already convened its meeting and which takes such a decision shall publish it and, where appropriate, notify it to its shareholders or associates or other participants in the form in which it had convened the meeting or by publication on its website no later than the third working day before the meeting.

(iv) Additional delay to file 2019 annual accounts

All Luxembourg companies will automatically benefit from a relief period of 4 months to make their financial data filings at the Luxembourg Trade and Companies Register. Thus, for a company having a financial year ending on 31 December 2019, the filing of its annual accounts can be made up to 30 November 2020 (instead of 31 July) without any penalty.

The above measures implemented by the Government will allow the Luxembourg companies to carry on their activities and put in place, if need be, temporary measures allowing them to hold their meetings (shareholders or corporate/management bodies) electronically while avoiding any breach of the provisions of their articles of incorporation or of the law.