The Luxembourg transparency law was recently amended: its scope has been widened, new requirements have been added and existing rules have been revised. The following changes merit particular attention:  

  • Securities issuers will now fall under the scope of the law when depositary receipts representing such securities are admitted to trading on a regulated market.
  • The definition of Home Member State has been amended:  
    • Issuers with registered offices in a third country or whose securities have a nominal value of less than EUR 1,000 will choose their Home Member State from among the countries in which the securities are admitted to trading on a regulated market.
    • Other issuers will choose between the country in which they have set up their registered office and the countr(y)(ies) in which their securities are admitted to trading on a regulated market.
    • The choice of the Home Member State has to be made publicly, at least three months after the admission of the securities to trading on a regulated market, otherwise the country in which the issued securities are admitted to trading on a regulated market will be considered as the Home Member State. If the securities are traded in several countries, each country will be considered as a Home Member State.
  • Annual and half-yearly reports will remain publicly available for 10 years (Articles 3 and 4 of the law).
  • Articles 3 and 4 (referred to above) apply to neither national and European public entities nor to entities whose securities have a nominal value of at least EUR 100,000 on the issuance date. However, entities which benefited from the lower threshold as laid down in the former legislation (exemption made for entities whose securities have a nominal value of at least EUR 50,000) will still benefit from the exemption regarding securities which have already been issued and admitted to trading on a regulated market before 31 December 2010, if those securities are still in issuance (Art. 7 (1) a), b), (4)).
  • An issuer whose Home Member State is Luxembourg and whose activities are part of the extractive industry or involve the exploitation of primary forests has to produce an annual report regarding the amount paid to governments (Art. 5).
  • Notification and disclosure of major holdings requirements for holders of (i) financial instruments which entitle them to acquire shares with voting rights and admitted to trading on a regulated market and (ii) financial instruments bearing the same entitlement (Art.12).
  • If the financial instrument entitles its holder to acquire shares with voting rights, the calculation of the voting rights has to be taken into account for the purposes of determining whether the notification is required. If a financial instrument returns pays cash, the long-term variation of the financial instrument has to be multiplied by the amount of the underlying assets. The new provision also sets out a non-exhaustive list of agreements/securities falling under the scope of the definition of “Financial Instruments” (Art.12bis).
  • The above-mentioned thresholds also apply when the holder of shares with voting rights acquires financial instruments entitling such holder to acquire the same category of shares already held by him.
  • The regulator of the financial sector (CSSF) is entitled to cooperate with other regulators in order to coordinate and ensure more efficient sanctions (Art. 23).
  • Extension of penalties in case of non-compliance with the notification/disclosure of required information. In case of breach/infringement, the CSSF is entitled to apply fines of an amount up to the higher of (i) EUR 10,000,000 and (ii) 5% of the turnover or double the expected benefit (Art. 25 (2)). If a corporate entity is held liable, the CSSF may also sanction its directors personally.

Following the amendments to the transparency law, securities issuers will have to face extended requirements and strict sanctions.