Directors of a Luxembourg public limited-liability company (SA) and managers of a Luxembourg private limited-liability company (S.à r.l.) must ensure that the company is properly run from its registered office in Luxembourg.
The board is responsible for managing the company and, in order to do so, may call meetings to discuss ongoing business and transactions. The board must meet at least once a year to approve the annual accounts and submit them for approval to the general meeting of shareholders.
It is generally recommended that the board meet in Luxembourg on a quarterly basis and any time a substantial transaction so requires, with as many directors/managers as possible in attendance.
Furthermore, a general meeting of shareholders must be held at least once a year, within six months from the close of the company's financial year, generally between March and June, to approve the company's annual accounts. Shareholder meetings may also be called to approve amendments to the articles of association, reorganisation measures (merger or demerger), increase or reduction in the share capital, liquidation, etc. Shareholder meetings of a Luxembourg company must be held in Luxembourg.
Due to the outbreak of Covid-19, many businesses are adopting a restrictive travel policy and limiting travel to what is strictly necessary, which could impact fulfilment of the abovementioned obligations.
As the Luxembourg Companies Act provides for various options, it is possible to take certain actions to mitigate the above risks. Please find below a Q&A on the most relevant measures that can be taken.
Is it possible to hold board meetings without all members attending in person?
Unless otherwise provided in the articles of association, members of the board of a Luxembourg company may attend a meeting by way of conference call, videoconference or any similar means of communication allowing them to be identified.
If allowed by the articles of association, decisions of the board may be adopted unanimously in writing.
The minutes of the meeting or the written resolutions may be circulated for signature by e-mail, and electronic copies of the signed minutes/resolutions collected in counterpart.
It is recommend that recourse to these means be justified at the meeting and documented in the minutes or, as the case may be, in the written resolutions by way of reference to COVID-19.
Is it possible to hold a shareholder meeting without the shareholders attending in person?
In practice (with the exception of listed companies), shareholders have various options under Luxembourg law and do not have to attend general meetings of shareholders in person:
- A shareholder of an SA or an S.à r.l. may attend a general meeting by means of: - the appointment in writing, by email or other electronic means of a proxyholder, who need not be a shareholder, to represent him or her at the meeting; - conference call, videoconference or similar means of communication allowing the shareholder to be identified (in the case of an S.à r.l., the attendance of the shareholder or the latter's representative is required), if allowed by the articles of association
- If allowed by the articles of association, the shareholders of an SA or an S.à r.l. may vote by correspondence.
- When there are fewer than 60 shareholders in an S.à r.l., a general meeting is not required to take decisions, others than those amending the articles. Shareholder resolutions may be adopted in writing, circulated for signature by e-mail and electronic copies of the signed resolutions collected.
If the articles of association do not allow for the foregoing options, what should we do?
The articles of association can be amended to allow for one of these options. The amendment must be adopted at an extraordinary general meeting of shareholders held before a Luxembourg notary.
Unless all shareholders are in attendance (in person or by proxy), a meeting must be called with at least eight calendar days' notice (if all shares are in registered form) or thirty days' notice for listed companies. Shareholders may in any case grant a proxy to represent them at the meeting before a Luxembourg notary.
Unless the articles provide for more stringent conditions:
- an amendment to the articles of an SA requires, at the first meeting, a quorum of 50% of the share capital and approval by a majority of two thirds of the vote cast. If the quorum is not met, a second meeting shall be called at which the amendment shall be adopted if approved by two thirds of the vote cast, regardless of the number of shares present or represented.
- an amendment to the articles of an S.à r.l. shall be adopted by shareholder(s) representing at least 75% of the share capital.