Underwriting arrangements

Types of arrangement

What types of underwriting arrangements are commonly used?

No standard form of underwriting agreement or guidelines exist that are provided by the Luxembourg financial authorities or professional bodies.

Underwriting agreements in the Luxembourg market usually comply with the prevailing international practice in equity or debt offerings, in particular with the International Capital Market Association (ICMA) standards. The LuxSE is an associate member of the ICMA. Underwriting agreements are several rather than joint-and-several.

Typical provisions

What does the underwriting agreement typically provide with respect to indemnity, force majeure clauses, success fees and overallotment options?


Underwriting agreements for Luxembourg equity securities offerings usually contain an indemnity clause, for the purpose of indemnifying and protecting the underwriters and their directors, officers and employees, or controlled interests against any loss or damages resulting from untrue or misleading statements of material fact or material omissions contained in the prospectus, or any breach of the representations, warranties and agreements contained in the underwriting agreement. Underwriting agreements for debt securities also feature very similar indemnity clauses. Greenshoe shareholders can also agree to indemnify the underwriter under certain circumstances. This indemnity obligation is normally guaranteed by the assignment for security purposes of the proceeds of the offering.

Force majeure

Force majeure clauses in equity underwriting agreements generally cover any event that could affect financial markets, such as any change in general economic conditions or currency exchange, any suspension or material limitation in trading in securities on the main stock exchanges and other events that could prevent or have an adverse effect on the success of the offering. Debt underwriting agreements follow the ICMA’s rules and recommendations relating to force majeure.

Success fees

Underwriting agreements relating to equity offerings frequently provide for incentive and success fees, which are paid at the issuer’s discretion. Incentive fees apply to the gross proceeds of the offering while success fees are paid if a certain threshold of gross proceeds is reached.


It is market practice for equity securities offerings to have underwriting agreements providing for an overallotment option in connection with the 30-day stabilisation activities that underwriters may perform during the stabilisation period following the listing of the shares. In accordance with the provisions of the Commission Delegated Regulation (EU) 2016/1052 of 8 March 2016 supplementing the Market Abuse Regulation (the Stabilisation Regulation), any stabilisation action usually ends no later than 30 days after the issue date of the relevant securities, in the case of a significant distribution in the form of an initial offer publicly announced, or 30 days after the date of the allotment, in the case of a significant distribution in the form of a secondary offer.

This overallotment option is typically granted by the company on newly issued shares or by the selling shareholders on existing shares. Article 3(3) of the Stabilisation Regulation restricts the extent of overallotment, such that issuers shall not, when executing transactions under a buy-back programme, purchase on any trading day more than 25 per cent of the average daily volume of the shares on the trading venue on which the purchase is carried out.

Other regulations

What additional regulations apply to underwriting arrangements?

There are no specific Luxembourg regulations applying to underwriting arrangements. The provisions of the Stabilisation Regulation apply directly to underwriting agreements in the Luxembourg territory. This regulation restricts the time-related conditions for stabilisation and sets the limit for, among other things, overallotment of securities and greenshoe options (not exceeding 15 per cent of the original offer).