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Due diligence requirements
What due diligence is necessary for buyers?
Legal and financial due diligence is recommended.
What information is available to buyers?
The Takeover Bids Law of May 19 2006, which transposed the EU Takeover Directive (2004/25/EC) into domestic law, provides that companies governed by the laws of an EU or EEA member state where all or some of the securities are admitted to trading on a regulated market in one or more member state must publish detailed information pertaining to the following matters without limitation:
- the structure of their share capital;
- restrictions on the transfer of securities;
- significant direct or indirect shareholdings;
- holders of securities with special control rights;
- any restrictions on voting rights;
- any shareholders’ agreement known by the company;
- applicable rules governing the appraisement of board members and the amendment of the articles of association;
- management powers relating in particular to the issuance and redemption of securities; and
- any significant agreements to which the company is a party and which take effect that are altered or terminated on a change of control of the company following a takeover bid.
However, such publication is not required where the nature of such agreements is such that their disclosure would be seriously prejudicial to the company.
Further, certain pieces of information are disclosed to the public pursuant to the Companies Law (eg, the articles of association, the annual or periodic financial reports or management information).
What information can and cannot be disclosed when dealing with a public company?
Please refer to the answers above.
How is stakebuilding regulated?
Pursuant to the transparency regulations applicable in Luxembourg to listed companies that have chosen Luxembourg as their home EU member state, shareholders or issuers must notify the Financial Sector Supervisory Commission (CSSF) where the voting rights attached to a shareholder’s shares reach, exceed or fall below certain thresholds (eg, 5%, 10%, 15%, 20%, 25%, 33.33%, 50% and 66.66%).
The Takeover Bids Law requires the parties to a bid to provide the supervisory authorities in their home EU or EEA member state (at any time on request) with all of the information in their possession concerning the bid that the supervisory authority requires to discharge its functions. Further, the offeror is required to communicate to the CSSF and disclose the number of securities – specifying the number of inherent voting rights – for which its bid has been accepted or which belong to it.
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