The Luxembourg Companies Act of 10 August 1915, as amended inter alia by the Act of 10 August 2016 (the "Act"), allows the issuance of shares with unequal value by a société anonyme (S.A.) and a société à responsabilité limitée (S.à .rl.).

The new rules, based on Belgian company law, provide additional flexibility to structure the share capital of an S.A. and an S.à r.l. and to regulate the voting rights of shareholders.

1. Unequal value shares of an S.A.

Article 37 (1) of the Act no longer specifies that shares of an S.A. must be of equal value, thus allowing an S.A. to issue shares with different values.

If shares with different values are issued by an S.A., this will affect determination of the shareholder majority requirements. In this case, each share will carry voting rights corresponding to the percentage of the share capital it represents. The share(s) representing the smallest amount of capital shall be deemed to have one vote. Thus, for example, shares with a nominal value of EUR 1 will have one vote, while shares with a nominal value of EUR 2 will have two votes, and so on.

2. The issuance of shares below par value by an S.A.

An S.A. may also issue shares with a par value below that of existing shares in the same class, provided the new shares are without nominal value.

The general meeting of shareholders may decide to issue such shares, provided this possibility is specifically mentioned in the notice of the meeting.

In this case, a report by the board of directors on the issue price and the financial consequences for the shareholders must be submitted to the general meeting. In addition, a certified auditor (réviseur d'entreprises) must prepare a report stating that the financial and accounting information contained in the board's report is accurate and sufficient. These reports must be mentioned in and appended to the notice of the meeting and filed with the Luxembourg Trade and Companies Register. Failure to provide an auditor's report will render the decision taken by the general meeting null and void, unless the shareholders have unanimously waived this requirement. The general meeting of shareholders can also authorise the board of directors to issue shares below par value, within the limits of the authorised capital. In this case, the abovementioned rules will apply as well.

3. Unequal value shares of an S.à r.l.

Article 182 (1) of the Act no longer specifies that shares of an S.à r.l. must be of equal value, thus allowing an S.à r.l. to issue shares with different nominal values.

Unlike for the S.A., however, the Act does not contain provisions authorizing an S.à r.l. to issue shares with a par value below that of existing shares in the same class.

If shares with different values are issued, this will affect determination of the majority required to adopt shareholder decisions. Depending on the type of decision, the majority will be determined either with reference to the percentage of share capital (e.g. amendments to the articles of association, winding-up, ordinary decisions) or the number of shares (e.g. approval of share transfers to third parties) represented at the meeting.