The Bill no. 7791, filed with the Luxembourg house of commons (Chambre des Députés) on 16 March 2021, proposes to correct a material error in a criminal provision of the law of 10 August 1915 on commercial companies, as amended (the “Law”) relating to the financial assistance prohibition.
The error finds its origins in the preparatory works leading to the adoption of the law of 10 August 2016, which effected a significant modernisation of the Law.
In those works, it had been proposed to introduce for private limited liability companies (sociétés à responsabilité limitée) the same rule existing for the public limited liability companies (sociétés anonymes) according to which a company is prohibited to directly or indirectly finance the subscription for or the acquisition of its own shares by a third-party, by way of advancing funds, providing loans or granting security subject to certain exceptions. However, this rule was not retained in the final amending legislation.
Notwithstanding this, the related criminal provision, Article 1500-7, 2° of the current Law was still referring to the regime introduced by the proposed changes where it mentioned “parts sociales” (the term used for shares in a société à responsabilité limitée):
The same penalties [imprisonment from one month to two years and/or a fine from 5,000 EUR to 125,000 EUR] will apply to those who as directors, commissaires (auditors), managers or members of the supervisory board have knowingly: […]
2° made loans or advances by way of company funds or given security with a view to the acquisition of shares or parts sociales of the company or have taken a pledge over the company’s own shares or parts sociales, and this contrary to Articles 430-19 and 430-21 in the case of sociétés anonymes.”
The new Bill proposes now to rectify this error by removing the reference to parts sociales in Article 1500-7, 2°and makes it clear that point 2° of this article does not apply to a société à responsabilité limitée removing the uncertainties on the application or not of the rules of financial assistance to a société à responsabilité limitée.
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