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Disqualified Directors – facilitated exchange of information between member states



On 24 November 2023, the bill of law No. 8342 (the “Bill”) on the use of digital tools and processes in company law aimed at amending Articles 14 and 21 of the amended Law of 19 December 2002 on the register of commerce and companies and annual accounts of undertakings (the “RCS Law”) was submitted to the Chamber of Deputies. The Bill aims to implement, into Luxembourg law, Article 13i entitled "Disqualified directors" (Administrateurs révoqués) of Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law (the "Directive").


Despite its misleading French title, Article 13i of the Directive deals in reality with disqualified directors. This explains why the notion of management ban (interdiction de gérer) is the key concept of the Bill. In substance, the aim is to facilitate the exchange of information between Luxembourg Business Registers (the "LBR"), in its capacity as manager of the Register of Commerce and Companies, and the other Member States, with regard to persons banned from managing companies in Luxembourg or in another Member State.


I. Background


The Grand-Duchy of Luxembourg already has rules on management bans in the Commercial Code and in the RCS Law. Indeed, Article 13(10) of the RCS Law states that court decisions imposing a ban on the basis of Article 444-1 of the Commercial Code are to be registered, in the form of extracts, in the Register of Commerce and Companies (“RCS”) (i.e. a ban on carrying out a commercial activity or a managing, supervisory or control function or any function conferring the power to bind the company).


As a result, the LBR already refuses any application to register a person for a position that he or she is banned from exercising by virtue of a court order.


The Bill seeks to provide further clarification as to the information entered in the RCS in order to optimise the quality of information transmitted to other Member States under the Directive.


Furthermore, it is proposed to amend the Grand-Ducal Regulation of 23 January 2003 implementing the RCS Law with the purpose of providing a legal basis for the exchange of information between the LBR and the Member States via the system of interconnection of registers.


II. Amendments of the RCS Law


1. Amendment of Article 14 of the RCS Law


The Bill proposes to require additional information, such as the date of commencement and termination of the prohibition as well as the identity and the precise private or professional address of the person subject to the prohibition, when registering in the RCS court decisions imposing a management prohibition in order to enable the LBR to respond more effectively to a request for information from another Member State.


2. Amendment of Article 21 of the RCS Law


In addition, it is proposed that the LBR should refuse any application for registration in the RCS of a person subject to a management ban imposed on the basis of Article 444-1 of the Commercial Code. In the same context, the Bill provides for the LBR to remove automatically the registration of a person in the file of a company subject to such a management ban.


It is also proposed that the LBR may, under certain conditions, refuse an application to register a person as a director, manager, supervisory auditor, statutory auditor or approved statutory auditor in a Luxembourg company, where the person concerned is subject to a management ban in force in another Member State. For this to happen, the following conditions must be met :


  • the LBR is informed of the management ban ;

  • the company is a public limited company, a partnership limited by shares or a private limited company governed by Luxembourg law; and

  • the said ban is comparable to that imposed on the basis of article 444-1 of the Commercial Code.


Provided that these same conditions are met, the LBR will also be able, under the terms of the Bill, to automatically remove the registration, as director, manager, supervisory auditor, statutory auditor or approved statutory auditor, of a person who is subject to a prohibition in force in another Member State.


III. Next steps


As the Bill is currently in committee, following its review by the Conseil d’Etat, the Chambre des métiers and the Chamber of Commerce, it should be presented and discussed soon in public session.


Our team is available to provide advice and/or assistance you may require.


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