Luxembourg exemption regime allowing remote meetings of shareholders and board members has ended

Luxembourg introduced an exemption regime regarding the holding of shareholders and board members meetings during the COVID-19 pandemic through the law of 23 September 2020 relating to measures on the holding of meetings in companies and other legal entities (the “Law”).
Since then, the Law has been renewed several times until its last amendment in December 2021 renewing the exemption regime until 31 December 2022. In the context of the lifting of the governmental sanitary measures, no further renewal was adopted, so that the exemption regime took an effective end on 1^st January 2023.

A flexible regime

The Law was flexible enough to allow the absence of any physical meeting during its implementation period.

The Law permitted meetings of shareholders and bondholders to take place remotely, irrespective of the statutory provisions of the concerned entities (i.e. even in the absence of specific statutory provisions allowing the same), provided that:

• the agenda and full text of the resolutions had been communicated to the shareholders or bondholders in advance in case of written or electronic vote,
• voting participants were properly identified in case of meetings held by videoconference or another telecommunication mean,
• shareholders or bondholders granted a proxy to a proxyholder appointed by the company (or by the concerned shareholder in circumstances where the company was subject to the rules set forth in the law of 24 May 2011 on the exercise of shareholders rights of listed entities).

As regards meetings of board members, they could have been held remotely provided that remote tools allowed an appropriate identification of the participating board members. The Law further allowed for circular resolutions to be taken instead, at the discretion of the board.

Going back to normality

What are the consequences of the end of the exemption regime?

The Law should not have impacted the frequency of the meetings though, and statutory rules governing the quorum and majority were still applicable. From that viewpoint, no change should take place.

With the end of the virtual meetings derogative regime, each Luxembourg entity should adequately verify the content of its statutory provisions regarding the possibility to hold meetings remotely or to vote by circular resolutions, primarily to avoid being in violation of such statutory provisions but also to prevent any voting shareholder, bondholder or board member facing the risk that his vote isn’t properly cast.

From 1^st January onwards, board members and shareholders are furthermore advised to renew their good habit to come to Luxembourg to physically participate to board members and shareholders meetings, according to the pre-COVID frequency or more often, depending on their assessment of the substance level required in their instance. They should hence consider the minimum substance requirements, from a tax perspective, and avoid creating circumstances leading to challenge the location of the effective place of management of their company.

For more information or assistance on this topic, you may reach out to our corporate team.