
Welcome on Board Margot GEISLER !
Brouxel and Rabia Luxembourg Law Firm is thrilled to introduce Margot GEISLER who will hold the position of Associate in corporate and investment funds …
The amended law of 5 August 2005 on financial collateral arrangements has long been recognized in Europe as offering strong legal certainty and protection to creditors (the Financial Collateral Law).
While the Financial Collateral Law has been tested on many occasions in courts and has proven to be very effective in enforcement scenarios, some Luxembourg practitioners thought that the law could be further improved in order to facilitate the enforcement. The Luxembourg Parliament heard the market and took up the issue by passing a law on 15 July 2022, which came into force on 24 July 2022 (the Amending Law)[1].
Against this background, the Amending Law aims to modernize the provisions relating to the enforcement of financial collateral, notably by reforming the regime for the public sale of financial instruments following the enforcement of pledges. Prior to the adoption of the Amending Law, the Financial Collateral Law provided that public sales of financial instruments were only carried out through a public sale organized at the Luxembourg Stock Exchange. This provision dated back to the time when the Luxembourg Stock Exchange operated on the basis of a state concession and was no longer relevant, necessitating the provision of a new regime for the public sale of financial instruments inspired by the classic auction procedure. In addition, the Amending Law also modernizes the other methods of enforcement of collateral, and introduces provisions to clarify the enforcement measures for assets of a special nature, such as units or shares in collective investment undertakings or insurance policies.
The key takeaways of the Amending Law are as follows:
In conclusion, it is clear that Luxembourg intends to remain a pledgee friendly jurisdiction where pledges governed by the Financial Collateral Law must be enforceable quickly and without legal obstacles. In that respect, the Amending Law is fully consistent with the approach taken by the legislature in 2005.
[1] Published in the Memorial N° 371 of 20 July 2022.
Brouxel and Rabia Luxembourg Law Firm is thrilled to introduce Margot GEISLER who will hold the position of Associate in corporate and investment funds …
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