{"id":124188,"date":"2026-01-09T09:59:55","date_gmt":"2026-01-09T09:59:55","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=124188"},"modified":"2026-01-09T09:59:55","modified_gmt":"2026-01-09T09:59:55","slug":"luxembourg-acquisition-finance","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/luxembourg-acquisition-finance\/","title":{"rendered":"Luxembourg: Acquisition Finance"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-124188","comparative_guide","type-comparative_guide","status-publish","hentry","guides-acquisition-finance","jurisdictions-luxembourg"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">AKD<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/01\/AKD-logo-2023-witruimte-300x219-1.png\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">AKD<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/01\/AKD-logo-2023-witruimte-300x219-1.png\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Acquisition Finance laws and regulations applicable in Luxembourg<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the trends impacting acquisition finance in your jurisdiction and what have been the effects of those trends? Please consider the impact of recent economic cycles, Covid-19, developments relating to sanctions, and any environmental, social, and governance (\u201cESG\u201d) issues.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>One of the major trends, initiated a few years ago, is the growing competition that traditional commercial banks face from \u201calternative lenders\u201d, enabling borrowers to rely on a broader range of financing sources. The alternative lending industry is well developed in Luxembourg and benefits from a wide variety of possible lending structures. In parallel, international groups increasingly set up dedicated borrowing vehicles in a context of a strong growth of private equity structures based in Luxembourg. The continued rise of private credit funds has further contributed to the diversification of available acquisition-finance products, particularly for mid-market transactions.<\/p>\n<p>Depending on the location of the lender\/sponsor of the project, it is quite common for the main finance documents to be governed by foreign law- typically English or New York law- even where the lender and\/or the borrower is a Luxembourg entity. Luxembourg law governed security documents are however invariably part of the robust security package that lenders typically require in acquisition finance structures.<\/p>\n<p>A further notable trend is the increasing use of fund-level and portfolio-level financing solutions- such as NAV facilities, subscription facilities and hybrid facilities- particularly for private equity sponsors seeking liquidity or acquisition firepower in a higher-rate environment. These products have become more common as Luxembourg continues to serve as a hub for private fund structures.<\/p>\n<p>While ESG is a growing topic requiring some add-ons and dedicated language, this trend has not fundamentally changed the financing structures used in Luxembourg. That said, ESG factors are gaining prominence in Luxembourg\u2019s financial sector. While ESG considerations have not fundamentally altered financing structures, there is indeed a growing inclusion of ESG components, reflecting increasing investor concern over climate, sustainability and diversity when considering a new investment or activity.<\/p>\n<p>The inclusion of ESG factors will gain importance with the forthcoming implementation of the Directive (EU) 2024\/1619, known as the sixth Capital Requirements Directive (CRD VI) in Luxembourg. The bill of law 8627, submitted to the Luxembourg Parliament on 2 October 2025, which aims at, among others, implementing CRD VI into Luxembourg law, will amend the Luxembourg law of 5 April 1993 on the financial sector. The amendments will require credit institutions and certain investment firms to establish robust governance arrangements and internal processes for ESG risk-management and management-approved strategies addressing the current but also the forward-looking impact of ESG factors on their operations. Management bodies of these institutions will need to ensure that they develop and monitor the implementation of specific plans that include quantifiable targets and processes to monitor and address the financial risks arising in the short, medium and long term from ESG factors.<\/p>\n<p>In 2023 and 2024, the rise of inflation and interest rates, elections in several major jurisdictions (including the United States) and heightened geopolitical risks have clearly had an impact on the acquisition finance sector in Luxembourg, which is inherently heavily dependent on developments in the rest of the European Union and the United States. The volume of acquisitions had considerably decreased, though not sharply.<\/p>\n<p>More recently, interest rates cuts within the European Union and the stabilisation of inflation have led to a modest rebound of the acquisition market in Luxembourg, as market participants consider once again initiating strategic financing decisions. Moreover, the anticipated macroeconomic environment \u2013 following growth of 1% in 2024, Luxembourg\u2019s real GDP is projected to increase to 2% in 2026 \u2013 and gradual recovery of the Luxembourg\u2019s finance industry provide a more positive backdrop for the acquisition market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please advise of any recent legal, tax, regulatory or other developments (including any reforms) that will impact foreign or domestic lenders (both bank and non-bank lenders) in the acquisition finance market in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Lending activities in Luxembourg are primarily governed by the law of 5 April 1993 on the financial sector, as amended (the LFS) as described in more detail under Question 8 below.<\/p>\n<p>The framework for lending activities and licensing requirements was clarified by the Commission de Surveillance du Secteur financier, the Luxembourg financial regulator (CSSF) in a June 2021 FAQ (currently under revision). Overall, the rules and market practices governing financing transactions remained very stable over the years, following trends and developments at European level.<\/p>\n<p>Several legislative developments have further shaped the Luxembourg acquisition finance market.<\/p>\n<p>One of the important development was the long-awaited reform of the insolvency procedures, implemented in 2023 by the law of 7 August 2023 on business preservation and modernisation of bankruptcy law (the Reorganisation Law) that entered into force on 1 November 2023. That reform modernises the tools available in case of financial distress and insolvency, enhancing the restructuring measures available to entities facing financial difficulties. The aim is essentially to offer such parties with alternative pre-insolvency restructuring tools with a view to avoid triggering insolvency proceedings in situations in which this can be avoided and replaced by more efficient restructuring tools. The direct impact of such legislation on acquisition finance structures remains modest at this stage, although it has added an additional layer of legal certainty (especially regarding the enforcement of security interests, as further described below) in an insolvency scenario and has been favourably welcomed by market participants.<\/p>\n<p>The law of 15 July 2024 on the transfer of non-performing loans transposing Directive (EU) 2021\/2167 on credit servicers and credit purchasers, entered into force on 22 July 2024 (the NPL Law). This new legislative framework introduced, among others, specific obligations for Luxembourg-based entities involved in the acquisition (i.e. credit purchasers) and\/or management of non-performing loans (NPLs). A non-performing loan refers, in essence, to a loan where repayment by the borrower is unlikely, or where more than 90 days have passed without the borrower making the agreed instalments. The NPL Law also introduced a new type of specialised professional of the financial sector in Luxembourg: the credit servicers.<\/p>\n<p>More recently, as noted under Question 1, the bill of law 8627, which among other objectives aims to implement CRD VI, was submitted to the Luxembourg Parliament on 2 October 2025. As part of the amendments introduced under the implementation of CRD VI, it is worth noting the contemplated amendments to the regime governing third-country firms providing core banking services, which include, inter alia, deposit-taking and lending activities, as well as, the granting of guarantees.<\/p>\n<p>Under this new regime, any type of third-country firms intending to commence or continue carrying out deposit-taking activities in Luxembourg will be required to establish a branch in Luxembourg, subject to prior approval of the CSSF. Regarding the commencement or continuation of lending activities and the granting of guarantees and commitments in Luxembourg, the branch requirement will only apply to credit institutions and firms that would meet the criteria set out in Article 4(1)(b) of Regulation (EU) 575\/2013 if they were established in the European Union.<\/p>\n<p>This branch requirement is however subject to certain exemptions, in particular, for interbank and intragroup activities, as well as for any business resulting from reverse solicitation by clients. Finally, it is important to note that in order to preserve the rights acquired by customers under existing contracts, the requirement to set up a branch is understood to be without prejudice to existing contracts that were concluded before 11 July 2026. Therefore, contracts concluded before this date will not be subject to this new regime.<\/p>\n<p>The bill of law is currently under parliamentary discussions and may be amended. Market participants should closely monitor the parliamentary process and the CSSF\u2019s guidance for final implementing measures.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any specific high level issues or concerns in your jurisdiction that should be considered in respect of structuring or documenting a typical acquisition financing.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is common for transaction documents involving Luxembourg borrowers to be governed by foreign law depending on where the acquired assets and\/or lenders are located. In such a context, Luxembourg corporate and financial laws are very flexible and do not raise any specific issues. As for points of attention, we will mention the capitalisation of interest, which is, under certain circumstances, subject to certain conditions (it being noted that it is likely that such rules might be loosened in the near future for non-consumer parties as a result of lobbying by professional associations in the banking sector), certain limitations to cross-stream and upstream guarantees developed by legal practitioners to tackle corporate benefit issues and the degree of flexibility to be given to the Luxembourg entities involved to perform certain intra-group arrangements or intra-group reorganisations. Financial assistance concerns should also be assessed \u2013 see Question 17 in this respect.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your jurisdiction, due to current market conditions, are there any emerging documentary features or practices or existing documentary provisions\/features which borrowers or lenders are adjusting or innovating their interpretation of, or documentary approach to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For most of Luxembourg driven transactions, the trend is to adjust and amend the documentation to reflect market conditions and build in greater flexibility where needed.<\/p>\n<p>Borrowers and lenders have become increasingly conscious that triggering acceleration or commencing enforcement could be counterproductive. As a result, documentation is often calibrated to provide more headroom and accommodate commercially driven restructuring or amendment process. For new transactions, guarantees and equity commitment type of instruments are increasingly seen, alongside the customary security interests over the target and its assets. In respect of international transactions, alternative lenders are steadily gaining more market share, competing more and more with traditional lenders, in particular for real estate acquisitions.<\/p>\n<p>It is also worth noting that as a result of the entry into force of the Reorganisation Law, it has become standard market practice to carefully review and adjust the trigger events under security interests granted under the Luxembourg law of 5 August 2005 on financial collateral arrangements, as amended (the Collateral Law) to make sure that they are not tied to an acceleration of the underlying debt only.<\/p>\n<p>Furthermore, in response to the growing focus on ESG factors, some Luxembourg-based borrowers and lenders are incorporating sustainability-linked provisions into loan documentation. Sustainability-linked loans and green loans have indeed emerged in the financial market, leading to the inclusion of sustainability-related provisions in loan documentation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has there been a prevalence of \u201cequity bidding\u201d in acquisition financing (i.e., signing the acquisition agreement prior to securing financing) with the expectation of securing financing shortly thereafter? If in the US, would Xerox language be included in the acquisition agreement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no specific Luxembourg trend in Luxembourg regarding \u201cequity bidding\u201d given the predominantly cross border nature of acquisition financings structures in the Luxembourg market. However, it is not uncommon for the share purchase agreement to be signed before the financing is fully secured, particularly in competitive auction process. In such cases, buyers generally rely on equity commitment letters or also possibly on reverse break fees (although the latter are not common). Where agreed, limited conditions precedent relating to the financing may be included in the share purchase agreement.<\/p>\n<p>The Xerox language itself is not typically used in purely Luxembourg transactions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any notable trends in the use of certain financing structures (e.g., private credit vs syndicated vs high yield vs holdco vs mezzanine vs preferred, etc.) in your jurisdiction for acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no specific trend in Luxembourg in the use of certain acquisition financing structures. Market participants and practitioners generally tend to align with broader European and international market practices and developments. Luxembourg is primarily used as a holding or financing platform and the choice between private credit, bank syndication, high-yield structure, Holdco PIK instruments or mezzanine financing is driven by the commercial and regulatory environment of the sponsor, the lenders and the target jurisdiction rather than Luxembourg law itself.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has the use of technology (e.g., e-signatures, digital platforms for syndication, document automation, AI, etc.) impacted the documentation or execution of acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The use of technology has generally impacted the documentation and execution process of acquisition financings in Luxembourg.<\/p>\n<p>The use of electronic signatures is now widely accepted, as these signatures are generally considered legally valid under Luxembourg law. In particular, electronic signatures that comply with the requirements of Article 1322-1 of the Luxembourg Civil Code or qualify as a qualified electronic signature under the eIDAS Regulation have an equivalent effect to a handwritten signature. Except in limited cases, they are valid for the execution of an agreement under private seal (acte sous seing priv\u00e9). As a result, it is now common for transaction documents to be executed by electronic means, which has significantly streamlined and accelerated the signing process.<\/p>\n<p>While some Luxembourg law firms have begun to implement AI tools internally, their use remains supplementary rather than transformative at this stage. Similarly, document automation technologies that can enhance efficiency and reduce the risk of drafting errors are still in the early stages of adoption.<\/p>\n<p>Luxembourg market participants also increasingly use electronic data rooms and digital workflow tools.<br \/>\nOverall, the use of technology has already improved efficiency and reduced execution times in acquisition financings.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the legal and regulatory requirements for banks and non-banks to be authorised to provide financing to, and to benefit from security provided by, entities established in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The LFS sets the rules applicable to entities authorised to grant loans. In addition to credit institutions, a specific regulated status exists for professionals carrying out lending activities. Both of these main categories of regulated lenders share common obligations and principles regarding (i) central administration and infrastructure, (ii) prior approbation of shareholders, (iii) competences and experience of their management teams, (iv) minimum amount of own funds, and (v) external auditing of financial statements.<\/p>\n<p>In addition to the \u201ctraditional\u201d types of lenders, \u201calternative\u201d lenders may, subject to conditions, also be authorised to grant credit following their own governing rules. Indeed, the specific laws and regulations applicable to securitisation undertakings, undertakings for collective investment (UCIs), specialised investment funds (SIFs), pension funds or investment companies in risk capital (SICARs) describe the parameters within which those entities may actually provide funding and loans.<\/p>\n<p>It is worth mentioning that the LFS, and especially its Article 28-4, lists the exceptions where Luxembourg unregulated entities may grant loans without any licence or preliminary authorisation. This is of course subject to meeting certain specific conditions and the typical exemptions that can be relied upon include situations when loans are notably (a) granted on a \u201cone-off\u201d basis, or (b) granted to intra-group borrowers only, or (c) granted to professional borrowers only to the extent that the nominal value of the loan(s) is in excess of EUR 3,000,000. It is further worth noting that an entity is not exempted in general. Instead, each act of lending requires a reassessment of the previously relied on exemption.<br \/>\nAs described in more detail under Question 11 below, the Collateral Law shapes a very favourable and protective framework for secured parties. Security interests created thereunder can generally be granted to any type of secured party.<\/p>\n<p>Finally, with the upcoming entry into force of CRD VI in Luxembourg, the provision of core banking services by third-party firms will be affected, as certain activities will trigger a requirement to establish a branch in Luxembourg. We refer to Question 2 for further details.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which govern the advance of loan proceeds into, or the repayment of principal, interest or fees from, your jurisdiction in a foreign currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No limitation exists under Luxembourg law regarding the use of foreign currency in financing transactions, the choice and contractual freedom amongst parties would prevail and apply. However, it is worth noting that in case of litigation the courts of Luxembourg may render judgments for a monetary amount in foreign currencies, yet any obligation to pay a sum or money in any currency other than Euro will be enforceable in Luxembourg in terms of Euro only.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which limit the ability of foreign entities to acquire assets in your jurisdiction or for lenders to finance the acquisition of assets in your jurisdiction? Please include any restrictions on the use of proceeds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Luxembourg has adopted a national screening mechanism pursuant to the law of 14 July 2023 setting up a mechanism for screening foreign direct investments which may affect security or public order, which entered into force on 1 September 2023. In a nutshell, it applies to investments made by foreign investors intended to gain control over a Luxembourg entity active in certain sectors considered as critical. That includes energy sector, transport sector, aerospace and defence, media sector, health sector, etc. Prior to such investment becoming effective, a notification must be made to the Luxembourg Ministry of Economy. In case the latter considers that the contemplated transactions may affect national security or public order, it will trigger a so-called screening procedure to assess the contemplated transactions. In such case, the investment cannot be performed until completion of the screening procedure and approval by the Ministry of Economy.<\/p>\n<p>The decision to either acquire, directly or indirectly a qualifying holding in licensed entities of the financial or the insurance sector or to further increase, directly or indirectly, a qualifying holding in a licensed entity of the financial or insurance sector may also be subject to prior approval from the CSSF or the Commissariat aux Assurances, respectively, depending on the target and size of shareholding acquired or increased.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What does the security package typically consist of in acquisition financing transactions in your jurisdiction and are there any additional security assets available to lenders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In acquisition financing transactions, the typical security package governed by Luxembourg law is composed of (i) a pledge on the shares of the holding company, (ii) a pledge on the intercompany receivables and (iii) a pledge on the Luxembourg bank account(s) held by the holding company with a Luxembourg based bank. These pledges are subject to the Collateral Law which provides the lender with a very efficient tool as these pledges are bankruptcy proof and can be easily and swiftly enforced through out-of-court enforcement procedures.<\/p>\n<p>The Collateral Law also provides for other financial collateral instruments such as the transfer of ownership by way of security interest (transfert de propri\u00e9t\u00e9 \u00e0 titre de garantie) and the repurchase agreement (mise en pension), which are less used in practice.<\/p>\n<p>The law of 10 July 2020 on professional payment guarantees (the Law on Professional Payment Guarantees) has introduced into the Luxembourg legal environment a specific, robust and innovative regime for personal guarantees (s\u00fbret\u00e9s personnelles) granted in a professional framework. A professional payment guarantee consists of an undertaking by a guarantor to pay a beneficiary, at the request of such beneficiary or an agreed third party, an amount determined on the basis of agreed terms, in relation to one or more claims or associated risks. Professional payment guarantees complement the two existing regimes of personal guarantees: (i) cautionnements (suretyships \u2013 i.e. broadly guarantees directly linked to an underlying obligation) provided for in the Luxembourg Civil Code and (ii) garanties autonomes (stand-alone guarantees \u2013 i.e. broadly guarantees independent from an underlying obligation) resulting from the practical construction recognised by Luxembourg courts for over three decades.<\/p>\n<p>Personal guarantees that are explicitly subject to the Law on Professional Payment Guarantees benefit from interesting protections and features, such as the fact that the guarantee can be called upon in all contractually agreed cases, including in absence of default or acceleration of the underlying claims and that the guarantee can be granted to a security agent or equivalent body acting on behalf of the secured parties.<br \/>\nA lender is also usually secured by collateral arrangements governed by foreign law over the assets held abroad by the Luxembourg entities involved in the transaction.<\/p>\n<p>In a transaction involving real estate properties, mortgages will be also granted to the lender. If the real estate property is located in Luxembourg, the mortgage will take the form of a notarial deed and shall be registered with the Administration de l\u2019Enregistrement, des Domaines et de la TVA and with the Conservation des Hypoth\u00e8ques. The registration of the mortgage is subject to registration duties and a transcription fee and the mortgage must be renewed every ten years to remain enforceable towards third parties.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the law of your jurisdiction permit (i) floating charges or any other universal security interest and (ii) security over future assets or for future obligations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Luxembourg law, the concept of floating charges does not exist as such, the closest instrument is the pledge on inventories (gage sur fonds de commerce), which is rarely used in practice as the pledgee must hold an authorisation and such pledges are subject to certain restrictions.<\/p>\n<p>It is indeed possible that the Luxembourg security package described under Question 11 above encompasses future assets and secure future obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do security documents have to (by law) include a cap on liabilities? If so, how is this usually calculated\/agreed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, the Collateral Law does not provide for a cap on liabilities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the formalities for taking and perfecting security in your jurisdiction and the associated costs and timing? If these requirements are different for different asset classes, please outline the main points to note for each of these briefly.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The perfection requirements depend on the type of asset and also on the type of collateral instrument.<\/p>\n<p>Concerning pledges on shares and other type of securities, the perfection of the pledge is made through the recording of the pledge in the relevant register of shares (or securities) held at the registered office of the company or kept by the depositary in case of securities in bearer form. The company the shares of which are pledged is usually party to the share pledge agreement for acknowledgment purpose, if not the pledge is notified to it.<\/p>\n<p>Concerning pledges on bank accounts, the pledge is notified to the account bank which is requested to sign and return to the pledgee an acknowledgment notice whereby the account bank waives its prior lien on the account in order to permit a first ranking pledge.<\/p>\n<p>Concerning pledges on receivables, these pledges are perfected by the mere signature of the pledge by the pledgor and the pledgee (and also by the notification of the pledge to the debtor or by making the debtor party to the pledge agreement).<\/p>\n<p>Usually, the pledge agreements cover additional and future collateral entering into the possession of the pledgor, triggering additional recording of the pledge on these assets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitations, restrictions or prohibitions on downstream, upstream and cross-stream guarantees in your jurisdiction? Please also provide a brief description of any potential mitigants or solutions to these limitations, restrictions or prohibitions.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A guarantee can be provided by a Luxembourg company if authorised in its corporate object and to the extent that providing this guarantee is within the company\u2019s corporate benefit (which must be assessed by the board of the Luxembourg company).<\/p>\n<p>Assuming that these conditions are met, the Luxembourg company can grant upstream, downstream, cross-stream guarantees, although upstream and cross-stream guarantees are subject to certain limitations. Indeed, it is market practice in Luxembourg to limit the upstream and cross-stream guarantees to a certain percentage of the net assets of the Luxembourg companies (usually between 80 and 95%) increased by the intra-group financing granted to the Luxembourg company (if any).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable costs, consents or restrictions associated with providing security for, or guaranteeing, acquisition financing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>With the exception of the mortgage over real estate property which is subject to registration (see Question 11 above) and the payment of fees, the instruments subject to the Collateral Law are not subject to mandatory registration; therefore, no fees are due. If an instrument is voluntarily registered with the Luxembourg Administration de l\u2019Enregistrement, des Domaines et de la TVA, a fixed registration duty of EUR 12 or a proportional registration duty becomes due.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible for a company to give financial assistance (by entering into a guarantee, providing security in respect of acquisition debt or providing any other form of financial assistance) to another company within the group for the purpose of acquiring shares in (i) itself, (ii) a sister company and\/or (iii) a parent company? If there are restrictions on  granting financial assistance, please specify the extent to which such restrictions will affect the amount that can be guaranteed and\/or secured.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Luxembourg rules on financial assistance are applicable in the context of the purchase of shares of a <em>soci\u00e9t\u00e9 anonyme, <\/em>a <em>soci\u00e9t\u00e9 anonyme simplifi\u00e9e <\/em>and a <em>soci\u00e9t\u00e9 en commandite par actions. <\/em>These companies can only provide direct or indirect financial assistance (i.e. advance funds, make loans or provide security) for the purpose of the acquisition by a third party of their shares subject to the completion of what is known as the \u201c<em>whitewash procedure<\/em>\u201d. As for financial assistance to a sister company and\/or parent company provided by a Luxembourg company under the form of a guarantee, we refer you to Question 15 detailing the applicable limitations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are any financial assistance issues in your jurisdiction, is there a procedure available that will have the effect of making the proposed financial assistance possible (and if so, please briefly describe the procedure and how long it will take)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, Article 430-19 of the law on commercial companies dated 10 August 1915, as amended (the Company Law), sets out the conditions to complete the \u201cwhitewash procedure\u201d. The financial assistance takes place under the responsibility of the board of directors, which must ensure that the following conditions are met:<\/p>\n<ul>\n<li>arm\u2019s length conditions (especially with regard to interest received by the company and with regard to security provided to the company for the loans and advances);<\/li>\n<li>the interest of the company;<\/li>\n<li>an investigation of the credit standing of the third party or in case of multiparty transactions, of each counterparty thereto;<\/li>\n<li>submission of a report to the shareholders\u2019 general meeting indicating the reasons for the transaction, the interest of the company in entering into the transaction, the conditions on which the transaction is entered into, the risks involved in the transaction for the liquidity and solvency of the company and the price at which the third party is to acquire the shares.<br \/>\nThis report of the board of directors of the company must be filed with the Luxembourg register of commerce and companies and published in the Recueil \u00e9lectronique des soci\u00e9t\u00e9s et associations.<\/li>\n<\/ul>\n<p>The transactions concluded by banks and other financial institutions in the normal course of business or transactions effected with a view to acquire shares by\/for the staff of the company or an affiliate of such company by a controlling relationship are not subject to the above conditions. One condition applies, however, which is that such transactions must not have the effect of reducing the net assets of the company below the aggregate of the capital and the reserves which may not be distributed under the Company Law or the articles of association of the company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are financial assistance issues in your jurisdiction, is it possible to give guarantees and\/or security for debt that is not pure acquisition debt (e.g. refinancing debt) and if so it is necessary or strongly desirable that the different types of debt be clearly identifiable and\/or segregated (e.g. by tranching)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is possible to give guarantees and\/or security for debt that is not pure acquisition debt without specific identification or segregation of the different types of debt but in case financial assistance issues arise (as described in Question 17 above) it is indeed advisable to make a distinction between pure acquisition debt and other debt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction recognise the concept of a security trustee or security agent for the purposes of holding security, enforcing the rights of the lenders and applying the proceeds of enforcement? If not, is there any other way in which the lenders can claim and share security without each lender individually enforcing its rights (e.g. the concept of parallel debt)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Collateral Law expressly recognises that the collateral can be provided to a security agent, fiduciary or trustee to secure the claims of third-party beneficiaries present or future, provided that they are determined or determinable. The creation of a parallel debt is not required to provide collateral to a security agent, fiduciary or trustee. In case of enforcement, the security agent is entitled to enforce the rights of the lenders and to apply the proceeds of the enforcement. The same also applies to guarantees governed by the Law on Professional Payment Guarantees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have significant restrictions on the role of a security agent (e.g. if the security agent in respect of local security or assets is a foreign entity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Collateral Law expressly recognises the possibility to have a security agent representing and acting on behalf of the security\u2019s beneficiaries and does not provide for restrictions on the role of a security agent.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide the main differences and considerations between bank loan financing and high yield bond\/note financing for acquisition purposes in your jurisdiction, and how do they affect the structuring and documentation of the transaction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Luxembourg is a very active jurisdiction for high-yield debt securities transactions, but does not have its own market. Rather, it is typically a go-to jurisdiction for foreign groups to structure their financing special purpose entities.<\/p>\n<p>Luxembourg\u2019s business-friendly environment makes it one of the most successful jurisdictions and financial centres in the EU and the world. That is also true for high-yield debt securities issuances.<\/p>\n<p>The Luxembourg Stock Exchange is the leading venue in Europe for the listing of high-yield debt securities and very often high-yield debt securities issued by Luxembourg and foreign issuers will be listed on the Luxembourg Stock Exchange and admitted to trading on one of its markets.<\/p>\n<p>The vast majority of high-yield debt securities issued through Luxembourg entities are governed by laws other than those of Luxembourg, typically New York law and to a lesser extent, English law or even German law. As such, the terms of the supporting documents (terms and conditions of the debt securities, indentures, purchase agreements, etc) are in line with the international market practices, essentially driven by US practices, in which Luxembourg law plays only an ancillary role.<\/p>\n<p>The same is true for bank loans, which are only rarely governed by Luxembourg law (which would, however, typically be the case for loans granted by the European Investment Bank). Accordingly, bank loans are usually subject to New York law or English law and follow the practices and requirements customary in these legal systems, closely following established documentation standards (eg LMA).<\/p>\n<p>From a Luxembourg law perspective, there are no notable differences for a Luxembourg company to structure its debt via the issuance of high-yield debt securities or bank loans, and the main differences and benefits will typically be assessed from the perspective of the governing law applicable to the relevant documents of a contemplated transaction or current market circumstances that may impact the economic terms. More generally, a listing of the high-yield debt securities in Luxembourg or elsewhere may offer the issuer and its group more visibility on international markets and offer more flexible liability management options (eg, ongoing purchases and tender offers), but will also require the issuer to comply with the applicable disclosure and reporting obligations. Therefore, issuance tickets for high yield debt securities will typically be in excess of EUR 150,000,000 to be cost efficient.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Describe the loan transfer mechanisms that exist in your jurisdiction and how the benefit of the associated security package can be transferred.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The transfer of a loan under Luxembourg law is governed by the provisions of the Luxembourg Civil Code and can be made by way of (i) an assignment of claims (Art. 1689 of the Luxembourg Civil Code) or (ii) a novation (Art. 1271 of the Luxembourg Civil Code).<\/p>\n<p>In the event of assignment of the loan, the security package that is an accessory to the loan will be transferred to the assignee. However, in the event of novation of the loan, the security package will not be transferred to the new lender unless the security documents expressly state that the benefit of the collateral is reserved for the benefit of the new lender (in application of Art. 1278 of the Luxembourg Civil Code). In practice, such statement is systematically included in the Luxembourg security documents when the loan is transferred by way of novation and it is also recommended to include such preservation language in the main finance document.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the rules governing the priority of competing security interests in your jurisdiction? What methods of subordination are used in your jurisdiction and can the priority be contractually varied? Will contractual subordination provisions survive the insolvency of a borrower incorporated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In practice, security interests over Luxembourg assets tend to be governed by the Collateral Law. If this is the case, the ranking of the security interests will be determined depending on the type of security (shares security, receivable security, bank account security) and based on the date of granting of the security interest or the satisfaction of the perfection formalities, as applicable.<\/p>\n<p>Contractual subordination mechanisms are present in virtually all acquisition financings. As a rule, the parties are free to determine the contractual rules whereby certain claims will rank senior to others. This can be implemented through a straightforward subordination agreement, often in larger deals complemented by an intercreditor agreement.<\/p>\n<p>Contractual subordination is a legal construction not explicitly recognised by Luxembourg law (outside the scope of securitisation transactions), but it is largely used in practice and advocated by legal practitioners. There is nowadays broad consensus that subordination provisions are legal and binding among parties. It has also been validated by Luxembourg courts, although not explicitly in insolvency scenarios.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a concept of \u201cequitable subordination\u201d in your jurisdiction whereby loans provided by a shareholder (as a creditor) to a company incorporated in your jurisdiction are subordinated by law upon insolvency of that company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, Luxembourg law does not recognise the concept of \u201cequitable subordination\u201d.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction generally (i) recognise and enforce clauses regarding choice of a foreign law as the governing law of the contract, the submission to a foreign jurisdiction and a waiver of immunity and (ii) enforce foreign judgments?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Luxembourg courts would generally recognise and enforce clauses regarding choice of law and jurisdiction, except to the extent that the result of such application would be manifestly incompatible with fundamental principles of public policy in Luxembourg or would be overriding provisions of mandatory law in Luxembourg. The rules and limitations set forth in Regulation (EC) No. 593\/2008 on the law applicable to contractual obligations (Rome I) will apply to choice of law clauses. Furthermore, while there have been legal developments regarding the recognition of asymmetric jurisdiction clauses by the Luxembourg courts, the judgement of the Court of Justice of the European Union dated 27 February 2025 has provided important clarification. The Court confirmed the validity of asymmetric jurisdiction clauses provided that certain conditions are met. These conditions include, among other things, designating courts in EU member states or countries party to the Hague Convention of 30 June 2005 on Choice of Court Agreements and identifying objective factors that allow a court to determine its jurisdiction. Particular caution should thus be exercised when drafting an asymmetric jurisdiction clause, as the consequences under Luxembourg law of a clause that does not satisfy these requirements remain uncertain, irrespective of whether such agreement is governed by the laws of an EU Member State, or of a state party to the Hague Convention of 30 June 2005 on Choice of Court Agreements.<\/p>\n<p>Regarding the enforcement of foreign judgements, decisions of courts from EU Member States will be generally enforced in accordance with Regulation (EU) No. 1215\/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I bis), and subject to the exceptions provided therein, whilst decisions from non-EU courts would generally be subject to an exequatur procedure in Luxembourg to make the decision enforceable in Luxembourg, unless a specific international convention were to apply (such as the Lugano Convention, the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters or the Hague Convention of 30 June 2005 on Choice of Court Agreements, each of which establishes a dedicated framework for recognition and enforcement of judgments).<\/p>\n<p>It is worth noting the recent accession of the United Kingdom to the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (the 2019 Hague Convention). Following Brexit, the United Kingdom lost the benefit of the Brussels Ibis Regulation and the Lugano Convention, which had previously provided a streamlined framework for the enforcement of judgements across the European Union. Since then, there has been no comprehensive regime for enforcing an English judgement abroad, other than the Hague Convention of 30 June 2005 on Choice of Court Agreements (the 2005 Hague Convention). However, the 2005 Hague Convention has a limited scope, applying only where there is a judgement based on an exclusive jurisdiction clause. In cases where such exclusive clauses were absent, particularly in finance documents providing non-exclusive or asymmetrical jurisdiction clauses, parties had to rely on the national laws of the enforcing state. The 2019 Hague Convention fills this gap by offering a broader framework for recognition and enforcement of judgments based on non-exclusive or asymmetrical jurisdiction clauses.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements, procedures, methods and restrictions relating to the enforcement of collateral by secured lenders in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Collateral Law creates creditor-friendly security interests over assets governed or deemed to be governed by Luxembourg law. Security interests created thereunder can notably be enforced under out-of-court proceedings notwithstanding the start of insolvency proceedings and will remain valid even if entered into during the hardening period (see Question 31).<\/p>\n<p>The Collateral Law offers a wide range of (cumulative) enforcement options, proven to be particularly time and cost efficient:<\/p>\n<ul>\n<li>the pledgee (or any person designated thereby) may appropriate the pledged assets at a value to be determined (before or after appropriation) in accordance with the valuation method agreed between the parties or at market price to the extent such assets consist of listed financial instruments;<\/li>\n<li>the pledged assets may be assigned through an arm\u2019s length private sale, auction or stock exchange sale;<\/li>\n<li>the pledgee may request a court to order the pledged assets to be retained by the pledgee until due and full payment of its claim; or<\/li>\n<li>in respect of pledged assets consisting of cash or monetary claims, the pledgee may set off such amounts against any sums owed by the pledgor.<\/li>\n<\/ul>\n<p>In parallel, soft enforcement methods may also be determined on a contractual basis. Modalities will vary depending on the nature of the security, and will typically provide that upon the occurrence of an enforcement event, the pledgee will be entitled to:<\/p>\n<ul>\n<li>in the case of a share pledge, take control of the company the shares of which are pledged through the exercise of all voting rights of the pledgor (including with a view to replacing the management in place) and receive any distributions to be paid out by such company to the pledgor; and<\/li>\n<\/ul>\n<p>in the case of an account or receivable pledge, request the account bank or the debtor to pay out any amount standing to the credit of the pledged accounts or any amount due by the debtor to the pledgor directly to the pledgee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the insolvency or other rescue\/reorganisation procedures in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The most commonly seen and used procedure would be bankruptcy proceedings (faillite). Under Luxembourg law, a company is bankrupt when it is unable to meet its current liabilities and when its creditworthiness is impaired. Other insolvency proceedings include suspension of payments (sursis de paiement), court-ordered liquidation\/dissolution (liquidation\/dissolution judiciaire), judicial reorganisation (r\u00e9organisation judiciaire), appointment of a provisional administrator (administrateur provisoire) or a receiver (s\u00e9questre).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does entry into any insolvency or other process in your jurisdiction prevent or delay secured lenders from accelerating their loans or enforcing their security in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>During bankruptcy proceedings, all enforcement measures by secured and unsecured creditors are suspended, subject to the exceptions applicable to financial collateral arrangements subject to the Collateral Law. Certain actions by the company and its creditors, such as security interests granted during the pre-bankruptcy hardening period (p\u00e9riode suspecte), may be challenged and set aside by the bankruptcy receiver (unless subject to the Collateral Law). The process is court-led and in general creditors have little influence on the process once the court declares a company bankrupt. The receiver will play a leading role in this case and will generally only seek at liquidating the assets of the bankrupt company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In what order are creditors paid on an insolvency in your jurisdiction and are there any creditors that will take priority to secured creditors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cost of liquidation and any claims that are preferred under Luxembourg law will rank ahead of creditors of the bankrupt company. Other preferential claims under Luxembourg law include remuneration owed to employees, employees\u2019 contributions to social security and certain amounts owed to the Luxembourg tax authorities.<\/p>\n<p>Assets (such as shares, financial instruments, debt instruments, accounts or receivables) on which a security interest has been granted and perfected will in principle not be available for distribution to unsecured creditors (except after enforcement and to the extent a surplus is realised), and subject to application of the relevant priority rule and liens and privileges arising mandatorily by law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any hardening periods or transactions voidable upon insolvency in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The hardening period (p\u00e9riode suspecte) lapses between the date of cessation of payments (cessation de paiements), as determined by the bankruptcy court, and the date of the court order declaring the bankruptcy. The hardening period cannot exceed six months and ten days.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable risks or concerns for secured lenders in enforcing their rights under a loan or collateral agreement (whether in an insolvency or restructuring context or otherwise)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Security interests governed by the Collateral Law are insolvency proof and will remain valid even if entered during the hardening period. Furthermore, the start of bankruptcy proceedings will not prevent the secured creditors from enforcing their security. As such, this protection is extremely efficient and has been enshrined by Luxembourg courts over the years. However, this protection does not extend to other types of security interests, nor to other acts that could fall within the risk of clawback provisions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any taxes, duties, charges or related considerations which are relevant for lenders making loans to (or taking security and guarantees from) entities in your jurisdiction in the context of acquisition finance, including if any withholding tax is applicable on payments (interest and fees) to lenders and at what rate.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Registration duties<\/strong><\/p>\n<p>Finance documents are not subject to mandatory registration in Luxembourg. Registration duties (a fixed or a proportional amount) will be due in Luxembourg only in the event of voluntary registration by one of the parties.<\/p>\n<p><strong>Withholding tax<\/strong><\/p>\n<p>Luxembourg does not impose withholding tax on arm\u2019s length interest payments made by Luxembourg resident borrowers to foreign lenders, except in some rather particular cases (e.g. interest on profit participating bonds).<\/p>\n<p>Finance documents typically include a \u201cgross-up clause\u201d intended to protect the position of the lender in the event tax is withheld from the payment made by the borrower; such provisions are however of little relevance in respect to Luxembourg withholding tax given the current legislation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other tax issues that foreign lenders should be aware of when lending into your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Tax filings<\/strong><\/p>\n<p>Foreign lenders having no activity in Luxembourg other than lending activities are not subjected to tax filing requirements in Luxembourg.<\/p>\n<p><strong>Deductibility of interest<\/strong><\/p>\n<p>Arm\u2019s length interest expenses of a Luxembourg corporate borrower are deductible for tax purposes unless<\/p>\n<ul>\n<li>They relate to exempt income; or<\/li>\n<li>They constitute exceeding borrowing costs capped by the interest limitation rules. Based on the interest deduction limitation rule introduced in Luxembourg law following the transposition of ATAD (Council Directive (EU) 2016\/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market), interest expenses in excess of interest income are deductible only up to 30% of EBITDA or EUR 3,000,000, whichever is the higher. Certain expenses borne in the context of financing (e.g. arrangement fees) are considered economically equivalent to interest expenses and must be taken into account when computing the amount of exceeding borrowing costs. The legal provisions on interest deduction limitation rule exclude certain type of borrowers from the application (inter alia in respect to borrowers that are securitization vehicles within the meaning of article 2 (2) of EU Regulation 2017\/2402 of the Europea Parliament, standalone entities, alternative investment funds managed by an alternative investment fund manager as defined in article 4 (1) b) of EU Directive 2011\/61\/EU of the Europea Parliament or an AIF supervised under the applicable national law, as well as single worldwide group companies, which are entities that: (i) are not part of a consolidated group for financial purposes; (ii) are not considered autonomous, stand-alone entities; in case where the ratio of the single entity equity over its total assets is superior or equal to the same ratio of the group (or up to 2% lower than that of the group ratio), upon request and subject to specific anti-abuse rules) .; or<\/li>\n<li>They are due to an affiliated enterprise located in a blacklisted jurisdiction. The \u201cblacklist\u201d has been last updated by the European Council on 10 October 2025.<\/li>\n<\/ul>\n<p><strong>VAT<\/strong><\/p>\n<p>While financing activities are generally exempt from VAT, the contemplated fee payments ancillary to the financing should be carefully reviewed ahead of implementation to apply adequate VAT treatment. The standard VAT rate amounts to 17% in Luxembourg.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the regulatory framework by which an acquisition of a public company in your jurisdiction is effected?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Luxembourg companies having their shares listed on a stock exchange tend not to be listed in Luxembourg but instead on more international listing venues such as the New York Stock Exchange or the Frankfurt Stock Exchange, so that largely local rules and regulations apply.<\/p>\n<p>If the shares of the Luxembourg public company are listed on an EU Regulated Market, the law of 19 May 2006 on public takeovers, as amended (the Takeover Law) applies and sets the relevant rules and requirements.<\/p>\n<p>Matters regarding company law (and related questions), such as, for instance, the question relating to the percentage of voting rights which give control over a company and any derogation from the obligation to launch a bid or regarding information to be provided to employees of the offeree company, and to the extent applicable, any sell-out or squeeze-out procedures further to a voluntary or mandatory takeover bid, are governed by Luxembourg law.<\/p>\n<p>Pursuant to the Takeover Law, if a person, acting alone or in concert, obtains voting securities of the target which give such person voting rights representing 33.3% of all of the voting rights attached to the voting securities in the target, this person is obliged to make an offer for the remaining voting securities in the target at a fair price (mandatory bid). For such purpose, an offer document must be prepared which will need to be submitted to the CSSF.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key milestones in the timetable (e.g. announcement, posting of documentation, meetings, court hearings, effective dates, provision of consideration, withdrawal conditions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key trigger is the acquisition of 33.3% of the voting rights in the target which triggers the requirement to launch a mandatory bid. The process is strictly determined by the Takeover Law.<\/p>\n<p>In a nutshell, the decision to launch the bid must be made immediately after the bidder has taken the decision to launch the bid and the CSSF must be informed of the bid before it is made public. As soon as the bid is made public, the board of the target will meet and inform the representatives of their employees of the bid. The decision to launch the bid is usually published in an ad hoc notice specifying that a full offer document will be prepared and submitted for approval to the CSSF.<\/p>\n<p>The offer document must be filed with the CSSF within 10 working days from the publication of the intention to launch the bid. The CSSF must approve such offer document within 30 working days following the submission of the draft offer document. The CSSF will review the offer document and may request additional information to be included therein. Upon approval of the offer document, the offer period can start. The time for acceptance of the bid may be no less than two weeks and no more than ten weeks from the date of the publication of the offer document. Before the end of the offer period, the board of the target must publish a reasoned opinion on the offer. Once the offer has closed and been settled, the squeeze-out and potentially delisting can be initiated by the bidder within three months from the end of the offer period.<br \/>\nVoluntary offers, i.e. offers falling outside of the scope of the mandatory bid, are subject to less regulation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the technical minimum acceptance condition required by the regulatory framework? Is there a squeeze out procedure for minority hold outs?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Takeover Law provides that, when as a result of an offer (mandatory or voluntary) addressed to all of the holders of voting securities of the target, the bidder holds voting securities representing not less than 95% of the share capital that carry voting rights to which the offer relates and 95% of the voting rights in the target, the bidder may require the holders of the remaining voting securities to sell those securities to the bidder. The price offered for such securities must be a \u201cfair price\u201d, to be determined in accordance with the requirements of the Takeover Law.<\/p>\n<p>In addition to the squeeze-out mechanism provided for by the Takeover Law, an alternative squeeze-out mechanism is provided for by the law of 21 July 2012 on the squeeze-out and sell-out of securities of companies admitted or having been admitted to trading on a regulated market or which have been subject to a public offer (the \u201cLuxembourg Mandatory Squeeze-Out and Sell-Out Law\u201d). This law provides that, subject to certain conditions being met, if any individual or legal entity, acting alone or in concert with another, becomes the owner (otherwise than by way of a voluntary or mandatory takeover bid pursuant to the Takeover Law), directly or indirectly, of a number of shares or other voting securities representing at least 95% of the voting share capital and 95% of the voting rights of the target, such owner may require the holders of the remaining shares or other voting securities to sell those remaining securities. Such squeeze-out must be exercised at a fair price according to objective and adequate methods applying to asset disposals and the process will be carried out in accordance with the Luxembourg Mandatory Squeeze-Out and Sell-Out Law and under the supervision of the CSSF.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what level of acceptance can the bidder (i) pass special resolutions, (ii) de-list the target, (iii) effect any squeeze out, and (iv) cause target to grant upstream guarantees and security in respect of the acquisition financing?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The means and actions available to the bidder will mainly depend on the provisions of the articles of association of the target and the percentage of voting securities held by it. For a Luxembourg public limited liability company (soci\u00e9t\u00e9 anonyme) in general, the bidder will gain control over the company as from the moment it holds the absolute majority of the voting rights in the company, entitling it to remove and appoint the board members of the company at its discretion. For listed entities, the threshold for control will in practice be lower than 50%+1 of the voting securities due to free float, therefore the Takeover Law refers to a threshold of 33.3% of the voting securities.<\/p>\n<p>From the moment the bidder controls the board, actions can be taken by the board in accordance with the instructions received from the bidder. Obviously, any such action by the board will always need to remain within the corporate interest of the company and will be assessed at that level \u2013 including with regard to a delisting of the shares or the granting of security interests and upstream guarantees. It is worth flagging that there is a principal prohibition of financial assistance for Luxembourg public limited liability companies. Other specific thresholds may apply, for example to amending the articles of association of the Luxembourg company, and the articles of association of the Luxembourg company tend to provide for specific requirements and majorities, so that this should be carefully analysed in advance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for a cash confirmation and how is this provided, by who, and when?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no specific requirements applying to price and payment mechanisms for voluntary offers. For mandatory offers, the price to acquire the voting securities must be determined in accordance with the rules set out by the Takeover Law and constitute a \u201cfair price\u201d \u2013 the fairness of the price to be assessed by the CSSF. The bidder may as a rule offer securities, cash, or a combination of both.<\/p>\n<p>Within the context of squeeze-out proceedings under the Takeover Law, the price offered in a voluntary offer would be considered a \u201cfair price\u201d in the squeeze-out proceedings if at least 90% of the securities representing share capital that carry voting rights and which were included in the offer were acquired in such voluntary offer. The price paid in a mandatory offer is deemed a \u201cfair price\u201d for the purpose of squeeze-out proceedings.<\/p>\n<p>The consideration paid in the squeeze-out proceedings must take the same form as the consideration offered in the offer or consist solely of cash. Moreover, an all-cash option must be offered to the remaining shareholders of the target. Finally, the right to initiate squeeze-out proceedings must be exercised within three months following the expiration of the acceptance period of the offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions to completion are permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Other than pursuant to the Takeover Law (and unless the target would be otherwise regulated), the conditions to completion can generally be determined by the bidder. Offer documents will generally confirm that firm commitments have been obtained by the bidder to secure the funding of the contemplated offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">9290<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/124188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=124188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}