Dormant accounts and inactive insurance contracts: Following the Belgium and French examples, Luxembourg contemplates to introduce a new law in relation to dormant accounts (including insurance contracts). Draft law 7348 includes (i) a preventive component that defines a series of measures to prevent account inactivity as well as the withdrawal of inactive insurance contracts respectively to restore contact through information and research procedures, (ii) a consignment component that defines the obligation to consign assets after inactivity, and (iii) a restitution component that includes provisions for the return of consigned assets.

EU insolvency harmonisation directive: The EU is expected to agree its position on the proposed EU Directive on business insolvency reform (the EU insolvency law harmonisation project). Read more here and here.

Protection of enterprises and modernisation of bankruptcy law: Draft law 6539 aims to reform the current legal framework by (i) providing conservatory measures and legal instruments to prevent financially distressed companies from being declared bankrupt should their financial problems be detected at an early stage and (ii) favouring turnaround options rather than liquidation of distressed companies.

Review of the European Supervisory Authorities (“ESAs”): In 2017, the EU Commission published a package of four legislative proposals to review and enhance the powers of the ESAs. These proposals have been recently updated to give the EBA a more explicit and comprehensive mandate to ensure that risks of money laundering and terrorist financing in the EU financial system are effectively and consistently incorporated.

Securitisation/STS: The regulation (EU) 2017/2402 which consolidates existing risk retention, disclosure and due diligence requirements and establishes a new regime for simple, transparent and standardised (’STS’) securitisations will apply from 1 January 2019. Draft law 7349 will amend the Luxembourg securitisation framework to reflect these changes.

Sustainable finance: Expected adoption of three proposals for (i) a Regulation amending the EU Benchmark Regulation, (ii) a proposed “ESG Taxonomy Regulation” which will establish a framework for the development of uniform criteria to identify whether a particular economic activity can be considered “environmentally sustainable”, and (iii) a proposed “ESG Disclosure Regulation” which will require financial market participants and investment advisers to make a range of disclosures relating to “sustainability risks” and ”sustainable investments”. Read more…

Circulation of securities: Draft law 7363 has been introduced to modernise the legal framework under the law of 1 August 2001 on circulation of securities by taking into consideration new technologies. If adopted, securities may be booked and transferred using secured online record-keeping mechanism notably the distributed public ledger technology such as blockchain.

EMIR: Changes to EMIR under the REFIT proposal are expected to come into force early in 2019 and amendments to CCP supervision are anticipated later in the year. Read more...

Prospectus for securities: Draft law 7328 aims to implement Regulation (EU) 2017/1129 on prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC and is repealing the law of 10 July 2005 on prospectuses for securities. It is divided into 4 main parts: (i) public offer and admission to trading of non-Euro denominated securities, (ii) prospectuses requirements and designation of the CSSF as competent authority, (iii) out of scope securities (‘light’ prospectus), and (iv) admission to trading on a non-regulated market (such as the Euro MTF operated by the Luxembourg Stock Exchange).

Prospectus Regulation: The remaining parts of the EU Prospectus Regulation are due to be implemented in July 2019. Key areas of change will be the exemptions from the requirement to produce a prospectus, the treatment of risk factors and the regime for secondary issuances. Read more...

Dormant accounts and inactive insurance contracts: Following the Belgium and French examples, Luxembourg contemplates to introduce a new law in relation to dormant accounts (including insurance contracts). Draft law 7348 includes (i) a preventive component that defines a series of measures to prevent account inactivity as well as the withdrawal of inactive insurance contracts respectively to restore contact through information and research procedures, (ii) a consignment component that defines the obligation to consign assets after inactivity, and (iii) a restitution component that includes provisions for the return of consigned assets.

Procedural law: Draft law 7307 will introduce several changes to the procedures before the Luxembourg courts.

Space law: If adopted, draft law 7317 will put into place a new authorisation scheme for space activity carried out from the Luxembourg territory or by Luxembourg nationals/legal entities. This law would not apply to missions of exploration and use of space governed by the existing law of 20 July 2017 on the exploration and use of space resources.

Trade secrets: Draft law 7353 aims to transpose Directive (EU) 2016/94 which protects undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

Company law package: The EU Commission has introduced two proposals amending Directive (EU) 2017/1132 to respectively (i) increase the use of digital tools and processes in company law, especially in relation to registration, filing and update of information in business registers, and (ii) increase the protection of employees, shareholders and creditors in cross-border conversions, mergers and divisions and prevent these procedures being used to set up artificial arrangements.

EU insolvency harmonisation directive: The EU is expected to agree its position on the proposed EU Directive on business insolvency reform (the EU insolvency law harmonisation project). Read more here and here.

Non-profit associations and foundations: Draft law 6054 on non-profit associations and foundations aims to modernise the current legal framework, which dates back to 1928.

Patrimonial foundations: Draft law 6595 intends to introduce a new wealth management vehicle in the form of a private foundation with an attractive tax regime.

Protection of enterprises and modernisation of bankruptcy law: Draft law 6539 aims to reform the current legal framework by (i) providing conservatory measures and legal instruments to prevent financially distressed companies from being declared bankrupt should their financial problems be detected at an early stage and (ii) favouring turnaround options rather than liquidation of distressed companies.

Shareholders rights Directive (“SRD”): The EU-wide ‘say on pay’ rules in a revised SRD must be transposed by 10 June 2019 and may result in new board pay rules for listed companies. Other SRD provisions will affect related party transactions and shareholder voting issues. Read more...

Apprenticeship: Draft law 7268 aims to reform the professional training and the apprenticeship conditions.

Disability and inclusion assistance: Draft law 7269 introduces an assistance activity to better include disabled and redeployed employees in the labour market.

Flexibility: Draft law 7324 introduces a time-saving account (“compte épargne-temps”) to improve flexibility for both employers and employees in managing working hours.

Positive actions: Draft law 6101 aims to simplify the implementation of positive actions in private companies and to achieve professional equality.

Professional redeployment: Draft law 7309 aims to optimise the redeployment procedure, fight against malpractices and improve the financial situation of redeployed employees.

Redundancy on economic grounds: Draft law 6086 introduces various provisions to prevent wrongful dismissal on economic grounds.

Regulation of internship: Draft law 7265 introduces a legal framework for the occupation of interns to improve their protection and to avoid abuse from employers.

Secondment: Draft law 7319 aims to (i) exclude certain situations from the secondment regime, such as internal meetings, conferences provided that they do not exceed five calendar days per month, and (ii) reform the organisation of the Labour Inspectorate.

Wage withholding: Draft law 4955 aims inter alia to reform the procedure applicable to wage withholding.

ePrivacy Regulation: During 2019, the EU is expected to adopt this Regulation which supplements the General Data Protection Regulation and contains specific rules on the use of cookies and electronic marketing.

Proposed EU copyright directive: The EU has proposed a controversial new Directive which will reform online copyright by, among other things, placing greater liability on platforms that allow users to share content.

Trade secrets: Draft law 7353 aims to transpose Directive (EU) 2016/94 which protects undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

Dormant accounts and inactive insurance contracts: Following the Belgium and French examples, Luxembourg contemplates to introduce a new law in relation to dormant accounts (including insurance contracts). Draft law 7348 includes (i) a preventive component that defines a series of measures to prevent account inactivity as well as the withdrawal of inactive insurance contracts respectively to restore contact through information and research procedures, (ii) a consignment component that defines the obligation to consign assets after inactivity, and (iii) a restitution component that includes provisions for the return of consigned assets.

Review of the European Supervisory Authorities (“ESAs”): In 2017, the EU Commission published a package of four legislative proposals to review and enhance the powers of the ESAs. These proposals have been recently updated to give the EBA a more explicit and comprehensive mandate to ensure that risks of money laundering and terrorist financing in the EU financial system are effectively and consistently incorporated.

Amendments to Part II fund, SIF and SICAR laws: Draft law 6936 is still in the pipeline and aims to (i) allow the CSSF to issue a regulation that would restrict the eligible assets of a SIF which offers its units/shares to investors who do not qualify as professionals under MiFID II, (ii) allow Part II funds, under certain conditions, to issue units/shares at a different price than their net asset value, and (iii) update the SICAR law to align it with the SIF law.

Cross-border distribution of investment funds in Europe: Proposals for a Directive and accompanying Regulation aim to reduce regulatory barriers to cross-border distribution of investment funds regulated by the UCITS Directive and the AIFMD in Europe. Both drafts introduce measures to further harmonise and align the operation of the marketing regimes under these Directives. Read more…

EMIR: Changes to EMIR under the REFIT proposal are expected to come into force early in 2019 and amendments to CCP supervision are anticipated later in the year. Read more...

Pan-European Personal Pension Product: As part of its Capital Market Union initiative, the EU Commission may adopt a proposal aiming to create a new personal pension product that can be offered to EU citizens as an alternative to the products available at national level. Read more...

Review of the European Supervisory Authorities (“ESAs”): In 2017, the EU Commission published a package of four legislative proposals to review and enhance the powers of the ESAs. These proposals have been recently updated to give the EBA a more explicit and comprehensive mandate to ensure that risks of money laundering and terrorist financing in the EU financial system are effectively and consistently incorporated.

Shareholders rights Directive (“SRD”): The EU-wide ‘say on pay’ rules in a revised SRD must be transposed by 10 June 2019 and may result in new board pay rules for listed companies. Other SRD provisions will affect related party transactions and shareholder voting issues. Read more...

Securitisation/STS: The regulation (EU) 2017/2402 which consolidates existing risk retention, disclosure and due diligence requirements and establishes a new regime for simple, transparent and standardised (’STS’) securitisations will apply from 1 January 2019. Draft law 7349 will amend the Luxembourg securitisation framework to reflect these changes.

Sustainable finance: Expected adoption of three proposals for (i) a Regulation amending the EU Benchmark Regulation, (ii) a proposed “ESG Taxonomy Regulation” which will establish a framework for the development of uniform criteria to identify whether a particular economic activity can be considered “environmentally sustainable”, and (iii) a proposed “ESG Disclosure Regulation” which will require financial market participants and investment advisers to make a range of disclosures relating to “sustainability risks” and ”sustainable investments”. Read more…

Anti-Tax-Avoidance Directives: The draft law implementing ATAD 1, which notably sets anti-abuse rules regarding interest deduction and intra-EU hybrid mismatches, was released. Deduction of “exceeding borrowing costs” will consequently be limited to 30% of EBITDA, with exceptions for standalone and financial entities. Should also enter into force new rules regarding (i) controlled foreign companies and a general anti-abuse rule on 1 January 2019, and (ii) exit tax on 1 January 2020. ATAD 2 enlarges the scope of the ATAD 1 anti-hybrid rules by covering non-EU situations and including situations involving permanent establishments, reverse hybrids, imported mismatches, hybrid transfers, and dual residence. ATAD 2 must be implemented by 31 December 2019 save for measures on reverse hybrids to be transposed before 31 December 2021.

Digital services tax: A proposal for an EU directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services is expected to be adopted by April 2019.

Multilateral Instrument (“MLI”): Draft law 7333 purports to ratify the MLI signed in June 2017, whose provisions may apply to covered tax treaties as from 2019. It notably includes the Principal Purpose Test rule (“PPT”) according to which the benefit of a tax treaty shall not be granted if such benefit was one of the principal purposes of any arrangement or transaction.