At the end of 2015 the new 2013/50/EU Directive on transparency came into force, driving the member states of the European Union to adapt their legislation to the new transparency requirements.

As a result, on 10th May this year, the Grand Duchy of Luxembourg passed the new Transparency Law, which amends the 2008 Act, and transposed the European Directive’s provisions into Luxemburg’s body of law.

The new Directive aims, essentially, to make capital markets more attractive for small and medium-sized investors, reducing their bureaucratic paperwork and making the information requirements placed on them more proportional. The key changes being introduced are summarised below:

Financial information

• Financial statements no longer have to be published every quarter.
• The time limit for the publication of half-yearly financial statements has been extended from 2 to 3 months after the end of the semester.

Transparency in payments to the government

• There is a new requirement report annually and separately any information about payments made to the government by issuers whose activity involves exploiting natural resources.

New loan issues

• New loan issues no longer have to be reported.  

Information on modifications to the articles of association

• The requirement to report any change to the company structure or the statutes to the competent authority (CSSF: Commission de Surveillance du Secteur Financier) has been removed.

Information on significant stakes

• The regime for the notification of significant stakes in voting rights has been harmonised, in order to ensure that the information on total voting rights which can be accessed by the investor is as accurate as possible.

Additional powers for the CSSF

• The supervisor has been given additional powers, being able to:
  • Request the withdrawal from the market of particular financial instruments, if it discovers, or has good reason to believe, that the provisions in the Transparency Law have been breached.
  • Request that regulated information or corrections or future modifications to said information be made public.
  • Give orders to prevent behaviour that breaches the Transparency Law.

Rules on penalties

• The penalties for non-compliance with transparency requirements have been toughened up: administrative sanctions and measures that include very high fines.
• In the case of non-compliance by a legal person, the possibility of penalising members of the organs of administration, management or supervision has been introduced, and/or of persons who may be considered liable for said non-compliance.
• Similarly, the suspension or possibility of suspending voting rights for those holding shares or stakes and financial instruments and who do not comply with the notification requirements can be considered.

The legislation stipulates that the administrative measures or penalties should be made public, in order to act as a deterrent against the decisions that have led to their imposition.