Comparative guide to capital markets – First section: Legal and regulatory framework – Finance and Banking

Luxemburg: Comparative guide to capital markets – First section: Legal and regulatory framework

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1.1 What laws and regulations govern capital markets in your jurisdiction?

The main capital market legislation applicable to issuers whose shares are listed and admitted to trading on a regulated market within the meaning of Article 1, paragraph 31, of the law of 30 May 2018 on markets in instruments as amended (“MiFID II law”) is:

  • the law of May 24, 2011 relating to the exercise of certain shareholder rights at general meetings of listed companies, as amended;

  • the law of 11 January 2008 relating to the transparency obligations of issuers, as amended (“transparency law”) implementing the European directive on transparency (2004/109/EC);

  • the EU Prospectus Regulation (2003/71/EC) and the law of July 16, 2019 on prospectuses for securities, as amended (“Prospectus Law”);

  • the law of May 19, 2006 relating to public takeover bids, as amended (“OPA Law”); and

  • the European Market Abuse Regulation (596/2014) (MAR) and the Market Abuse Law of 23 December 2016, as amended (“Market Abuse Law”).

In addition, the Luxembourg financial regulatory authority, the
Financial Sector Supervisory Commission (CSSF), regularly publishes circulars, annual reports and FAQs on various topics related to capital markets.

An issuer is also subject to the Rules and Regulations of the Luxembourg Stock Exchange (LuxSE), which set the conditions for listing and admission to trading.

1.2 Is your jurisdiction part of a supranational, transnational or multinational framework relating to capital markets? If yes, how does it work?

The Grand Duchy of Luxembourg, as an EU Member State, is subject to secondary EU law adopted by EU institutions through regulations, decisions, directives, opinions and recommendations. Thus, decisions and regulations relating to capital markets, such as the EU Prospectus Regulation and EU MAR, are directly applicable in Luxembourg; while directives, such as the Transparency Directive, must first be transposed into Luxembourg law within a specific timeframe in order to achieve their objectives. On the other hand, the opinions and recommendations issued by the European Union to suggest a line of action on a specific subject are not binding.

1.3 Which bodies are responsible for regulating capital markets in your jurisdiction? What powers do they have?

In Luxembourg, the main body responsible for monitoring compliance with capital market regulations and ensuring their implementation is the CSSF. To this end, the CSSF has all the powers of supervision and investigation necessary for the exercise of its functions, including the power to impose corrective measures.

In accordance with its rules of procedure, LuxSE is the competent body for all decisions and operations relating, inter alia, to the admission of securities and the ongoing obligations of issuers, unless otherwise provided by Community or national law.

1.4 How does enforcement work and what types of penalties can be applied?

The CSSF is empowered to impose administrative sanctions and measures, such as specific orders, public warnings and fines. For example, the CSSF has the power to set up an enforcement process in order to check whether the financial information published by the issuer complies with the Transparency Law. At the end of this enforcement procedure, the CSSF will communicate its decisions to the issuer in the form of injunctions, recommendations and follow-up measures with a view to correcting or improving the content of the financial information published.

Another arrow in the quiver in terms of sanctions, the criminal sanctions that can be imposed by a criminal court in the event of market abuse in the context of EU MAR and the law on market abuse.

The LuxSE may also suspend, withdraw, delist or transfer securities from one market to another in the event of non-compliance with its Internal Rules.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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