This is the 11th episode of our COVID-19 webcast series. In this new episode, Mark Shaw gives a quick run-down of where we are in terms of financial services regulation, corporate law and tax. A look back over the various responses to the COVID-19 pandemic to see which are still applicable while we are in this period between the initial wave and our ultimate return to normality.

For the purposes of this update, we’ll assume that firms have adapted to the crisis, and have well established remote working arrangements with satisfactory IT security measures, etc.

Financial Services Regulation

ESMA hasn’t released any guidance or decisions for a month now, with the last one being on 17 June, when it renewed its temporary decision to require the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority if the position exceeds 0.1% of the issued share capital (down from 0.2%). This will last throughout the summer for a period of three months.

ESMAs concerns have been largely in relation to market stability following the initial market shock caused by the pandemic. Nevertheless, the overriding principle regarding transparency remains, and issuers in the EU should continue to be mindful of their transparency obligations regarding financial stress caused by the ongoing challenges presented by the COVID-19 pandemic.

Turning to the CSSF, which has also been quiet over the last month, with no more updates to its COVID-19 FAQ. At this stage there are probably two key takeaways:

  • The markets are still incredibly volatile, so the CSSFs guidance regarding passive investment breaches (including passive VaR breaches) remains relevant – if they are passive they do not need to be notified, but active breaches do. Breaches should be managed by taking appropriate steps in a reasonable period of time and taking account of the best interests of investors;
  • There remain various reliefs that firms can request to the CSSF to delay regulatory reports, but given that these have to be justified as being necessary, such justifications are going to become increasingly difficult as time goes on./li>

Corporate Law

On 18 March the Government declared a state of emergency, lasting up to three months. Acting under emergency powers, the government enacted a number of temporary measures, which include new rules allowing Luxembourg companies to hold their shareholder or board meetings without any participants attending in person.

On 20 June, a bill of law (N°7566) replaced the temporary regulation and extends its term until after the end of the state of crisis – given we have no end date, it is effective for an unlimited period of time.

To recap:

  • Meetings of shareholders and boards of directors or managers may be held remotely,
  • Participants joining via through video conference will be considered present for the purposes of determining quorum and majorities,
  • Proxy voting is authorised, and
  • Board resolutions may be passed in writing.

On company accounts, the Law updated the temporary measures to account for a subsequent change of law extending the deadlines for filing and publishing accounts, which provides that the AGM of companies may be convened on a date which is within a period of nine months after the end of its financial year.

These rules apply regardless of any contrary provision in the articles of association of the relevant company and regardless of the number of participants.


The Government had implemented several fiscal measures in favour of legal entities and individuals, which included a delay to filing of tax returns and cancellations of quarterly advances of corporate income tax and communal business tax for the 1st and 2nd quarters of 2020.

It should be noted that these provisions were only effective until the end of Q2 and have not been extended, so for the purposes of taxation at least, we are back to normal.

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