Luxembourg has introduced a comprehensive legal framework to facilitate cross-border transactions. The new law increases legal certainty and strengthens protections for stakeholders in line with EU standards.
Overview
On 23 January 2025, the Luxembourg Parliament adopted a new law (Law) implementing Directive (EU) 2019/2121, which amends Directive (EU) 2017/1132 regarding cross-border conversions, mergers and divisions (Mobility Directive).
The Law modernises the Luxembourg framework relating to cross-border mobility transactions through the introduction of two distinct regimes: a general regime applicable to national and cross-border mergers, divisions and conversions not within the scope of the specific regime, and a specific regime applicable to intra-EU cross-border mergers, divisions and conversions explicitly included within the scope of the specific regime.
By introducing these two regimes, Luxembourg has expanded the scope of mobility transactions to include cross-border conversions and divisions, which were previously unregulated. This dual-regime approach ensures legal certainty for businesses while reinforcing Luxembourg’s attractiveness as a jurisdiction for cross-border corporate transactions.
General regime
The general regime governs domestic mergers, divisions and conversions, as well as the following cross-border mergers, divisions and conversions:
- Cross-border transactions involving a non-EU Member State.
- Cross-border transactions involving a Luxembourg company existing in a form other than a société anonyme, a société à responsabilité limitée or a société en commandite par actions, regardless of whether the other country is within or outside the EU.
- Cross-border transactions involving both the above criteria.
The existing rules will continue to apply under the general regime. This will maintain flexibility and allow Luxembourg companies to continue to engage in cross-border transactions with third parties while aligning with Luxembourg’s established corporate practices.
Specific regime
The specific regime governs intra-EU cross-border mergers, divisions and conversions where the Luxembourg company exists in the form of a société anonyme, a société à responsabilité limitée or a société en commandite par actions and an EU Member State is involved.
Cross-border divisions by absorption are explicitly excluded from the specific regime.
Key features include:
- Enhanced protections for stakeholders:
- Shareholders: including a right of withdrawal for minority shareholders under certain conditions
- Creditors: strengthened safeguards for claims
- Employees: improved rights and involvement
- Harmonised processes: every EU Member State will apply the same rules, including for cross-border conversions.
- Notaries play a pivotal role in verifying compliance, ensuring the legal requirements are met and preventing fraudulent activities.
What’s next?
The Law will come into force on the first day following the month of its publication in the Luxembourg Official Journal.
In cases where the draft terms of a transaction are published prior to that date, the existing rules will continue to apply. Where the draft terms of a transaction are published on or after that date, the new rules will apply.
Bill of law 82251, which implements the employment law aspects of the Mobility Directive, is likely to be adopted soon. This bill of law introduces new rules regarding informing, consultation and participation of employees of companies involved in cross-border restructurings. It extends existing obligations related to mergers and strengthens them to include cross-border divisions and conversions. These measures aim to ensure that employees’ rights are maintained and protected during these transactions by ensuring adequate worker involvement in corporate decision-making processes.
1Bill of law 8225 amending the Labour Code to implement Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions.