As a reminder, article 430-19 of the Law of 1915 provides that public companies limited by shares (sociétés anonymes - "SA") may not (except under specific conditions), directly or indirectly, advance funds or make loans or provide security with a view to the acquisition of their own shares by third parties (commonly known as financial assistance).
Article 1500-7, point 2° of the Law of 1915 provides for criminal sanctions in case of violation of the provisions regarding financial assistance. However, this article 1500-7, point 2° refers not only to shares of SA (actions) but also to corporate units of SARL (parts sociales). This implicit reference to SARL has led to recurring discussions and debates amongst practitioners concerning the potential extension of the prohibition of financial assistance to SARL.
Draft bill N°7791 confirms that such reference to SARL's corporate units (parts sociales) in article 1500-7, point 2° of the Law of 1915 was, after all, a material (or clerical) error.
This error has its origin in the legislative work leading to the adoption of the law of 10 August 2016 modernising the Law of 1915 (resulting from draft bill N°5730) (the "Law of 2016") which initially envisaged applying similar prohibition of financial assistance to SARL. While the addition of the relevant provisions was in the end abandoned, the addition of a mention to SARL's corporate units (parts sociales) in article 1500-7, point 2° inadvertently remained.
The expected adoption of draft bill N°7791 and the deletion of all references to SARL's corporate units (parts sociales) from the text of article 1500-7, point 2° of the Law of 1915 is seen as a long-awaited clarification from the legislator. The resulting revision of the Law of 1915 would settle the non-application to SARL of the provisions relating to the prohibition of financial assistance and confirm the general view of practitioners.
For any questions, please contact your trusted advisor at Tiberghien Luxembourg or any of the authors of this publication.
Thomas Roberdeau – Counsel (thomas.roberdeau@tiberghien.com)
Andréas Molter – Associate (andreas.molter@tiberghien.com)