On July 17 2008, the Luxembourg Parliament voted the law implementing the Directive 2007/44/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increases of holdings in the financial sector, by amending the Law of April 5 1993 on the financial sector (the 1993 Law) and the Law of December 6 1991 on the insurance sector (the 1991 Law).
One of the aims is to clarify the legal environment applying to acquisitions or increases of holdings in the financial sector (such as credit institutions, (re)insurance companies and professionals of the financial sector (PSFs)) and to provide a transparent approval procedure.
Any person or persons acting in concert, who have decided either to acquire, directly or indirectly, a qualifying holding in a Luxembourg credit institution or PSF or to increase, directly or indirectly, such a qualifying holding as a result of which the proportion of the voting rights or of the capital held would reach or exceed the thresholds of 20%, 33.33% or 50% or so that the credit institution or the PSF would become its subsidiary, has to notify the Luxembourg Commission for Financial Sector (the CSSF) in order to be approved.
The CSSF has a maximum of 60 business days to carry out the assessment of the acquirer.
In assessing the notification, the CSSF shall ensure the sound and prudent management of the credit institution. Considering the likely influence of the proposed acquirer, the CSSF has to analyse its suitability and the financial soundness of the proposed acquisition against the following criteria: (a) the reputation of the acquirer; (b) the reputation and experience of any person who will manage the credit institution or the PSF as a result of the acquisition; (c) the financial soundness of the proposed acquirer; (d) compliance with the 1993 Law; (e) the absence of grounds to reasonably suspect that money laundering or terrorist financing is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof.
Similar rules have been implemented in the 1991 Law in respect of the acquisitions and increases of holdings in Luxembourg (re)insurance companies, in which case the Luxembourg Insurance Commission (Commissariat aux Assurances) will be the competent authority.
The above changes will enter into force on March 21 2009.