Board of directors

Management mandate

There must be at least 3 directors unless the company is formed by a single shareholder or unless it is duly noted during the shareholders’ general meeting, that there is only one shareholder left in the company. In this case, the composition of the board of directors can be limited to a single member until the next ordinary general meeting following the confirmation that there is more than one shareholder in the company again.

The directors can be resident or non-resident.

The directors can be legal persons provided that they in this case appoint a permanent representative, i.e. a natural person responsible for the execution of this task for and on behalf of the legal person(s). The representative is subject to the same conditions and assumes the same civil liability as if he were to carry out the management mandate on his own account, without prejudice to the joint and several liability of the legal person that he represents. Moreover, the legal person can only revoke a representative by simultaneously appointing a successor.

The board members are appointed by the shareholders’ general meeting for a maximum renewable term of 6 years.

Exceptionally, in the event of a vacant post of director appointed by the general meeting, the remaining directors are entitled to co-opt a replacement person, unless otherwise stipulated by the articles of association of the company. In this case, this person shall be formally elected at the next general meeting.

A director can resign from his mandate at any time. They are however required to continue to exercise their functions until they have been replaced.

The term of office of a director can be revoked ad nutum (without justification of grounds, without notice and without indemnity) by the shareholders’ general meeting.

Due to the intuitu personae nature of the term of office (granted to a specific person), a director cannot be replaced by a third party during a meeting of the board of directors, unless the articles of association specifically stipulate that a director can appoint another director as his representative.

The board of directors appoints a president from within its ranks.

Competencies of the board of directors

Management

The board of directors manages the company and works to achieve the company objective.

The company is bound by the acts of its directors, even if they exceed the limits of the powers granted to the board of directors that were defined by the company objective or any other statutory provision. The company is released from its responsibility if it can prove that the third party involved knew that these acts exceeded the company objective or could not have ignored it given the circumstances (publication of the articles of association does not constitute proof).

The board of directors can delegate the day-to-day management and representation of the company to one or more administrators, directors, managers or other agents whose acts are binding on the company towards third parties, even if they exceed the responsibilities entrusted to them (provided that the third parties act in good faith).

The fact of delegating the company management to a member of the board of directors gives rise to an obligation for the board to report annually to the shareholders’ general meeting any salaries, emoluments and benefits allocated to the managing director.

Representation

The board of directors represents the company with regard to third parties and the courts of justice.

The company can be represented by one or more directors depending on the signing authority conferred by the articles of association: signature of a sole director or joint signature of two (or more) directors.

The company can also be represented by a managing director, restricted to the day-to-day management, or a representative (proxy) within the context of a specific business-related act.

The fact of delegating the company management to a member of the board of directors gives rise to an obligation for the board to report annually to the shareholders’ general meeting any salaries, emoluments and benefits allocated to the managing director.

Management board and supervisory board

This management system includes 2 organs: the management board and the supervisory board. This system is deemed to provide a better distribution of powers between those responsible for the company management (the management board) and those entrusted with constant supervision of the management (the supervisory board).

The management board mandate

The number of members of the management board or the rules for determining this number are defined by the articles of association or, failing this, by the supervisory board.

In single member public limited companies or where the company capital is less than EUR 500,000, a single person can exercise the functions assigned to the management board.

The members of the management board are appointed by the supervisory board unless the articles of association of the company reserve this right for the shareholders’ general meeting, in which case only the general meeting can make such appointments.

A member of the management board cannot be a member of the supervisory board.

The members of the management board can be resident or non-resident.

The members of the management board can be legal persons provided that the legal person(s) appoint a permanent representative, i.e. a natural person responsible for the execution of this task for and on behalf of the legal person(s). The representative is subject to the same conditions and assumes the same civil liability as if he were to carry out the management mandate on his own account, without prejudice to the joint and several liability of the legal person that he represents. Moreover, the legal person can only revoke a representative by simultaneously appointing a successor.

The members of the management board are appointed for a term defined by the articles of association, which cannot exceed 6 years. The members can be re-elected.

Exceptionally, in the event of a vacancy for a member of the management board, the remaining members are entitled to fill the vacancy provisionally unless otherwise stipulated in the articles of association. In this case, the supervisory board, or the general meeting depending on the case, proceeds with the formal election of this person during the first general meeting following this event.

Exceptionally, in the event of a vacancy within the management board, the supervisory board may appoint one of its members to exercise the functions of a member of the management board. During this period, the functions of the person concerned as a member of the supervisory board are suspended.

Members of the management board have the right to resign at any time. They are however required to continue to exercise their functions until they have been replaced.

The members of the management board can be dismissed by the supervisory board or, if stipulated by the articles of association, by the general meeting.

Competencies of the management board

Management

The management board has the necessary powers to carry out acts required for the fulfillment of the company objective, with the exception of those reserved by law or the articles of association to the supervisory board or the general meeting.

The company is bound by the acts of the members of the management board, even if they exceed the limits of the powers granted to the management board that were defined by the company objective or any other statutory provision. The company is released from its responsibility if it can prove that the third party involved knew that these acts exceeded the company objective or could not have ignored it given the circumstances (publication of the articles of association does not constitute proof).

The management board may delegate the day-to-day management and representation of the company to one or more members of the management board, directors, managers and other agents, shareholders or otherwise, with the exception of the members of the supervisory board. Their acts are binding on the company towards third parties, even if they exceed the powers entrusted to them (provided that the third parties act in good faith).

The appointment, dismissal and competencies of these representatives are governed by the articles of association or by a decision from the competent organs.

Delegation to a member of the management board gives rise to an obligation to report annually to the shareholders’ ordinary general meeting any salaries, emoluments and benefits allocated to the representative.

Representation

The management board represents the company with regard to third parties and the courts of justice.

The company can be represented by one or more members of the management board depending on the signing authority conferred by the articles of association: signature of a sole member of the management board or joint signature of 2 (or more) members of the management board.

The company can also be represented by a managing director, restricted to the day-to-day management, or a representative (proxy) within the context of a specific business-related act.

Delegation to a member of the management board gives rise to an obligation to report annually to the shareholders’ general meeting any salaries, emoluments and benefits allocated to the representative.

The supervisory board mandate

There must be at least 3 members on the supervisory board unless the company is formed by a single shareholder or unless it is duly noted during the shareholders’ general meeting, that there is only one shareholder left in the company. In this case the composition of the supervisory board can be limited to a single member until the next ordinary general meeting following the confirmation that there is more than one shareholder in the company again.

A member of the supervisory board cannot be a member of the management board. Exceptionally, in the event of a vacancy within the management board, the supervisory board may appoint one of its members to exercise the functions of a member of the management board. During this period, the functions of the person concerned as a member of the supervisory board are suspended.

The members of the supervisory board can be resident or non-resident.

The members of the supervisory board can be legal persons provided that the legal person(s) appoint a permanent representative, i.e. a natural person responsible for the execution of this task for and on behalf of the legal person(s). The representative is subject to the same conditions and assumes the same civil liability as if he were to carry out the management mandate on his own account, without prejudice to the joint and several liability of the legal person that he represents. Moreover, the legal person can only revoke a representative by simultaneously appointing a successor.

The members of the supervisory board are appointed by the shareholders’ general meeting for a maximum renewable term of 6 years.

Exceptionally, in the event of a vacancy for a member of the supervisory board appointed by the general meeting, the remaining members of the supervisory board are entitled to co-opt a replacement person, unless otherwise stipulated by the articles of association. In this case, this person shall be formally elected at the next general meeting.

Competencies of the supervisory board

The supervisory board permanently monitors the management board's work, but has no powers to interfere in the management.

The supervisory board has unlimited rights of oversight and questioning of members of the management board concerning all company operations; it may inspect the books, correspondence, reports and in general all documents of the company.

The management board must submit a written report, at least every three months, to the supervisory board concerning the business and the forecast trends. In addition, the management board must communicate in good time to the supervisory board all information on events likely to have a significant impact on the situation of the company.

The supervisory board may grant one or more of its members a special mandate for one or more specific purposes. It may decide to create commissions within its ranks, for which it defines the composition and competencies, and which exercise their activities under its responsibility. It is however not possible to delegate to a commission the powers granted to the supervisory board itself by the law or the articles of association, or to reduce or restrict the powers of the management board.

Management meetings

Calling and holding meetings

The board of directors, the management board and the supervisory board must elect a president from within their ranks.

The means of convening the directors, members of the management board and the members of the supervisory board is freely determined by the articles of association.

The supervisory board meets when convened by its president. He is obliged to call a meeting upon the request of at least 2 of its members or of the management board.

The board of directors meets at the frequency defined by the articles of association.

The supervisory board may invite members of the management board to meetings of the supervisory board, in which case they have a consultative role only.

Since the board of directors, the management board and the supervisory board are collegiate bodies, all of their decisions must be taken following deliberations.

Unless otherwise stipulated in the articles of association and without prejudice to stricter legal provisions, the internal rules concerning the quorum and decisions taken by the board of directors, the supervisory board and the management board are as follows:

• at least half of the members must be present or represented;
• decisions are taken by majority vote of the members present or represented;
• in the absence of statutory provisions on the matter, the president shall have the casting vote in the event of a split vote.

The meetings of the board of directors, the management board and the supervisory board must in principle take place at the registered office of the company located in the Grand Duchy of Luxembourg (the country in which it is held determines the effective place of management of the company) and in the presence of the directors, members of the management board and members of the supervisory board.

The articles of association of the company and/or its internal regulations may nevertheless stipulate that, for the calculation of the quorum and the majority vote, the directors, members of the management board and members of the supervisory board that are participating in a meeting of their respective organ either by teleconferencing or videoconferencing or by any other means of telecommunication which allows for their identification, are deemed present. Meetings held by such means of telecommunication are deemed to have taken place at the registered office of the company.

This practice also allows the board of directors to adopt resolutions by circular vote and obtain the unanimous consent of the directors.

Although it is not mandatory by law, decisions taken can be recorded in the minutes of the meeting in order to keep a trace of any resolutions adopted and reservations voiced during such meetings.

Conflicts of interest

A conflict of interest arises when the board of directors, the management board or the supervisory board must decide on an issue in which a director, a member of the management board or a member of the supervisory board has a personal interest that conflicts with the interests of the company.

In such a case, the director, a member of the management board or a member of the supervisory board concerned must inform the board of directors, have it recorded in the minutes of the meeting and abstain from participating in the deliberation.

These facts must also be specifically explained before any voting during the next general meeting.

By derogation, where the board of directors, the management board or the supervisory board of the company only has a single member, the minutes will only mention operations between the company and the director or member of the management board or supervisory board with an interest that conflicts with the interests of the company.

When the operation gives rise to a conflict of interest between the company and a member of the management board, the authorisation of the supervisory board is also required.

These provisions do not apply to decisions concerning day-to-day operations carried out under normal conditions.

Confidentiality/secrecy

The directors, members of the management board and the supervisory board, as well as any person called upon to attend the meetings of these organs, are required not to disclose, even after cessation of their functions, the information they have on the public limited company where the disclosure could prejudice the interests of the company, with the exception of cases where such disclosure is required or allowed by a legal or regulatory provision applicable to public limited companies or in the public interest.

Managing the SA

Inventories and balance sheets

Every half year, the board of directors or the management board, depending on the case, submits to the auditors a financial statement with an overview of the company's assets and liabilities.

Each year, the company management draws up an inventory of the company's movable and immovable assets and liabilities and establishes the balance sheet and the profit and loss accounts.

One month before the annual general meeting is held, these documents are submitted to the auditors together with a management report for the company.

The board of directors or the management board, depending on the case, also ensures the lodging and publication of the annual accounts within one month of their approval and at the latest 7 months after the financial year-end.

Calling general meetings

The board of directors or the management board, depending on the case, as well as the supervisory board call the shareholders’ general meeting.

In particular, they must convene the general meeting:

• once a year in order to approve the annual accounts;
• upon written request from the shareholders representing 1/10 of the share capital;
• and whenever required in the interest of the company.

Procedures

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