Going public is a transformational event. To do so successfully, a company or its sponsors must navigate a long, complex process involving, inter alia, aspects relating to strategy, tax, accounting, reporting standards, treasury and financial risk management and governance.
The Luxembourg Stock Exchange offers a regulated market, Bourse de Luxembourg (BdL), and a multilateral trading facility, the Euro MTF. The regulated market is eligible for the European passport. Rules and regulations apply to both markets and they both operate on the OPTIQ platform hosted by Euronext’s European cash markets. The system is capable of handling exceptionally large volumes rapidly. Major multinational companies such as ArcelorMittal, RTL Group and SES have chosen to list on the Luxembourg Stock Exchange.
Over the past 10 years, there has been a steady interest in Luxembourg-based vehicles for carrying out an international IPO. Luxembourg corporate law offers a wide range of modern, flexible solutions that enable the sponsor to shape the articles of association and corporate governance of an IPO vehicle to the specific needs of the transaction, combined with a high degree of legal certainty.
Luxembourg corporate law also allows for the issuance of shares having different nominal values, thus offering additional structuring options. In addition to shares, a Luxembourg company may issue preference shares and various other equity-like instruments, with or without voting rights.
Luxembourg law provides for a one-tier (board of directors) or two-tier (management board and supervisory board) management structure. Daily management can be delegated to a single executive or an executive committee. Moreover, the administrative and management bodies of a Luxembourg company may appoint special committees with advisory or decision-making powers.
Wide acceptance by major international exchanges
The use of a Luxembourg incorporated company to conduct an IPO has been widely accepted by the market, wherever the market for the placement of the shares or other securities being the subject of the IPO may be located.
Luxembourg companies are not only suitable for preparing a domestic IPO but such companies have also been widely used in international IPOs or related capital markets transactions. As such, it is worthwhile mentioning that one can find Luxembourg incorporated issuers listed on all the major international stock exchanges within the EU or the EEA, such as on Euronext Amsterdam, Euronext Paris, the Frankfurt Stock Exchange or the London Stock Exchange. Other Luxembourg issuers have chosen to be listed on the Madrid Stock Exchange, the Oslo Stock Exchange, Euronext Dublin, or the Warsaw Stock Exchange. In third countries, Luxembourg companies have been listed inter alia on the New York Stock Exchange or the NASDAQ in the United States, the Buenos Aires Stock Exchange, the Hong Kong Stock Exchange and the Toronto Stock Exchange, following their successful IPO.
This is evidence that Luxembourg corporate law not only offers a vast choice of innovative options for structuring an IPO vehicle or putting in place bespoke corporate governance models but that, in addition, they are fully compatible with the requirements of any major international stock exchange.
A prime location for listing in the EU
As a founding Member State of the European Union, Luxembourg adheres to the EU regulatory framework. It offers a legal environment that supports growth and innovation – especially in terms of corporate law. EU directives are implemented quickly and in a business-oriented way.
Any listing and admission to trading require the approval of the prospectus by the relevant competent authority.
The CSSF is the competent authority for the approval of an IPO for admission to trading on the regulated market. The regulation-compliant prospectus is approved by the CSSF if the issuer is a Luxembourg company and for third-country issuers if certain conditions are met. If the issuer is incorporated in an EEA country other than Luxembourg it would have the prospectus approved in its jurisdiction of incorporation (the home Member State) and then passported into Luxembourg via the EU passport for an admission to trading on the BdL.For admission to trading on the Euro MTF, the competent entity for prospectus approval will be the LuxSE.
In principle, admission to listing on the LuxSE’s official list goes hand in hand with the admission to trading on one of the LuxSE’s markets. However, since 2018 the LuxSE offers the possibility for issuers to have securities admitted on its official list without being admitted to trading on the LuxSE-regulated market or Euro MTF. This, thanks to the creation of a dedicated section of the LuxSE’s official list, namely the LuxSE Securities Official List (the LuxSE SOL). LuxSE SOL is designed for issuers looking for visibility and for whom admission to trading is not a prerequisite.
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