1.1 Which laws and regulations govern the capital markets in your jurisdiction?

The main capital markets legislation applicable to issuers whose shares are listed and admitted to trading on a regulated market within the meaning of Article 1(31) of the law of 30 May 2018 on markets in financial instruments, as amended ('MiFID II Law') is:

  • the law of 24 May 2011 relating to the exercise of certain shareholder rights in general meetings of listed companies, as amended;
  • the law of 11 January 2008 on transparency requirements for issuers, as amended ('Transparency Law') implementing the EU Transparency Directive (2004/109/EC);
  • the EU Prospectus Regulation (2003/71/EC) and the law of 16 July 2019 on prospectuses for securities, as amended ('Prospectus Law');
  • the law of 19 May 2006 on takeover bids, as amended ('Takeover Law'); and
  • the EU Market Abuse Regulation (596/2014) (MAR) and the law of 23 December 2016 on market abuse, as amended ('Market Abuse Law').

In addition, the Luxembourg financial regulatory authority, the Commission de Surveillance du Secteur Financier (CSSF), regularly publishes circulars, annual reports and FAQs on various capital markets-related topics.

An issuer is also subject to the Rules and Regulations of the Luxembourg Stock Exchange (LuxSE), which lay down the requirements for listing and admission to trading.

1.2 Is your jurisdiction part of a supranational, transnational or multinational framework with relevance to capital markets? If yes, how does this work?

The Grand-Duchy of Luxembourg, as an EU member state, is subject to EU secondary legislation adopted by the EU institutions by means of regulations, decisions, directives, opinions and recommendations. Hence, decisions and regulations related to the capital markets, such as the EU Prospectus Regulation and the EU MAR, are directly applicable to Luxembourg; whereas directives, such as the Transparency Directive, must first be incorporated into Luxembourg law within a specific timeframe in order to achieve their objectives. By contrast, the opinions and recommendations issued by the European Union in order to suggest a line of action on a specific matter have non-binding force.

1.3 Which bodies are responsible for regulating the capital markets in your jurisdiction? What powers do they have?

In Luxembourg, the main body responsible for monitoring compliance with the capital markets regulations and ensuring their implementation is the CSSF. For this purpose, the CSSF has all supervisory and investigatory powers which are necessary to exercise its functions, including the power to impose remedies.

According to its Rules and Regulations, the LuxSE is the competent body for all decisions and operations relating to, among other things, the admission of securities and the continuing obligations of issuers, unless otherwise prescribed by EU or national law.

1.4 How does enforcement work and what kinds of sanctions may be applied?

The CSSF has the authority to pronounce administrative sanctions and measures, such as specific orders, public warnings and fines. For example, the CSSF has the power to set up an enforcement process in order to control whether the financial information published by the issuer is in accordance with the Transparency Law. Following the completion of such enforcement process, the CSSF will communicate its decisions to the issuer in the form of injunctions, recommendations and follow-up measures for the purpose of correcting or improving the content of the financial information being published.

Another arrow in the quiver in terms of sanctioning are the criminal sanctions that may be imposed by a criminal court in case of market abuse under the context of the EU MAR and the Market Abuse Law.

The LuxSE may also proceed with the suspension, withdrawal, delisting or transfer of securities from one market to another in case of non-compliance with its Rules and Regulations

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.