The Luxembourg Stock Exchange updates its Rules and Regulations

On 15 January 2020, the Luxembourg Stock Exchange (the LuxSE) announced that it had updated its Rules & Regulations (R&R) for 2020.

This new version takes into consideration the entry into force of the Law of 13 January 2019 establishing a Register of Beneficial Owner (the RBO Law), which partly implements the 4th and the 5th anti-money laundering EU directives.

It also incorporates changes related to the entry into force of Regulation (EU) 2017/1129 of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the Prospectus Regulation) and the Luxembourg law of 16 July 2019 implemented in this respect.

In order to comply with the RBO law, the LuxSE has seen its scope of authority expanded as regards listing and the admission of securities to trading on the LuxSE:

• it has now “full power and authority” to apply to issuers all anti-money laundering (AML) and know-your customer (KYC) measures and procedures it deems necessary;
• it has authority to carry out verifications in order to identify the issuer and its Beneficial Owner(s) (the B.O.) during the scrutiny process; and
• it has the right to ask for any additional documents and information in order to identify the issuer, its B.O. and generally in order to fight against money laundering and terrorist financing.

The resulting changes have also been made as regards the admission of new members to LuxSE’s regulated market or the Euro MTF. In addition to the aforementioned changes applicable to members, the latter will also be subject to a revised risk classification process which will amount to checks and identification controls on a regular basis, in order to make sure that the mandatory filings and documentations are up-to-date. The failure to comply with AML/KYC obligations will henceforth be a potential cause for termination the membership by the LuxSE.

Concurrently, the due diligence process has been widened to include AML and KYC measures:

• when filing an application for admission to trading on the LuxSE’s regulated market or the Euro MTF and its official list, it is now required to disclose in addition to the full legal name of the issuer, the name of its B.O., and where applicable, the name of any related or involved politically exposed person(s) as defined in the Directive (EU) 2015/849;
• the following additional documents will now have to be provided with the application: (i) a proof of existence of the issuer, (ii) the full list of the issuer’s legal representative, (iii) the full list of the issuer’s B.O., (iv) an organisation chart representing the issuer, the guarantor, the B.O and any intermediaries; and
• a due diligence process in relation to the issuer will be carried before an issuer is admitted to trading and listing on the LuxSE’s regulated market or the Euro MTF and on its official list. In practice, this means that new issuers will need to complete standard AML/KYC forms available on the LuxSE website encompassing information regarding the identity of the issuer, its legal representatives, and any politically exposed persons.

As regards public auctions organised by LuxSE, documents allowing for the verification of the seller’s identity now need to be attached to the application.

Moreover, regarding the Euro MTF Market, LuxSE has aligned the prospectus exemptions with those provided by the Prospectus Regulation. Indeed, from now on, the obligation of issuers of debt securities to publish their latest annual accounts and management report does not apply where:

• the bonds have a denomination per unit equal to or above EUR 100,000;
• the bonds are admitted to trading on the professional segment of the securities market of the LuxSE; or
• the respective applicable national law does not require it.

Finally, the LuxSE has created a single regime for prospectus approval. The distinction that existed between prospectuses covered by the Prospectus Regulation and those not covered by it or not set out on the list of regulated markets published by the European Commission has been removed.

It has also added guidelines for the use of appendices, which have been remodelled and incorporated right after Part 2 of the new R&R instead of at the end of the R&R.

The New Rules and Regulations of the Luxembourg Stock Exchange will come into effect on 31 January 2020. They will replace the last version (Edition 11/2018) from November 2018.