European cross-border operations: navigating through the new anti-abuse control rules

The law of 17 February 2025 which transposed the commonly known “Mobility Directive”¹  (the “2025 Law”) entered into force on 2 March 2025².  The 2025 Law introduces significant changes to Luxembourg's legal framework on cross-border conversions, mergers, and divisions within the European Economic Area (EEA). Among these changes, the most disruptive is the notary’s anti-abuse control of European cross-border operations when Luxembourg is the departing country. 

Quick look at the context 

European cross-border operations falling in the scope of the specific regime (“régime special”)³ are henceforth subject to an unprecedented dual successive legality control mechanism, entrusted to the Luxembourg notary:  

• the first control, referred to as the “contrôle de conformité” or anti-abuse control, is the most substantive control to be performed when the Grand Duchy of Luxembourg is the departing Member State of the operation i.e., when Luxembourg is the Member State of the absorbed company, divided company or the converted company before completion of the cross-border conversion.  
• the second control, referred to as the “contrôle de légalité”, is a more formal control to be performed when the Grand Duchy of Luxembourg is the destination Member State of the operation i.e., when Luxembourg is the Member State of the absorbing company, the recipient company or the converted company upon completion of the cross-border conversion). 

The article will focus exclusively on the first of these controls, the “contrôle de conformité” or anti-abuse control, offering an in-depth analysis of its scope and exploring some practical implications.

The notary’s role in this new anti-abuse control

Notaries will now take a more active role by verifying and confirming that the cross-border operation: 

(i) complies with Luxembourg law; 

(ii) is not set up for abusive or fraudulent purposes leading to or aimed at the evasion or circumvention of European Union or Luxembourg law; and

(iii) is not set up for criminal purposes.

The notary must ensure the completion by the converted/absorbed/divided Luxembourg company of all procedures and formalities of the operation in the Grand Duchy of Luxembourg to issue the “pre-conversion/merger/division certificate”. This certificate will be required in the destination Member State to perform the second control and complete the operation. The anti-abuse control will focus mainly on the internal aspects of the operation, such as the holding of the general meeting of shareholder(s) of the Luxembourg company and the respect of protection mechanisms of shareholders, creditors, and employees to ensure that the operation is not driven by fraud, abuse or criminal purposes. As such, the notary must ensure that the Luxembourg company has fulfilled all necessary legal and procedural obligations but must not, under any circumstances, evaluate the commercial or financial merits of the operation.

While performing the control, the notary shall consider the following indicative elements⁴ related to the characteristics of the establishment in the Member State in which the Luxembourg company is to be registered after the operation, such as (i) the purpose or drivers of the operation, (ii) the sector, (iii)  the investment, (iv) the net turnover and profit or loss  (v) the number of employees, (vi) the composition of the balance sheet, (vii) the tax residence, (viii)  the assets and their location, (ix) the beneficial owners, (x) the place where social contributions are due, (xi) the number of employees posted in the year prior to the cross-border operation, (xi) the number of employees working simultaneously in more than one Member State, and (xii) the commercial risks linked to the operation.

Considering the limited resources of notaries, they may consult any relevant national or foreign authority to obtain any information required to carry out the anti-abuse control,⁵ including the following national authorities: le Centre commun de la sécurité sociale, l’Administration des contributions directes, l’Administration de l’enregistrement des domaines et de la TVA, la Commission de surveillance du secteur financier,  l’Inspection du travail et des mines and le Commissariat aux assurances. Additionally, they may consult independent experts such as lawyers, accountants, auditors, or university professors, at the expense of the Luxembourg company being converted, absorbed or divided. 

In addition to the items mentioned above, the Luxembourg Chamber of Notaries has advocated to have the notaries systematically require the certificates issued by the public authorities for voluntary dissolution without liquidations.⁶ However, this approach goes against the legislator’s will, as it introduces an additional requirement provided as an option by the European legislator and not transposed in the 2025 Law.⁷ Thereby this will expand the scope of the anti-abuse control beyond what is strictly necessary and may negatively affect the timeline of the operation. Also, and as mentioned above, the notary may consult these public authorities without needing to request the issuance of these certificates. 

Timing and outcomes of the anti-abuse control

The notary will have three (3) months from the receipt of all necessary documents to complete the anti-abuse control. Four (4) possible outcomes may result from the control:

1) Issuance of the pre-certificate: If all legal conditions were met and all procedures were duly accomplished, the notary shall issue the pre-conversion/merger/division certificate allowing the operation to be completed in the destination Member State, subject to the completion of the second control.

2) Conditional refusal: If deficiencies were found, the notary may grant an additional period (up to three months) to the Luxembourg company to rectify them.

3) Extended review: If further investigations are needed, the notary may extend the review period for an additional period of three (3) months maximum. 

4) Definitive refusal: If the notary considers that the operation is being carried out for abusive or fraudulent purposes leading to or aiming at evading or circumventing European Union or national law, or for criminal purposes, the pre-conversion/merger/division certificate will not be issued.

Practical implications 

The request to perform the anti-abuse control must be submitted electronically to the notary, accompanied by (i) the executed version of the common draft terms of the European cross-border operation, (ii) the reports from the management body addressed to shareholders and employees, along with any independent expert reports, to the extent applicable, (iii) any comments from shareholders, creditors, or employee representatives on the common draft terms of the European cross-border operation and (iv) information on the approval of the operation by the general meeting of the shareholder(s) of the Luxembourg company. 

To mitigate timing constraints and to complete the legality control as quickly as possible, the Luxembourg Chamber of Notaries suggests submitting a management representation letter along with the above listed documents. This letter, by attesting inter alia that the operation does not serve any fraudulent, abusive, or criminal purposes, may provide the notary with additional assurance and thus facilitate the anti-abuse control. 

We recommend involving the notary from the early stages of the preparatory phase of the operation and providing her/him, in advance, with all the documents and information necessary for the anti-abuse control, well before the general meeting of the Luxembourg company is held.

The anti-abuse control will introduce uncertainty over the timeline and success of the operation, which can no longer be guaranteed until the issuance of the pre-conversion/merger/division certificate by the notary. To mitigate the risk of an excessively long anti-abuse control negatively impacting the economic conditions of the operation, the draft terms of the operation may provide for a condition subsequent (condition résolutoire) if the operation is not completed before a long-stop date.