25.01  As the EU Regulation 2017/1129 does not establish a harmonized civil liability regime with regards to information provided in a prospectus, it requires the EU Member States to apply their national provisions on civil liability to those persons responsible for the information given in a prospectus.

25.02  This chapter focuses on the Luxembourg civil liability regime, which applies to information given in a prospectus.

25.03  According to Article 4.1, Regulation (EC) 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, in case of a conflict of laws, the applicable law is the ‘law where the damage occurs’.

25.04  According to the conclusions made by the European Court of Justice in the Kolassa case,¹ the Luxembourg courts would have jurisdiction, if a loss was to be incurred in Luxembourg due to inaccurate or misleading information or due to the omission to include material information in a prospectus. According to the Court’s reasoning, the ‘place where the harmful event occurred’ within the meaning of Article 5(3), Regulation (p. 554) 44/2001, must be interpreted as encompassing the place in which the claimant is domiciled.

25.05  Luxembourg has implemented certain specific provisions on prospectus liability; however, these do not constitute an entirely autonomous civil liability regime on prospectus liability as such. Most aspects with regards to a person’s liability must be determined in accordance with the general Luxembourg provisions on civil liability from the Luxembourg Civil Code.

25.06  No questions have yet arisen before the Luxembourg courts on the liability regime which applies to those persons responsible for the information given in a prospectus. There is therefore no established Luxembourg case law complementing the provisions currently in place.

25.07  This chapter is limited to those situations where a prospectus contains misleading information or omits to include material information infringing the requirements of the Luxembourg legal provisions on prospectuses. However, civil liability could also arise if a public offer was to be made without a duly approved prospectus.

25.08  The EU Regulation 2017/1129 has not yet been implemented into Luxembourg law. A new proposed law² (projet de loi) was introduced on 29 June 2018, but has not yet been voted by Parliament.

25.09  The current Luxembourg legal basis for prospectus liability is provided by the law of 10 July 2005 on prospectuses for securities, as amended (Law of 10 July 2005 or the Luxembourg Prospectus Law). The law transposes into Luxembourg law the EU Directive 2003/71 of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (Directive 2003/71/EC), now repealed by the EU Regulation 2017/1129.

25.10  With respect to the new requirements, clarifications, and terminology introduced by the new EU Regulation 2017/1129, Luxembourg decided for the sake of clarity that a new law should be adopted that shall implement the new EU Regulation 2017/1129. This new law will thus replace the law of 10 July 2005 on prospectuses for securities which is currently in place.

(p. 555) 25.11  The new proposed law (projet de loi) therefore does not only contain technical changes with regards to the current statutory provisions, but will also implement a new legal framework which will entirely replace the legal framework that is currently in place.

25.12  The Luxembourg Prospectus Law establishes two regimes. The first regime governs offers of securities to the public and admissions of securities to trading on a regulated market, subject to the EU Law harmonization regime under the Directive 2003/71/EC. The second regime governs offers of securities to the public that fall outside the scope of the abovementioned Community harmonization and requires in those cases only a ‘simplified prospectus’ to be established.³

25.13  This chapter will only analyse the first regime provided by the Law of 10 July 2005, which is subject to the EU Law harmonization under the Directive 2003/71/EC, now repealed by the EU Regulation 2017/1129.

25.14  Article 9 of the Law of 10 July 2005, as amended, provides as follows:

25.15  The new proposed law, which was introduced on 29 June 2018 provides under Article 5 that:

Paragraph 1 shall apply without prejudice to Articles 4 and 5, Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonization of transparency requirements concerning information on issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34 /EC, where the information referred to in those articles is included in a universal registration document.⁵

25.16  When comparing Article 5 of the new proposed law with Article 9 of the Law of 10 July 2005, the essential elements do not change. Paragraph 3 of Article 5 of the new proposed law gives specifications on the liability which shall be incurred for a registration document.

25.17  In Luxembourg, a combination of specific provisions supported by the general Luxembourg provisions on civil liability form the civil liability regime for prospectuses. The Luxembourg Prospectus Law does not as such establish an autonomous civil liability regime. It simply provides that civil liability shall apply with regards to the information provided in a prospectus, and also defines the relevant persons who may incur such liability. In principle, all other aspects with regards to that person’s liability (in particular the determination of fault, the resulting damage, and the causal link between the fault and the damage) must thus be determined in accordance with the general Luxembourg provisions on extra-contractual liability (liability in tort) from the Luxembourg Civil Code.⁶

(p. 557) 25.18  When the Law of 10 July 2005 was first introduced on 22 February 2005 as a proposed law,⁷ the following comments were presented by the Luxembourg government with regards to Article 9:

Article 9 lays down the guiding principles with regards to the liability which applies when information is provided and published in a prospectus.( . . . )

The general Luxembourg provisions on civil liability apply with regards to persons responsible for the information provided in prospectuses for public offerings of securities in Luxembourg or for the admissions of securities on a regulated market located or operating in Luxembourg. By way of derogation, no liability can be sought in relation to the production and translation of a prospectus summary unless the content is misleading or inaccurate.⁸

25.19  The general Luxembourg provisions on civil liability are set out in Articles 1382 and 1383 of the Luxembourg Civil Code (Civil Code).

25.20  According to Article 1382 of the Civil Code, any act of man which causes damage to another obliges that person who committed the fault, to repair it (‘Tout fait quelconque de l’homme, qui cause à autrui un dommage, oblige celui par la faute duquel il est arrivé, à le réparer’).

25.21  Article 1383, Civil Code provides that everyone is responsible for the damage that he causes not only due to an act he committed, but also due to his negligence or imprudence (‘Chacun est responsable du dommage qu’il a causé non seulement par son fait, mais encore par sa négligence ou par son imprudence’).

25.22  In the absence of any specific provision regulating the compensation regime of a certain damage, recourse to Articles 1382 and 1383, Civil Code is always possible, unless otherwise provided. The provisions are therefore considered as general law (droit commun) on civil liability.

25.23  It should be noted that, depending on the specific circumstances and facts of the case, misleading information or the omission to include material information in a prospectus could also potentially constitute an infringement to certain other Luxembourg statutory regimes giving rise to civil liability,⁹ for example:

• –  the Consumer Code provisions in relation to unfair commercial practices;¹⁰ or

• (p. 558) –  the financial sector law dated 5 April 1993 in relation to the conduct of business rules when providing investment services to clients.¹¹

25.24  These provisions give protection from a consumer law perspective; however, they do not in any way implement the Directive 2003/71/EC or establish a specific civil liability regime for prospectuses.

25.25  According to the consumer code, unfair commercial practices are punished by a fine between EUR 251 and 120,000.

25.26  Despite there being no case law on the civil liability regime for prospectuses, certain general case law principles could potentially be relied upon before the courts.

25.27  Within the context of general consumer law and misleading advertisements, Luxembourg case law has held that, for example, when failing to indicate in a brochure that a statutory guarantee should apply, this should be considered as misleading a normal, careful, and diligent consumer, who is made to believe that he can only benefit from the commercial guarantee as stated in the brochure and that once this guarantee has expired, no further guarantee shall apply. The courts held that, within the context of misleading advertising, it is not necessary to prove that the consumer specifically purchased the product due to the information contained in the brochure, in this case the guarantee. It is sufficient to demonstrate that the illegal advertising was likely to affect the consumer’s behaviour.¹²

25.28  Another case has held that for erroneous information to qualify as misleading advertising, it is sufficient that it potentially affected the economic behaviour of the public or that it is prejudicial to a competitor. The court also held that in order for erroneous information to qualify as misleading advertising, it did not have to have the deliberate intention to mislead.¹³

25.29  Neither the Law of 10 July 2005 nor the new proposed law defines the term ‘prospectus’.

25.30  When issuing a prospectus, Article 9, Luxembourg Prospectus Law provides that the issuer, the offeror, the person asking for the admission to trading on a regulated market, (p. 559) or the guarantor, as the case may be, shall be responsible for the information given in the prospectus by declaring that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.

25.31  One of the abovementioned persons must accept full responsibility for all the information contained in the prospectus, unless different persons agree to accept responsibility for individual parts of the prospectus, which would entail that a person’s responsibility is thus limited to that specific part of the prospectus. In practice, however, this is rare, since in contrast to other competent authorities, the financial regulator in Luxembourg, the Commission de Surveillance du Secteur Financier (CSSF), requires the responsibility statement in a prospectus to be made by the legal entity acting as the issuer, and not the individual directors of that legal entity.¹⁴

25.32  When the Law of 10 July 2005 was first introduced on 22 February 2005 as a proposed law, the following comments were provided by the Luxembourg government with regards to Article 9:

The legal entity acting as the issuer and/or the guarantor remains solely responsible for the information provided in a prospectus, except when the legal entity is not responsible for the proposed financial transaction (for example the offeror is a natural person). The option provided for by the EU Directive to include other persons (such as administrative or management bodies) within the potential scope of responsibility was not chosen to apply.¹⁵ ( . . . )

Persons seeking admission to trading on a regulated market should not be confused with listing agents who submit applications for admission acting as an agent of the issuer or the person requesting admission. This differentiation is made within the context of Article 22 (3) (c) which distinguishes between the persons who the supervisory authority may request information from, the person applying for admission and the financial intermediaries responsible for submitting the application for admission to the regulated market. Agents acting in that capacity who introduce such an application shall incur no liability for the content of the prospectus.¹⁶

25.33  On 14 June 2005, the Luxembourg Chamber of Commerce consequently provided the following parliamentary opinion (avis parlementaire) with regards to Article 9:

This article aims at making not only the issuer and the person applying for admission to trading on a regulated market but also the offeror responsible for the information contained in the prospectus. The Chamber of Commerce is of the opinion that only (p. 560) the issuer must be held responsible for the contents of the prospectus, except in the case where the issuer has not himself written the prospectus. The words ‘as the case may be’ at the end of the sentence seem to have that meaning.

25.34  On 14 June 2005, the State Council (Conseil d’Etat) provided a similar parliamentary opinion with regards to Article 9 (avis parlementaire):

The provisions on liability for prospectuses follow the general Luxembourg rules on civil liability, in that they attribute the responsibility to the legal person, if the issuer, the offeror, the person requesting the admission to trading on a regulated market or the guarantor is a legal person. There is therefore no automatic extension of the legal person’s responsibility to natural persons acting on its behalf. Individuals are only responsible if they themselves exercise one of the above-mentioned roles. However, in order to avoid any doubt as to the possible responsibility of the operators offering securities without having themselves drawn up the prospectus, the Conseil d’Etat suggests to rephrase the first sentence as follows,: ‘Responsibility regarding the information provided in a prospectus is attached to the issuer, or, where the issuer does not draft it, to the offeror, to the person seeking admission to trading on a regulated market or to the guarantor, where such persons have drafted the prospectus on behalf of the issuer.’

25.35  In principle, when drafting a prospectus in Luxembourg, the issuer is referred to as being the responsible person for the information contained in the prospectus, which is always the company itself, unless a natural person is exercising one of the above-mentioned roles.

25.36  The person who is responsible for the drafting of the prospectus, whoever it may be, is responsible for the content of the document throughout the entire period of validity of the prospectus and must continue to make the required additional publications in order for the prospectus to be kept up to date.¹⁷

25.37  The Luxembourg Prospectus Law expressly lists the different actors which may be responsible for the information contained in a prospectus. When drafting a prospectus, Article 9 of the Luxembourg Prospectus Law requires the responsible person to provide its identity and declare that to the best of its knowledge, all information contained in the prospectus is in accordance with the facts and that it makes no omission likely to affect its import. Such a person shall thus incur liability in case the declaration made in the prospectus is not upheld.

(p. 561) 25.38  According to the Luxembourg Prospectus Law, the person who declares itself responsible for the information contained in the prospectus, whether a legal person or a natural person, will be liable for any inaccuracies or misleading information contained in the prospects. If a legal person declares itself responsible for the information provided in the prospectus, the legal person alone will be held liable for any erroneous or missing information. No person which acts on behalf of the legal person can be held liable by automatic extension of the legal person’s responsibility.

25.39  That being said, on the basis of the general Luxembourg provisions on civil liability, depending on the specific circumstances of the matter, one cannot exclude that other persons can be held liable. Even if the issuer is identified under the responsibility statement as assuming responsibility for the information given in the prospectus, other persons involved in drawing up the prospectus, such as directors or accountants of the issuer, could also be held liable on the basis of the said general Luxembourg provisions on civil liability. As said in section IV ‘Persons Responsible for the Prospectus’ (para. 25.30) above, this does not consist in an automatic extension of the company’s liability. The claimant would have to demonstrate that the director acting on behalf of the issuer committed a fault and that the damage incurred by the claimant is causally linked to the director’s fault or breach.

25.40  For example, in the case of an underwriting bank, an investor would have to prove that the underwriting bank committed a fault in that they knew that substantial material information in the prospectus was missing or was inaccurate, that the investor suffered a loss, and that there is a causal link between the fault and the incurred loss.

25.41  In order to avoid liability, the defendant must demonstrate that one of the three following elements has not been met, i.e. (i) the existence of a fault (or negligence); (ii) that damages have resulted; and (iii) that there is a causal link between the fault and the damages.

25.42  However, if these elements are met, liability could be avoided if the defendant were able to prove that the claimant is partially responsible for the financial loss, for example that the investor was negligent or that the investor knew about the inaccuracy or incompleteness of the information in the prospectus. The defendant could also avoid responsibility if he were able to prove that the missing information could not be considered as important for a reasonable investor when making an investment decision, or that the missing information in the prospectus was not material and would not have had any influence on the investor’s decision or on the price of the securities. In this case, the defendant bears the burden of proof.

25.43  If multiple persons are considered liable for the content of the prospectus and the damage resulted therefrom, the Luxembourg Prospectus Law does not specify whether liability should apply on a joint and/or several liability basis. This aspect is therefore determined in accordance with the general Luxembourg provisions on civil liability.

(p. 562) 25.44  Considering that in principle, in Luxembourg, the responsibility statement is made by the legal entity acting as the issuer and not the individual directors, there are usually not multiple persons declared responsible for the content of the prospectus. However, if, for example, the claimant is able to prove that other persons than the issuer contributed to the claimant’s loss due to the misleading content of the prospectus, according to the general Luxembourg provisions on civil liability, the issuer and the other persons having contributed to the claimant’s loss will be held jointly and severally liable (responsabilité in solidum) towards the claimant. This, however, only applies when the claimant has incurred one single damage. If this is not the case and the damage caused by each individual defendant can be precisely determined, the issuer and the other persons having contributed to the claimant’s loss are not held jointly and severally liable.¹⁸

25.45  In the case of one single damage, the issuer and the other persons having contributed towards the claimant’s loss, will remain jointly and severally liable towards the claimant. The issuer cannot claim exoneration from its liability due to the third party’s fault that contributed towards the damage, even if the issuer is able to clearly prove the causal link between the third party’s fault and the loss incurred by the claimant. Vis-à-vis the claimant, the issuer will nevertheless be held responsible for the entire damage incurred by the claimant. The issuer will in that case have to take legal action (action récursoire) against those persons having contributed towards the claimant’s loss in order to determine the proportional amount of liability each one of them should incur.¹⁹

25.46  The issuer who takes responsibility for the content of a prospectus may, for example, argue that there is no fault on his part, since he carried out an adequate due diligence investigation. However, the issuer will remain nevertheless liable towards the claimant and will have to take legal action against the person who provided him with inaccurate information.

25.47  The application of joint and several liability in such a context was a jurisprudential creation in order to protect the claimant against insolvency of the defendants. However, this principle works to the detriment of a defendant who only has a secondary role or who only contributed in a very small way towards the production of the damage. Such a person remains nevertheless liable for the entire loss suffered by the claimant. The only way for such a person to exclude the application of joint and several liability is to demonstrate that the loss can be broken down and that certain parts can be exclusively attributed to one or the other person’s fault. The principle of jointly and severally liable (responsabilité in solidum) therefore only applies in the event of a single damage. If it is possible to divide the damage and clearly identify the individual damage caused by each of the defendants, joint and several liability no longer applies.

25.48  Joint and several liability, for example, does not apply to a person who has only declared himself responsible for a specific part of the prospectus.

(p. 563) 25.49  In order for the prospectus to be reused in a different context, the person responsible for the drafting of the prospectus has to provide a written consent. This would allow the prospectus to be reused, for example, by a financial intermediary within the context of reoffering the securities on the secondary market.²⁰ The responsibility of the financial intermediary operating in the secondary market will diminish due to the consent it will have obtained for the content of the prospectus, however without its liability being automatically entirely excluded within the context of the reissuing of the securities.²¹

25.50  If, for example, the same prospectus is reissued by the financial intermediate in the exact same form and containing the same content, without the financial intermediate having the option to verify the accuracy of the given information, he shall bare no liability with regards to any inaccuracies or missing information. On the contrary, if the financial intermediate amends the prospectus or is aware of inaccuracies or missing information, he could be held liable and, depending on the circumstances, potentially even jointly and severally liable with the initial issuer.

25.51  This is also clearly explained in Recital (10), Directive 2010/73/EU of the European Parliament and of the Council of 24 November 2010 amending Directives 2003/71/EC:

25.52  In principle, investors can also claim compensation from the CSSF on a civil liability basis if the claimant is able to prove that during the performance of its duties at approving the prospectus, the CSSF did not perform such duties in accordance with the Luxembourg Prospectus Law. No specific rules are set out under the Luxembourg Prospectus Law on this matter. The law of 23 December 1998 establishing the CSSF in conjunction with Articles 1382 and 1383 of the Civil Code are applicable in such a case.

25.53  The civil liability regime applicable with regards to the CSSF is, however, slightly derogatory to the general civil liability regime. In order for the CSSF to be held liable for damage incurred by third parties, Article 20.2 of the law of 23 December 1998 establishing the CSSF provides that ‘it must be demonstrated that the damage was caused through gross negligence in the choice and implementation of the means used by the CSSF in furtherance of its mission’.²²

(p. 564) 25.54  As opposed to the general Luxembourg civil liability regime, which solely requires the claimant to prove that the loss was caused by the defendant’s negligence, when invoking the CSSF’s liability, the claimant must demonstrate that the claimant’s loss was caused through gross negligence in the CSSF carrying out its duties.

25.55  In practice, it is very unlikely that an investor would claim compensation from the CSSF. The CSSF cannot be held liable for untrue or misleading information in the prospectus, since this is not something the CSSF can verify.

25.56  The Luxembourg Prospectus Law does not determine who should be entitled to sue for damages.

25.57  In principle, any person who is able to prove a fault or negligence, a damage and a direct link between this fault or negligence and the damage, is entitled to claim compensation on the basis of liability in tort (extra-contractual liability).

25.58  In accordance with Article 50 of the Luxembourg New Code of Civil Procedure, in order to bring a claim before the Luxembourg courts, the claimant must demonstrate that he has sufficient standing (‘qualité d’agir’) and a legitimate and direct interest (‘intrérêt à agir’).

25.59  Offers of securities which are addressed solely to qualified investors are exempted from the requirement to publish a prospectus. In principle, a prospectus will define the type of investors to whom the securities are going to be offered.

25.60  The Law of 10 July 2005 provides that ‘qualified investors’ means:

25.61  Under the Luxembourg Prospectus Law, natural persons and small-to-medium-sized enterprises are able to register in a special register in order to be considered as qualified investors. The Luxembourg Prospectus Law defines small and medium-sized (p. 565) enterprises as being ‘companies, which, according to their last consolidated or non-consolidated published annual accounts, meet at least two of the following three criteria: an average number of employees during the financial year of less than 250, a total balance sheet not exceeding EUR 43,000,000 and an annual turnover not exceeding EUR 50,000,000’.

25.62  A prospectus is issued when securities are offered solely to private investors, but also when offered to both private and qualified investors. In principle, the liability regime does not differ if the securities are offered to both private and qualified investors or if they are solely offered to private investors. However, general Luxembourg case law has held that in a banker and client relationship, the banker’s obligation to inform (obligation d’information et de conseil) varies depending on the technical understanding and experience of the client.²⁴ It is likely that this principle, which also applies in a pre-contractual phase between banker and client, would also apply with regards to prospectus liability. The appreciation of the issuer’s fault differs if the investor is a professional investor (or qualified investor) as opposed to a private investor, since a professional investor is supposed to have a greater understanding and experience on the subject matter than a private investor. In principle, a private investor would be easier to mislead or would require more extensive information in a prospectus than a professional investor.

25.63  In principle, anyone is entitled to sue for damages, provided that the damage that person incurred can be causally linked to the misleading or incorrect information or the omission of material information in a prospectus. First and foremost, investors would be entitled to claim for damages, but depending on the circumstances, in principle, also other parties having suffered a financial loss are entitled to sue as long as they are able to prove that there is a causal link between the fault (inaccurate information in the prospectus) and their financial loss. Depending on the circumstances, this could potentially be a managing company who loses clients if these decide to withdraw their investments or the issuer of securities if this is a different entity than the person issuing the prospectus.

25.64  A person who declares to be responsible for the information included in a prospectus incurs liability when the prospectus does not comply with the declaration made.

25.65  According to Article 8.1, Luxembourg Prospectus Law read in conjunction with Article 9 of the same law, the responsible person incurs civil liability as a result of the following breaches:

(p. 566)

• –  untrue information issued in the prospectus; or

• –  the omission to include material information which affects the import of the prospectus, i.e. information which would have had an influence on the investor’s decision and would have allowed the investor to make a more informed assessment of the assets and liability, financial position, profit and losses, prospects of the issuer and of any guarantor, and of the rights attaching to the securities.²⁵

25.66  The Luxembourg Prospectus Law does not define the concept of untrue information or the omission of material information, nor does it determine the degree of fault or negligence which must be demonstrated.

25.67  The assessment of a fault or an act of negligence lies within the discretion of the judges, who have the liberty in assessing what act or omission shall constitute a ‘fault’ within the meaning of the Luxembourg Prospectus Law or within the meaning of Articles 1382 and 1383, Civil Code. The judges take into account all the facts and circumstances and will assess what a normal, careful, diligent, and informed person would have done in the same position (le bon père de famille). The fault is assessed in an abstract (in abstracto) and objective manner.

25.68  Despite the differentiation made between the concept of fault (Art. 1382) and negligence (Art. 1383), there is no difference in the conditions which must be fulfilled in order for the one or the other article to be applied. Neither have the articles different consequences when being applied which means that they can be (and usually are) invoked simultaneously. Within the context of civil liability, negligence is therefore assimilated to a fault. The degree of fault required for civil liability to apply is at least negligence.

25.69  No difference is made between a minor fault or a gross fault. Liability is not proportionate to the degree of severity of the committed fault. The obligation to repair a caused damage even applies in the case of slight negligence.

25.70  Considering that no specific provisions are provided under the Luxembourg Prospectus Law, the general Luxembourg provision on civil liability applies with regards to the resulting damage and the causal link between the fault and the damage.

(p. 567) 25.71  Whether or not the claimant is invoking the liability of the person having declared itself responsible for the content of the prospectus or some other person’s liability, according to the general Luxembourg provisions on civil liability, the claimant must demonstrate (i) the existence of a fault (an act or omission); (ii) the identity of the person responsible for the fault; (iii) that a damage has resulted; and (iv) that there is a causal link between the fault and the damage.

25.72  The claimant must thus demonstrate that he has suffered a loss due to the inaccurate information or the non-inclusion of material information in the prospectus.

25.73  According to the general Luxembourg provisions on civil liability, when a person incurs a loss, in order to claim compensation the claimant must prove that the loss is certain. A person’s claim which is based on a loss which is still uncertain will not be taken into account by the courts. If the loss will occur in the future, the claimant must prove that that future loss is nevertheless certain and not solely hypothetical.²⁶

25.74  According to the general Luxembourg provisions on civil liability, the claimant can only claim damages equivalent to the loss the claimant actually incurred. The claimant is not able to claim higher damages than the loss it incurred, but will not obtain any less. Compensation of damages must be sufficient to put the claimant into the position it would have been in if the fault had never been committed by the defendant. The courts apply a concrete (in concreto) analysis of the situation in order to assess the loss incurred by the claimant. The courts cannot take into account the degree of severity of the committed fault in order to determine the amount of damages the claimant shall obtain.

25.75  First and foremost, material damages can be compensated. However, Luxembourg courts also consider that in certain circumstances a loss of opportunity can be compensated, such as a loss of income or loss of profit.²⁷ In principle, moral damage cannot be obtained before the Luxembourg courts for a financial loss.

25.76  The investor’s or claimant’s position in evidence is not facilitated in any way, since it must demonstrate that the defendant committed a fault, that a loss was incurred by the claimant, and that there is a causal link between that fault and the loss that the claimant incurred.

25.77  Under the Luxembourg Prospectus Law, no disclaimers can be made, excluding or limiting in any way any person’s responsibility with regards to the information provided in the prospectus. Such disclaimers shall be considered as null.

25.78  The second paragraph of Article 9, Law of 10 July 2005, as amended, provides that:

The CSSF accepts prospectuses drafted in English, French, German, and Luxembourgish. If the summary to the prospectus is provided to the CSSF in one of these languages, according to Luxembourg law, no translation is needed.²⁹

25.79  The general Luxembourg provisions on civil liability may be relied upon when seeking a director’s liability with regards to the information contained in a prospectus. The director’s fault will need to be demonstrated, as well as the loss suffered and the causal link between the fault and the loss. The courts assess what a reasonable, cautious, and diligent director would have done under the specific circumstances.³⁰

25.80  In practice, the Luxembourg courts are, however, reluctant to uphold directors’ liability towards third parties on the basis of the general principles of civil liability. They generally consider that third parties who suffer a loss due to a director’s management mistake should, in principle, bring proceedings against the company itself.

25.81  The law of 10 August 1915 on commercial companies, as amended, (the Company Law) provides that a company shall assume liability towards third parties for the mistakes committed by its directors. In principle, directors of a company should therefore not incur personal liability for the mistakes they commit when carrying out their (p. 569) functions. A third party should therefore only take legal actions against a director on the basis of the general principles of civil liability if the director’s fault constituted more than a simple management mistake. The burden of proof is thereby heavier for a claimant when bringing a claim against a director on the basis of Articles 1382 and 1383, Civil Code than if the claimant brings an action against the company itself.

25.82  However, directors remain accountable for management errors they commit. They are liable towards the company for the performance of their mandate and for any shortcomings in the performance of their duties. Their liability, however, is sought on a contractual basis, and not on a tort basis.(p. 570)