The reimbursement of the share premium and account 115 is the subject of debate. We cannot equate the distribution/redemption of the share premium/account 115 with all aspects of the payment of dividends/distribution of interim dividends, as it is not a distribution of distributable profits and reserves. However, there are some limits to premium distribution/redemption/account 115. As mentioned above, Article 461-2 of the Luxembourg Companies Code refers to “distributions”. This is a broader concept than the simple distribution of profits/dividends and these provisions seal the pillar of all distribution restrictions. Therefore, the reimbursement of the premium/account 115 should in any case comply with the conditions of article 461-2 of the law. Such reimbursement may not therefore be made if the distribution has the effect of ensuring that the net assets declared at the balance sheet date of the preceding financial year are less than the amount of the subscribed share capital plus the reserves whose distribution is required by law or by the statutes. Article 461-2 also provides that “no distribution may be made to shareholders of an amount exceeding the amount of profits of the previous financial year closed, plus undistributed profits and advances on the reserves available for this purpose and after deduction of loss carry-overs and sums to be allocated to reserves by law or by the articles of association”. mandatory allocations to the statutory reserve (up to 10% of the share capital); The so-called 115 account was introduced in 2009 by the new Luxembourg Standard Accounting Plan (PCN) and refers to a shareholder`s contributions to equity without issuing shares. The NCP has formalised the Luxembourg practice. The main reason for using account 115 of the contribution is to allow distributions to shareholders without capital reduction, even in the absence or insufficiency of distributable reserves and profits. Although the contribution to Account 115 is different from an issue premium payment, it is part of the same section of the NCP (Section 11 – Share Premium and Similar Premiums).
It should be noted that Account 115 should also be distinguished from the Reserve Accounts (Section 13 of the NCP), which contain distributable reserves. Concept of distributable profit: this includes profit for the financial year, plus profit carried forward (distributable reserves) minus past losses minus amounts allocated to minimum reserves. In other words, distributable profit means: It should be noted that ordinary dividends can also be distributed from distributable reserves without annual net income. The Luxembourg law of 10 August 1915 on commercial companies, as amended (the law), requires certain Luxembourg companies to maintain a legal reserve account. According to the literal interpretation of the law, the statutory reserve is to be understood as a calculation related to profits (“each year, at least one-twentieth of the net profit is used to constitute a reserve; This allowance expires when the reserve has reached an amount equal to one-tenth of the share capital, but it is again mandatory if the reserve falls below that tenth. The decision on the refund/distribution of the premium/invoice 115 is generally up to the shareholders. The question of whether the Executive Board can distribute premium/account 115 in the context of the distribution of an interim dividend is also the subject of legal doctrinal debate. To the extent that the Premium Account and Account 115 differ from the Distributable Reserve Accounts, we are of the opinion that the distribution resolution should be submitted to the Annual General Meeting for approval in the absence of authorization from the Management Board in the Company`s Articles of Association to distribute the Premium Account/Account 115 in connection with the distribution of interim dividends. Legal provisions that allow the board of directors to distribute interim dividends include distributable reserves, but not share premiums and similar premium accounts.
In addition, the amounts contained in the premium account and account 115 do not result from the profits of the company, but from the contributions of shareholders resolved by them. Therefore, in the absence of explicit authorisation from the Board, the Board should not be allowed to distribute/reimburse those amounts. According to the Belgian Court of Cassation, the general meeting may decide at any time during the financial year to distribute a dividend to shareholders from available reserves. In addition, the conditions under which the Management Board is authorised to distribute an interim dividend as an advance on the dividend to be definitively distributed to shareholders on the profit or loss for the financial year do not prevent the General Meeting from having available reserves at all times. Nevertheless, there are two opposing schools of thought among Luxembourg lawyers as to the possibility of allocating to the statutory reserve account from another reserve account of the company (for example, the premium account and/or the 115 account): `Except in the case of a reduction in the subscribed share capital, no distribution may be made to shareholders if, At the balance sheet date of the preceding financial year, the net assets shown in the annual accounts are less than or would be less than the amount of subscribed share capital plus the reserves whose distribution is required by law. Statutes. Nothing prevents a general meeting other than the annual general meeting from resolving the distribution of a dividend from the balance sheet reserves recorded by the previous general meeting.
