Opinion of the European Central Bank at the request of the Luxembourg Minister for Relations with Parliament, the Grand Duchy of Luxembourg, under Articles 109l (2) and 109f (6) of the Treaty establishing the European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft legislative proposal to facilitate the redenomination of the capital of corporations in euro and settle rounding problems in this connection (CON/98/48)
Date: 1998-10-20
Institutions: European Central Bank
Subjects: Luxembourg, euro, monetary integration, money, national law, share capital

OPINION OF THE EUROPEAN CENTRAL BANK

at the request of the Luxembourg Minister for Relations with Parliament, the Grand Duchy of

Luxembourg,  under  Articles 109l (2)  and  109f (6)  of  the  Treaty  establishing  the  European

Community  and  Article 5.3  of  the  Statute  of  the  European  Monetary  Institute  on  a  draft

legislative  proposal  to  facilitate  the  redenomination  of  the  capital  of  corporations  in  euro  and

settle rounding problems in this connection

CON/98/48

1. 

On  21  September  1998  the  European  Central  Bank  (ECB)  received  a  request  from  the

Luxembourg Minister for Relations with Parliament, the Grand Duchy of Luxembourg, for an

ECB  Opinion  on  a  draft  legislative  proposal  No. 4456  (hereinafter  referred  to  as  the  “Draft

Act”) regarding:

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the redenomination of the capital of commercial companies in euro, which modifies the law

of 10 August 1915 regarding commercial companies, as amended; and

the differences that result from the application of the rules on rounding.

2. 

In  accordance  with  Article 1091 (2)  of  the  Treaty  establishing  the  European  Community

(hereinafter referred to as the “Treaty”), the ECB has taken over the advisory functions of the

European Monetary Institute (EMI), which went into liquidation upon the establishment of the

ECB on 1 June 1998. The ECB’s competence to deliver an opinion is based on Article 1.1, first

indent, of  the  Council  Decision  (93/717/EC)  of  22 November  1993  on  the  consultation  of  the

EMI by the authorities of the Member  States  on draft  legislative  provisions,  as  the  legislative

proposal contains  provisions  concerning  currency  regulation.  In  accordance  with  Article  17.5,

first sentence, of the Rules of Procedure of the ECB, this ECB Opinion has been adopted by the

Governing Council of the ECB.

3. 

The ECB welcomes the Draft Act since it aims (a) to facilitate the redenomination of the capital

of corporations in euro  through  a  procedure  which is less time  consuming  and  less  expensive

than the capital increase provided for under the laws of Luxembourg, and (b) to settle rounding

problems that may occur as a result of such redenomination.

The  Draft  Act  provides  that  the  types  of  commercial  corporations  specified  therein  may

redenominate their capital from any national currency unit (with the exception of the ECU) of

the  Member  States  of  the  European  Union  to  euro  from  1 January  1999  until  31 December

2001.  In  this  connection,  and  in  order to  avoid  rounding  problems,  the  shareholders’  meeting

may also decide to increase the capital up to E1,000 for small corporations or up to 4% of the

capital for large corporations. This provision will facilitate the smooth introduction of the euro

by  implementing  simple  and  inexpensive  measures  which  ease  the  redenomination  of  share

capital in euro, as well as by introducing the possibility of capital adjustment in the event that a

whole  amount  is  preferred.  Moreover,  the  non-par  value  share  principle  is  foreseen  in

Article 1(1)  in  parallel  with  a  mere  redenomination  of  the  share  in  euro.  This  provision  is

welcomed since it introduces flexibility and simplicity. This point was made in the Convention

of 4 May 1998, which states that non-par value shares should be encouraged in order to avoid

technical problems.

The Draft Act simplifies the procedure of the shareholders’ meeting. Furthermore, in the spirit

of Council Regulation (EC) No. 1103/97 of 17 June 1997, which provides, that from 1 January

1999, references to the ECU in legal instruments shall be replaced by a reference to the euro at a

rate of E 1 to ECU 1, the Draft Act states that the board of directors may replace the reference

to the ECU, in the event that the capital of the corporation is expressed in ECU in the corporate

charter,  by  a  reference  to  the  euro.  Obviously,  such  a  measure  would  not  constitute  a  capital

increase  because  it  shall  occur  by  operation  of  law  pursuant  to  Council  Regulation  (EC)

No. 1103/97 of 17 June 1997. The provisions of the law of 10 August 1915 regarding publicity

will still apply to the decision regarding the simplified capital redenomination in euro, which is

crucial in order to ensure the dissemination of information.

Article  5  amends  the  provision  of  the  law  of  10 August  1915  on  limited  liability  companies

(SARL)  regarding  the  minimum  par  value  of  the  shares.  According  to  the  Explanatory

Memorandum, this provision allows limited liability companies to express their capital in any

national currency unit other than Luxembourg francs; however, the minimum par value of the

shares  must  correspond  to  the  minimum  of  LUF 1,000.  This  particular  amendment  is  not

connected  to the scope  of the  Draft  Act,  which  concerns the redenomination  of  the  capital  of

commercial corporations in euro.

Article 6 of the Draft Act is declaratory in nature and states  that, if the  rounding  conventions

pursuant to the Council Regulation (EC) No. 1103/97 of 17 June 1997 are applicable, payments

effected or book entries constitute full repayment of the obligations and do not raise any liability

for  indemnification.  This  provision  is  welcomed  since  it  clarifies  any  uncertainties  that  may

arise with respect to the settlement of a debt.

4. 

The  ECB  confirms  that  it  has  no  objection  to  this  ECB  Opinion  being  made  public  by  the

competent national authorities at their discretion.

Done at Frankfurt am Main on 20 October 1998.

The President of the ECB

[signed]

Willem F. Duisenberg