LU - New law on dematerialized securities in Luxembourg
On 22 January 2021, Luxembourg published law of 22 January 2021 on dematerialized securities. This law modifies both the law of 5 April 1993 on the financial sector, as amended and the law of 6 April 2013 on dematerialized securities.
It aims to modernize the existing legal framework for dematerialized securities, notably by recognizing the possibility of using secure electronic registration mechanisms—including distributed electronic registers or databases—to issue dematerialized securities. The law recognizes the reality of distributed electronic ledgers or database technology. It aims to enable relevant actors to benefit from these innovative technologies in the context of dematerialized securities while remaining technologically neutral.
In addition, the law extends the application of the law of 6 April 2013 on dematerialized securities, by opening the activity of central account holders for unlisted debt securities to European Union (EU) credit institutions and investment firms. To guarantee high quality and security standards, these entities must have adequate infrastructure, control and security mechanisms in place, equivalent to those required for the authorization of central account holders. This is to ensure a level playing field between the various actors.