The law on 1st March 2019 (the “Law”) amending the Luxembourg law of August 1st 2001 on the circulation of securities (the “2001 Law”) was published on March 5th 2019, marking a further significant step in the modernisation of the legal framework governing the Luxembourg financial sector. The Law will enter into force on 9th March 2019.
The Law introduces a single new Article 18bis which extends the scope of the 2001 Law by specifying that securities may be booked and transferred through secure electronic recording devices, in particular through distributed ledgers such as blockchain, thus providing an alternative to the dematerialisation processes already known in law and practice.
Transfers of securities recorded through such recording devices shall be considered as transfers between securities accounts and the use of such recording mechanisms shall not affect the fungibility of the securities.
For the sake of legal certainty, the second paragraph of the new Article 18bis clarifies that the use of these secure electronic recording devices shall have no effect on the positions of the securities held with the relevant account holder, nor the validity or enforceability of any security interests or guarantees created in accordance with the Luxembourg law of August 5th 2005 on financial collateral arrangements, as amended.