Independent Directorship & Governance

No. There is no general rule requiring a Luxembourg company or special purpose vehicle (SPV) to appoint a Luxembourg-resident director. What matters in practice is where decisions are actually taken. Board composition, the location of decision-making and the way the board really operates all feed into governance, tax-residence and substance analysis, which is why many sponsors appoint at least one Luxembourg-based director even though no rule compels them to.

No, not on its own. Substance depends on whether important decisions are genuinely considered and taken at the appropriate level in Luxembourg, rather than being settled elsewhere and formalised locally afterwards. A Luxembourg director supports substance only to the extent that the director actually exercises judgement.

An independent director adds most value where the board faces decisions with real consequences and potentially divided loyalties: acquisitions, disposals, financing and refinancing, distributions, related-party transactions, conflicts of interest, valuation questions and cross-border structures. Investment funds, general partners (GPs), holding companies and SPVs involved in any of these commonly appoint one.

Understand the entity, obtain and read the information needed to decide, challenge proposals where the analysis does not hold up, and act in the corporate interest of the entity, taking account of its financial position, contractual obligations and conflicts of interest. The role is decision-making, not document-signing.

No. A director may take the shareholder’s strategy and the group context into account, and usually should, but remains personally responsible for exercising independent judgement and for the duties owed to the entity being managed. The practical test is whether each board decision can be justified at the level of the Luxembourg entity itself.

Very, particularly for material transactions. Minutes are the primary evidence that a governance process took place. They should record what was considered, what questions were asked, which conflicts were identified and how they were handled, and what was decided. Minutes that recite a pre-agreed resolution and nothing else are weak evidence precisely when the evidence is most needed.

Amana deliberately maintains a reasonable and controlled portfolio of mandates rather than seeking to maximise the number of appointments held by his director. Capacity is assessed before accepting every new mandate, taking into account the expected workload, number and complexity of investments, investor base, transaction activity, regulatory status and other professional commitments.

There is no single CSSF limit that applies to every independent director in Luxembourg. For members of the governing body of a Luxembourg investment fund manager subject to Circular CSSF 18/698, however, the CSSF uses supervisory thresholds of 20 mandates in regulated entities and operating companies and 1,920 hours of professional engagements per year. These thresholds may need to be reduced where the nature, scale or complexity of the activities requires more time, and the CSSF may treat certain related mandates as a single mandate in specific circumstances.

Amana’s objective is to retain sufficient capacity so that each director can properly prepare for meetings, review documentation, remain available when transactions arise and devote the necessary attention to every client.

Where the client already maintains adequate Directors’ and Officers’ liability insurance (D&O) and Amana is satisfied that the appointed director is appropriately covered, Amana can rely on that policy. The adequacy of the cover is reviewed as part of the acceptance process, including the scope of coverage, exclusions and, where relevant, run-off protection following the end of the mandate. Where appropriate D&O cover is not provided by the client, Amana may charge a separate D&O insurance fee or contribution. The insurance arrangements are agreed before appointment and documented in the engagement terms.

Amana generally operates on a fixed annual fee basis so that clients have cost certainty and are not charged according to the number of board meetings held. The annual fee covers the ordinary directorship mandate, including scheduled and ad hoc board meetings, without a numerical limit on the number of board meetings. The fee is determined before accepting the mandate and reflects the actual complexity and expected workload of the structure, including factors such as the size of the structure, number of entities involved, number and nature of investments, number and profile of investors, regulatory status, transaction activity and overall governance requirements.

If the scope of the mandate subsequently changes materially — for example through a significant expansion of the structure or responsibilities — any adjustment would be discussed and agreed with the client rather than resulting in unexpected time-based charges.

An Amana director can typically be appointed within one to two weeks, provided that the information required for Amana’s acceptance and KYC process is supplied promptly and the necessary shareholder resolutions or other appointment documentation are prepared without delay. Before accepting a mandate, Amana completes its conflict and capacity checks, performs KYC on the relevant structure and parties, reviews the constitutional and other relevant documents and agrees the engagement terms. Where all requested information is available from the outset, the appointment process can therefore move relatively quickly. Delays generally arise where KYC information, structural documentation or corporate approvals remain outstanding.

Under Amana’s current standard directorship terms, either party may terminate the engagement for convenience on 60 calendar days’ prior written notice. Upon termination, Amana seeks to ensure an orderly handover. This includes cooperating with the company and, where applicable, the incoming director, transferring relevant company documents held by the outgoing director and providing reasonable assistance so that outstanding governance matters can be transitioned appropriately.

The necessary corporate actions and RCS filings should also be completed promptly so that the public record accurately reflects the composition of the governing body.

Yes, for Luxembourg investment structures and corporate vehicles, with a focus on informed decision-making, independent challenge and direct senior-level involvement rather than delegated attendance.

Further reading: our note on advisory and consulting engagements, and on the commissaire à la liquidation mandate.