On 22 June, at the close of its general meeting, the Institut Luxembourgeois des Administrateurs (ILA) elected Virginie Lagrange as the new chair of its board of directors. Lagrange replaces , who was completing her second term. Delano’s sister publication Paperjam spoke to both the incoming and outgoing chairs, asking them about their work and the changing role of directors.
Carine, how would you sum up your four years as chair?
Carine Feipel: The results have been positive. And on a personal level, it’s been a very productive four years. During this period, we strengthened the services we offer our members, particularly in terms of training: we created the Fund Governance Masterclass, a highly successful certification programme for fund and management company administrators that is truly unique in Luxembourg, and also launched training courses for directors in the insurance sector. That was a first.
Additionally, we issued many position papers on subjects such as diversity, sustainability and the independence of directors; clarified the position of directors in relation to the AML regulations after discussions with the justice ministry and the registration authority; and, after reviewing our governance, appointed a new CEO: .
How has the role of the director in Luxembourg changed over this period?
CF: The role of the board member has already become more professional, which comes alongside an increase in responsibilities. For all regulated companies, the expectations placed on boards of directors have risen sharply. Today, the regulator expects much greater involvement and decision-making on operational issues from directors. The days of “passive” directors are over.
We must continue to train independent directors who are familiar with Luxembourg regulations and the Luxembourg environment.
Virginie Lagrange: For me, the role of a director goes beyond the regulatory framework. Directors have to bring a vision, discuss the company’s strategy and positioning, its budget, how to generate revenue, ESG issues. These are all vital issues that just a few years ago were best left to management. Directors are now being asked to make their contribution. The idea that--for a daughter company--decisions are taken by the parent company is no longer acceptable.
This raises the question of whether there are enough directors in Luxembourg, particularly independent directors.
VL: There is a shortage of directors, especially in the regulated sectors--banks, funds, management companies, insurance companies--where regulatory expectations and responsibilities are increasingly important. Knowing all the regulations specific to these sectors is not easy. Clearly, we must continue to train independent directors who are familiar with Luxembourg regulations and the Luxembourg environment.
We are making progress. The ILA is working hard. But I think there’s still a lot of work to be done.
Would a shortage of directors not be detrimental to Luxembourg’s financial centre?
VL: Luxembourg is a small market, more limited than a place like Paris or London. It’s a market where people are asked to be in touch with the regulators, to speak three or even four languages and to have a certain number of skills besides those of a director. Finding such people isn’t easy, and training the candidates that do exist will continue to be necessary. Still, we shouldn’t think negatively: a new generation coming through, and we also have a programme called Aspiring Director, aimed at young people who want the job.
Ongoing training is really essential.
CF: There are plenty of people on the market, but because certain sectors have grown so specialised, requiring particular technical skills, we can’t always find people who are qualified or can invest the time to get trained properly.
That’s something we really emphasise at the ILA: being an administrator isn’t just about being appointed and then drifting down a long, quiet river. Ongoing training is really essential.
In view of these developments, should directorships be further limited?
VL: I think that the issue of term limits is ultimately a question of time commitment. The issue is not the number of directorships, but the number of hours a director can reasonably spend per year on this activity. And the regulations are moving in this direction. The CSSF has set rules on the number of hours required of a fund director.
Virginie, you have just been elected for a two-year term. What are your priorities and objectives?
VL: My priority is to ensure that the association remains the benchmark for all governance issues. The first objective is to continue to provide quality training that meets the needs of our members, practical training tailored to their day-to-day challenges. ESG, digitisation, AI… these maybe be buzzwords, but directors need to be able to grasp their day-to-day implications.
Another of my priorities is to gain recognition for the role of the corporate governance officer--commonly known as the company secretary--who, on a daily basis, is the pillar of support for board members. This is something we’d like to see promoted more widely.
With Alfi, ABBL, Luxembourg for Finance and Luxflag, we have a real ecosystem.
I’d also like to work more closely with other associations in Luxembourg. With Alfi, ABBL, Luxembourg for Finance and Luxflag, we have a real ecosystem. We have good contacts with Alfi, but not so much with the others. I’m going to try to put that right.
I’d also like to attract members from sectors where we have little or no presence at the moment, like healthcare, non-profit organisations and fintech.
As far as training is concerned, after launching a certification for investment fund administrators, we’re thinking about doing the same in the banking sector.
What are the major issues that are preoccupying you at the moment?
VL: The big issue--currently before the EU Court of Justice--is the VAT treatment of directors. The advocate general’s conclusions are expected in the next few days. The current system, which is unique in Europe, penalises directors. This is an issue that we would like to see resolved, with or without a court ruling.
There is also the latest version of the ATAD directive, in which independent directors are treated as external service providers. This generates additional reporting for companies, even if it’s an added value for them. That doesn’t help us at all. It’s also something I’d like to discuss with the government.
This article in French in Paperjam. It has been translated and edited for Delano.