Legal news 02 June 2020
In order to comply with the European regulations for anti-monetary laundering and countering terrorist finance, an order dated February 12, 2020[1], and two implementation decrees on the same day[2], which entered into force on February 14, 2020, were enacted to promote the mechanism for the companies’ declaration of actual beneficiaries (DAB). The purpose of this obligation is to enable the identification of the shareholders and the person(s) actually controlling the company.
For the record, since April 1, 2018, all the companies registered on the registry of trade and companies, with the exception of listed companies, must declare their actual beneficiary(ies) with the court registry of the Commercial Court.[3] The DAB must be established upon the registration request for the entity in question on the registry of trade and companies[4], and any new registration request must also be made within 30 days following any event requiring any rectification or specifications for the information declared[5].
WHAT MODIFICATIONS HAVE BEEN PROVIDED IN THE REFORM?
The key change involves rendering accessible to the public, gratuitously, a part of the information relating to the actual beneficiaries of the entities concerned. Prior to the order, only an exhaustive list of authorities and persons had access to this information. These persons and authorities (in particular, the court authorities, customs and public finance agents, and TRACFIN), the list of which was extended by order, shall continue to be entitled to access all the information communicated[6].
Furthermore, the name, first names, month and year of birth, nationality, country of residence, and the type and extent of actual shareholdings held in the given entity, are now freely accessible to the public[7]. By imposing on the given entities the requirement to declare the type and extent of the control carried out by their actual beneficiary(ies), the order requires that, in accordance with case law[8], a declaration be made mentioning the exact percentage of the capital held by the actual beneficiary holding more than 25% of the capital and/or voting rights of such entity, also affecting the principle of anonymity of the shareholders or stakeholders of public limited companies, at least for those which are actual beneficiaries.
According to the order, this free access to the public must be organized via the transfer, by the commercial court registry, of the relevant information to the National Institute of Intellectual Property (INPI), which shall make this information available via a specific platform[9].
WHAT SANCTIONS ARE APPLICABLE IN THE EVENT OF NON-RESPECT OF YOUR OBLIGATIONS?
The following sanctions, already incurred by the relevant legal entity or its legal representative in the event whereby the DAB is not filed or filed inaccurately or incompletely, were extended by order to the actual beneficiary, when the latter fails to communicate the information requested within a period of 30 days, or communicates incomplete or inaccurate information[10]:
- Up to 6 months imprisonment and fine of 7,500 euros (increased to 37,500 euros for legal entities);
- Management prohibition for individuals;
- Order, by the President of the Commercial Court, if necessary subject to a penalty, from communicating the information requested. It must be emphasized that the court registries already use this order for filing the DAB, and fines for up to 100€ per day overdue may be applied.
We remain at your disposal to assist you with the implementation of your obligations relating to the declaration of actual beneficiaries.
[1] Order no.2020-115 dated February 12, 2020.
[2] Decrees nos. 2020-118 and 2020-119 dated February 12, 2020.
[3] Articles L.561-46 and L.561-45-1 of the French Monetary and Financial Code.
[4] Article R561-55 of the French Monetary and Financial Code.
[5] Ibid.
[6] Articles L.561-46 and R.561-57 of the French Monetary and Financial Code.
[7] Article L.561-46 of the French Monetary and Financial Code.
[8] Order no. 2018S07031 dated May 18, 2018 by the President of the Bobigny Commercial Court and Lyon Court of Appeal, September 12, 2019, no.19/02040.
[9] Article 18 of the Order no.2020-115 dated February 12, 2020.
[10] Articles L.561-45-1; L.561-48 and L.574-5 of the French Monetary and Financial Code.
