14 Feb 2018

Obligation to file a document identifying the beneficial owner(s) of French companies

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The obligation for French companies to file information regarding their beneficial owner with the Companies' Registry is governed by:

  • the order n°2016-1635 of 1 December 2016 and the law n°2016-1691 of 9 December 2016 (known as the "loi Sapin II"), that are codified in articles L.561-2-1 to L.561-50 of the French Monetary and Financial Code ("MFC");
  • the decree n°2017-1094 of 12 June 2017 (the "Decree") codified in articles R.561-55 to R.561-63 of the MFC;
  • the decree n°2018-284 of 18 April 2018 codified in article R.561-1 of the MFC ; and
  • article L. 123-6 of the MFC.

I. Definition of beneficial owner

According to article R.561-1 of the MFC, a "beneficial owner" refers to the individual(s) who (i) either hold(s), directly or indirectly, more than 25 % of the share capital or voting rights of a company, or (ii) exercise(s), by any other means, control over the said company by effectively determining the decisions taken at the company's shareholders' meeting or having the power, as the company's shareholder(s), to appoint or dismiss the majority of the Board members (management Board and supervisory Board members).

II. Entities to which the obligation applies

The requirement to provide and keep information related to the beneficial owners applies to companies, economic interest groups (groupements d’intérêt économique) and other legal entities that must be registered with the Companies' Registry.

In fact, according to articles L.123-1 and L.561-46 of the MFC, companies and legal entities subject to this obligation are :

  • companies and economic interest groups having their registered office in a French territory and having the legal capacity;
  • commercial companies having their registered office located outside of a French territory and having a branch in one of those territories; and
  • other legal entities that have to be registered according to legislative and regulatory provisions.

III. Deadlines to comply with the filing obligation

With regards to the deadlines for filing the information on the beneficial owner(s), a distinction is made between companies registered before and after 1 August 2017.

a. Deadlines applicable to companies registered after 1 August 2017

For companies registered after 1 August 2017, the article R. 561-55 of the MFC states that the document relating to the beneficial owner's identity must be filed with the Companies' Registry of the Commercial Court (greffe du tribunal de commerce):

  • when the registration application of the company is filed with the Companies' Registry; or
  • at the latest, within fifteen (15) days as from the receipt of the certificate proving that the company's registration application has been filed.

Additionally, any updates in respect of the beneficial ownership must be filed with the Companies' Registry of the Commercial Court (greffe du tribunal de commerce) within thirty (30) days as from the occurrence of any fact or act requiring any modification of or addition to the information already provided.

b. Deadlines applicable to companies registered before 1 August 2017

Pursuant to the article 5 of the Decree, companies registered before 1 August 2017 must file the beneficial owner's information no later than 1 April 2018.

IV. Form and content of the document relating to the beneficial owner

Pursuant to article L.561-56 of the MFC, the document relating to the company's beneficial owner shall:

  • be dated and signed by the company's legal representative or the legal entity filing the information;
  • include the following information about the company or the legal entity:
    • name or business name;
    • legal form;
    • address of the registered office; and
    • where appropriate, its identification number completed by the mention "RCS" followed by the name of the city where its Companies' Registry is located;
  • include the following information relating to the beneficial owner:
    • names, used name, aliases, first names, date and place of birth, nationality, personal address of the individual(s);
    • form of control over the company or the legal entity; and
    • date on which the individual(s) became beneficial owner(s) of the company or the legal entity.

V. Sanctions

a. Imprisonment, fine and other penalties

Pursuant to article L.561-49 of the MFC, failure to file the document related to the beneficial owner with the Companies' Registry or filing a document containing inaccurate or incomplete information is punishable by six (6) months of imprisonment and a fine of seven thousand, five hundred (7,500) euros for individuals and thirty-seven thousand, five hundred (37.500) euros for legal entities.

Individuals convicted of this offense shall also incur the penalties of prohibition of management and partial deprivation of civil rights provided for in the French criminal code.

Legal entities found criminally liable for this offense shall also incur, in addition to the fine, the following penalties provided for in article 131-39 of the French criminal code:

  • dissolution, if the legal entity was created or, if such criminal offense is punishable by an imprisonment of three (3) years or more when committed by an individual, diverted from its corporate purposes to commit a criminal offense ;
  • placement under judicial supervision for a maximum period of five (5) years ;
  • permanent closure of one or multiple establishments of the company used to commit the offences in question or closure for up to five (5) years ;
  • disqualification from public tenders, either permanently or for a maximum period of five (5) years ;
  • prohibition to make a public appeal for funds, either permanently or for a maximum period of five (5) years ;
  • prohibition to draw cheques, except those allowing the withdrawal of funds by the drawer from the drawee or certified cheques, and the prohibition to use payment cards, for a maximum period of five (5) years ;
  • posting a public notice of the decision in question or publication of such decision in the written press or by means of electronic communication.

b. Injunction

Pursuant to article L.561-48 of the MFC, if the company has failed to file the document relating to its beneficial owner's identity, the president of the Commercial Court may, immediately or following a request from the public prosecutor or from any person having a legitimate interest, order the company to file this document, and if necessary, subject the company to a penalty.

Pursuant to article R.561-62 of the MFC, the president of the Commercial Court will issue an order in which he provides a time limit for filing the document, and where appropriate, a penalty rate.

VI. Disclosure of the document identifying the beneficial owner

Pursuant to article L.561-46 of the MFC, the document relating to the beneficial owner may be communicated only to:

  • the company or the legal entity that has filed the document;
  • without restriction, the following competent authorities, within the scope of their mission:
    • the judicial authorities;
    • the national financial intelligence unit;
    • the customs officials acting within the powers conferred by the French Customs Code;
    • the authorized agents of the public finance administration responsible for tax control and recovery in tax matters ;
    • the supervisory authorities mentioned at article L.561-36 of the MFC;
  • persons subject to the legislation and regulation on anti-money laundering and counter terrorism financing; and
  • any other person having a legitimate interest and duly authorized by the judge in charge of monitoring the Companies' Registry in which the company or the legal entity is registered.
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