Link to the article: https://www.nomosparis.com/en/ultimate-beneficial-owner-beneficiaire-effectif-new-rules/

By Nomos | 21 October 2020 | Corporate

Ultimate beneficial owner (bénéficiaire effectif): new rules

Since August 1st, 2017[1], private companies  and associations registered with the Trade and Companies Register (Registre du Commerce et des Sociétés – RCS), as well as collective investment vehicles and Economic Interest Group (Groupement d’Intérêt Économique), are required to identify their “ultimate beneficial owners” (bénéficiaires effectifs) and to communicate this information to the clerk’s office of the competent commercial court.

As a reminder, the beneficial owner is the natural person who ultimately controls directly or indirectly the concerned legal entity:

–          either because he holds, directly or indirectly, more than 25% of the capital or voting rights of the concerned entity;

–          either because he exercises, by any other means, a power of control over its management or governing bodies or over its shareholders.

If no natural person can be identified according to the above criteria, the legal representative(s) will be considered as the beneficial owner of the legal entity.

An ordinance and two implementing decrees dated February 12, 2020[2] transpose into French law European Directive N°2018/843 of May 30, 2018 (also known as the “5th Anti-Money Laundering Directive”) in order to strengthen the national dispositive against money laundering and terrorist financing.

In this context, the regime of identification of the beneficial owners has been substantially amended, here are the most significant modifications.

Access to beneficial owners information

Until now, information related to the beneficial owners was not intended to be publicly available and was accessible only to a limited list of authorities and persons.

Only part of the information relating to the register of beneficial owners is now publicly available (which means to all), i.e. information on the surname, customary name, pseudonym, first names, month and year of birth, country of residence and nationality of the beneficial owners, as well as the nature and extent of their beneficial ownership in the company or entity.[3]

Access to the entire register remains restricted to certain authorities and persons whose list has been slightly extended by the ordinance.[4] Unlike the public, the additional information available to them are: the day and place of birth of the beneficial owner, his personal address and the date on which he became a beneficiary.[5]

Currently, in order to access the documents relating to the beneficial owners, a request should be sent by mail to Infogreffe legal service. Eventually, the register of beneficial owners will be available for consultation through a dedicated online platform which is scheduled to be legally set up for 2023.

Access to this information is free of charge, regardless how the information is consulted or communicated.[6]

Reporting of the beneficial owner to the RCS

The modalities for declaring the beneficial owners to the RCS have been modified, hence the information relating to the beneficial owners are no longer communicated by filing specific document annexed to the RCS but by a declaration to the RCS.[7]

Such a declaration to the RCS takes the form of Cerfa “M’BE” form. Unlike the specific document that  had to be signed by the legal representative of the concerned legal entity, the new Cerfa form allows an agent with a signed power of attorney to proceed with the declaration of the beneficial owner.

These new declarative terms and conditions as well as the new Cerfa form are now available on the Infogreffe website, on the clerk’s office of the commercial courts’ websites or on the chambers of commerce and industry’s websites. It is planned that this declaration can also be made through the dedicated online platform.

Previously, this declaration had to be made at the time of the application for registration at the clerk’s office or at the latest 15 days of the application; this additional 15-days period has been abolished.

A new document also had to be filed within 30 days of any fact or act that made it necessary to rectify or supplement the information mentioned in the declaration of beneficial ownership; a request for supplementary change will now have to be made.

New obligations and sanctions for beneficial owners

Until now, only the legal representatives of the legal entity (or the legal entity itself) were punished with a 6-month imprisonment sentence and a EUR 7,500 fine[8] (EUR 37,500 for legal entities) for failing to file the declaration of beneficial ownership or for providing inaccurate or incomplete information. Natural persons could also be subject to penalties of disqualification from management and partial deprivation of civic and civil rights.

The ordinance introduces the obligation, this time at the expense of the beneficial owners themselves, to provide companies and entities that so request with all the necessary information within 30 working days of the request.[9]

In case of failure to comply with this deadline or where the information provided by the beneficial owner are inaccurate or incomplete, the beneficial owner shall be subject to two penalties:

–          the company, or the entity concerned may refer the matter to the President of the commercial court, ruling in summary proceedings (référé), to force, if necessary by way of penalty payment, the transmission of such information[10]; and

–          the same criminal penalties as those abovementioned, incurred by the legal representatives of the concerned legal entity (or the legal entity itself), namely 6-month imprisonment sentence and a EUR 7,500 fine (or EUR 37,500 for legal entities), as well as an interdiction to manage for the natural persons.[11]

All of these provisions came into force on February 14, 2020. No particular procedures need to be taken with the clerk’s office except, of course, in the event of change of the beneficial owner.

[1] Ordinance n° 2016-1635 of December 1st, 2016 and the implementing decree n° 2017-1094 of June 12, 2017
[2] Ordinance n° 2020-115 its implementing decrees n° 2020-118 and 2020-119 of February 12, 2020
[3] Article L. 561-46, al. 2 and 14 of the Monetary and Financial Code
[4] Access extended to the judicial authorities and the national financial intelligence unit for instance
[5] Articles L. 561-46 and R. 561-56 of the Monetary and Financial Code
[6] Article L. 561-46, last paragraph, of the Monetary and Financial Code
[7] Articles L. 561-46 and R. 561-55 of the Monetary and Financial Code
[8] Article L. 561-45-1 of the Monetary and Financial Code
[9] Articles L. 561-45-2 and R. 561-59 of the Monetary and Financial Code
[10] Article L. 561-45-2, paragraph 3 of the Monetary and Financial Code
[11] Article L. 574-5 of the Monetary and Financial Code