As per our previous article dated 2014 in relation to the law dated July 28th 2014 on the immobilisation of shares and corporate units in bearer form and the keeping of the register of shareholders of registered shares and of bearer shares (the Law), this shall be a concise reminder about main provisions contained in the Law and the impact of the transitory provisions therein.
Who is concerned?
The Law applies to Luxembourg public limited liability companies (société anonyme), corporate partnership limited by shares (société en commandite par actions), European companies (société européenne) and FCPs (each refered hereafter to as an Issuer).
Please note that the Law does not provide for any exemption for listed companies, which consequently must apply the rules provided under the Law in case of issuance of bearer shares or corporate units.
The management bodies of an Issuer falling under the scope of the Law must appoint a depositary amongst the limitative list, provided therein, of authorised persons to act as depositary, which are all subject to strict anti-money laundering regulations.
Who are the authorised depositary?
The depositary cannot be shareholder of the Issuer and must be established in Luxembourg.
May only be appointed as depositary in compliance with the Law, the following persons:
- credit institutions (établissements de crédit);
- asset manager (gérants de fortune);
- distributors of units/parts in UCIs (distributeurs de parts d’OPC);
- specialised professionals from the financial sector approved as Family Office, corporate domiciliation agents (domiciliataires de sociétés), professionals providing company formation and management services (professionnels effectuant des services de constitution ou de gestion des sociétés); registrar agents (agents teneurs de registre), or as professional custodians of financial instruments (dépositaires professsionels d’instruments financiers);
- lawyers registered on lists I and IV at the Luxembourg Bar;
- statutory auditors (réviseurs d’entreprises) and approved statuary auditors (réviseurs d’entreprises agréés); and
- charted accountants (experts-comptables).
Obligation of the authorised depositary?
The depositary will maintain a register where the ownership of bearer shares or corporate units will be recorded. Such register must contain information concerning the bearer shareholders or corporate unitholders, for instance, their identity, the indication of the number of shares or corporate units owned, date of deposit, date of transfer (if any), date of potential conversion into registered shares (if applicable).
A shareholder is only allowed to consult the entries, in the said register, which concern its own shares or corporate units. However, bearer shareholders or corporate unitholders may request in writing to be provided with a certificate containing all the entries related to them.
The depositary is strictly prohibited to dispose of the bearer shares or corporate units, except in the following cases where he must deliver the bearer shares or corporate units to:
- its successors in the event of cessation of its duties; or
- the Issuer, in the event of (i) conversion of the bearer shares or corporate units into registered shares; (ii) share buyback by the Issuer in compliance with article 49-2 and 49-3 of the Luxembourg law on commercial dated August 10th 1915, as amended (the Company Law); and (iii) capital decrease according to article 69-1 of the Company Law.
Obligation of bearer shareholders or corporate unitholders?
Shareholders or corporate unitholders must ensure that their bearer shares or corporate units are deposited with the depositary in accordance with the Law as explained above.
Entry into force and transitory period?
The Law entered into force on August 18th 2014 and all provisions were immediately applicable.
For Issuers that have issued bearer shares or corporate units, prior to August 18th 2014, the Law provides for a six months transitory period starting on the same date, for the appointment of a depositary.
The transitory period is coming to an end on Febuary 18th 2015.
In other words, the transitory period is coming to an end on Febuary 18th 2015, date at which the Issuers must have appointed a depositary, which will hold the bearer shares or corporate units issued by them in deposit. Within the same timeframe, bearer shareholders or corporate unitholders must deposit their bearer shares or corporate units with the depositary so appointed.
Members of the management bodies may incur a fine amounting from Euro 5,000 to Euro 125,000 in the case they knowingly :
- did not designate a depositary;
- recognised rights of bearer sharesholders or unitholders having failed to deposit their shares or corporate units with the depositary and regarding which the required information have not been registered in the captioned register of bearer shares or corporate units; and
- did not cancel the bearer shares or corporate units non deposited, and did not proceed with the reduction of the corporate capital and deposit of the funds to the “Caisse des consignations”.
August 18th 2014
Date of entry into force of the Law.
February 18th 2015
Last date for appointment of a depositary by the management of the corporate bodies of the Issuer.
February 18th 2015
Last date for the bearer shareholders or corporate unitholders to deposit and register their bearer shares or corporate units with the depositary. In the absence thereof, the voting rights attached to such bearer shares or corporate units will be suspended.
February 18th 2016
Ultimate date for deposit of the bearer shares or corporate units with the depositary.
February 18th 2016
Failing the valid deposit and registration of the bearer shares or corporate units within the depositary at this ultimate date, the bearer shares or corporate units must be canceled and a corresponding decrease of the corporate capital of the Issuer must be performed.