In an effort to prevent money laundering and fight the financing of terrorist activities, France has adopted requirements for the identification and registration of beneficial owners of corporations and other entities registered in France. The requirements were incorporated into French law as required of EU Member States by Directive (EU) 2015/849, approved in May of 2015. Those falling under the new requirements include all unlisted companies (civil and commercial) and economic interest groupings that have their registered office in France, foreign commercial companies having a French branch, and other legal persons required to register under French law.
This Jones Day White Paper explains the definitions, obligations, procedures, and potential penalties associated with the beneficial owner registration requirements.
As part of the fight against money laundering and the financing of terrorism, Directive (EU) 2015/849 of May 20, 2015, required EU Member States to set up national registers of beneficial owners of companies by June 26, 2017, at the latest. This requirement was incorporated into French law through the adoption of Ordinance N° 2016-1635 of December 1, 2016, reinforcing France's arsenal of measures to combat money laundering and the financing of terrorism ("Ordinance"), as well as through Implementing Decree No. 2017-1094 of June 12, 2017, amending the French Monetary and Financial Code ("MFC").1
Under these provisions, beneficial owners of corporations and other entities registered in France must now be identified and declared to the Registry of the Commercial Court.
BENEFICIAL OWNER IDENTIFICATION AND DECLARATION OBLIGATIONS
Persons concerned by the new obligations include (L. 561-46 of the MFC):
All unlisted2 companies (civil and commercial) and economic interest groupings (EIG, EEIG) that have their registered office in France and have "legal personality"; Foreign commercial companies if they have one (or several) branch(es) located in France; and All other legal persons required to be registered under French law (i.e., certain associations). Given the exclusion of listed companies from this requirement, it is possible that an unlisted company may be required to search and declare the identity of its ultimate beneficial owner(s), even though its listed parent company would not be required to do so. The provisions applicable to date do not provide for any exceptions for companies controlled by a listed company, neither with respect to the principle of the declaration obligation of their beneficial owner(s), nor with respect to the definition, in such case, of the beneficial owner(s). An alternative approach could have been to provide that in such cases the beneficial owner is deemed to be the listed company controlling the reporting person, and the various disclosure requirements applicable to listed companies (major holding notifications, disclosure of shareholders' agreements, disclosure requirements of the reference document, etc.) would have taken over from there.
SCOPE OF THE REQUIREMENTS CONCERNING BENEFICIAL OWNERS
Persons concerned by these requirements must (L. 561-46 of the MFC):
Obtain and maintain accurate and up-to-date information on their beneficial owners; and File a document with the Registry of the Commercial Court relating to the beneficial owner containing the identification elements and the personal domicile of the latter and the modalities of the control he/she exercises, to be annexed to the Commercial and Companies Registrar. WHAT IS A BENEFICIAL OWNER?
The definition and methods for determining the beneficial owner remain unclear. Indeed, the new provisions on the identification and declaration requirements use, by reference, the concept of "beneficial owner" as used in the provisions...