All French unlisted legal entities to declare effective beneficiary before 1 April 2018, subject to criminal sanctions

Pursuant to a French Order dated 1 December 2016¹ which implements the EU anti-money laundering Directive² dated 20 May 2015, all companies established in France must identify their “effective beneficiaries” and shall file such information with the clerck of the Commercial Court which will keep a specific register in this respect.

This new filing obligation applies to legal entities registered as from 1 August 2017 but all entities registered before such date have an obligation to regularize their situation and make such filing before 1 April 2018.

• Companies/legal entities subject to this new obligation
  
  • All unlisted companies (civil and commercial) and economic interest groups (“groupements d’intérêt économique”) which have their registered office in France and have legal personality;
  • Foreign commercial companies which have one or several branches in France; and
  • All other legal entities which are required to be registered under French law (associations etc.).
• Timing applicable to this declaration
  • Companies/legal entities registered before 1 August 2017 shall file the relevant information no later than 1 April 2018.
  • Companies/Legal entities registered since 1 August 2017 shall file the relevant information together with the registration filing and no later than within 15 days as from such filing.
• Content of the declaration – concept of “effective beneficiary”
  • The French Order is not all that clear and a decree is awaited to provide details on the definition of “effective beneficiary”.
  • In short, “effective beneficiary” designates any individual who ultimately controls (holds at least 25% of share capital or voting rights or control by any other means), directly or indirectly, the concerned company/legal entity.
  • In some limited cases, the legal representative of the concerned company/legal entity shall be deemed the “effective beneficiary”.
• Sanctions

Failure to file the information or filing inaccurate or incomplete information is punished as follows:

• Natural persons: 6 months of imprisonment, a fine of EUR 7,500 and additional penalties such as the prohibition of running a business or partial deprivation of civil and civic rights.
• Companies/legal entities: fine of EUR 37,500 and additional penalties including notably dissolution of the legal entity, placement under judicial supervision, exclusion from public contracts, prohibition of making public offerings of financial securities or having its securities admitted to trading on a regulated market, publication of the decision.

The Corporate and M&A lawyers in Norton Rose Fulbright’s Paris office can assist you in complying with this new obligation within the tight deadline to avoid any potential sanctions.