Nouvelles obligations légales concernant les actions au porteur au Luxembourg

The bill of Law 6625 on the immobilisation of bearer shares (the "Bill") has been adopted by the Luxembourg Parliament on 16 July 2014 and entered into force on 18 August 2014.

The aim of the Bill is to align the legal regime on bearer shares with the call for vigilance and recommendations of the Financial Actions Task Force on the appropriate measures that countries have to take in order to prevent money laundering and terrorism financing by facilitating the access to the beneficial ownership and ensuring transparency.

1. Are bearer shares still authorised in Luxembourg ?

Holding bearer shares is still authorised under Luxembourg law. The outright ban was one of the FAFT recommendations regarding bearer shares. However, this option was not on the Luxembourg government agenda. The government has chosen a flexible way consisting on a deposit mechanism that ensures at any time the availability of information on the identity of bearer shareholders. As a consequence, the management body of any bearer shares issuer has to appoint a depositary. This obligation applies to existing bearer
shares and those to be issued.

2. What are the steps to be followed ?

Bearer shares must be deposited with the appointed depository and registered on the register held by the depositary as from their issuance. As regards bearers shares already issued, the issuer must :

- appoint a depositary within six months from the entry into force of the Bill. Otherwise, the rights attached to bearer shares are suspended ;
- deposit bearer shares within 18 months with the appointed depositary from the entry into force of the Bill. If this step is not completed, bearer shares must be cancelled and a capital reduction shall be made.Brucher Thieltgen & Partners |Avocats à la Cour

3. Who or which entity may be appointed as depositary of bearer shares ?

The depositary has to be established in Luxembourg amongst the following
professionals :
- credit institution ;
- asset manager ;
- distributor of UCIS shares;
- professional of the financial sector registered as family office agent, corporate domiciliation agent, professional providing company
incorporation and management services, registrars agent, professional depositary of financial instruments ;
- lawyer registered on lists I or IV of Luxembourg bar;
- notary ;
- statutory auditor and an approved statutory auditor;
- chartered accountant.

4. What is the Register of bearer shares ?

The bearer shares register contains the designation of the shareholder, the number of the held shares, the date of the deposit and the date of any transfer or conversion into registered shares. This register must be kept in Luxembourg in order to be accessible to the
authorities. Any shareholder can access to the register but only to take note of information relating to its shares.

5. How will the bearer shares be transferred ?

Any transfer of bearer shares must be registered on the abovementioned register. The declaration of transfer must be dated and signed by the transferor and the transferee, in accordance with article 1690 of the Civil Code. Such inscription on the register is the evidence of the ownership of the bearer shares.

6. What are the applicable sanctions ?

The rights attached to the bearer shares can only be exercised if the rules regarding the deposit have been complied with. The member of management body of any bearer shares issuer may incur a fine of up to EUR 125,000.00 if :

- they fail to appoint a depositary ;
- they fail to hold a register shares ;
- they recognise rights attached to bearer shares that have not been deposited.