On 26 January 2015, the CSSF published Press Release 15/09 in which Luxembourg issuers of bearer shares and units were reminded of the final deadline for appointing a depositary in accordance with the Law of 28 July 2014 concerning the compulsory deposit and immobilisation of shares and units in bearer form (the "Law").
On 27 March 2015, the CSSF published its Press Release 15/16 (the "Press Release") alerting holders and issuers of bearer shares and units regarding further action to be taken by each of them pursuant to the Law.
The following is a summary of the key points addressed in the Press Release:
- Bearer instruments credited to a securities account: Holders of shares or units in bearer form which are credited to their securities account with a financial institution are not required to take any action. These shares or units are indeed immobilised, typically in a clearing and settlement system, and their holder can therefore be identified. If the relevant financial institution physically holds the bearer instruments it has credited to its clients, it will need to ensure compliance with the Law.
- In-scope securities: The securities listed below existing in physical individualised bearer form and issued by an issuer having its registered office (siège) in Luxembourg are within the scope of the Law:
- shares and units issued by public limited liability companies (sociétés anonymes, including where they have adopted the form of a European Company) and corporate partnerships limited by shares (sociétés en commandite par actions);
- shares in UCITS, alternative investment funds (AIFs), specialised investment funds (SIFs) and investment companies in risk capital (SICARs) which do not qualify as AIFs (together, "UCIs")) incorporated as an investment company with variable capital (SICAV) or an investment company with fixed capital (SICAF) and organised as a public limited liability company (société anonyme) or of a corporate partnership limited by shares (société en commandite par actions);
- units in UCIs set up as an FCP (Fonds Communs de Placement);
- Out of scope securities: The following securities are outside the scope of the Law:
- units issued by securitisation funds;
- depositary receipts representing bearer shares or units (eg. American Depositary Receipts (ADR), American Depositary Shares (ADS) or Global Depository Receipts (GDR)), as such depositary receipts are not per se shares or units;
- shares or units in bearer form deposited with a securities settlement system and represented by a global certificate or by securities under individualised physical form, as these securities effectively no longer are to the bearer or able to circulate by physical transfer but can only circulate by book entry.
We also remind that bearer bonds are outside the scope of the Law.
- Investors who physically hold in-scope bearer shares or units need to take action no later than 17 February 2016:
- they can deposit their shares or units in an account with a financial institution, with this option being generally only available if the relevant shares or units are cleared within a clearing and settlement system ;or
- they can elect to convert their bearer instruments into registered form (which option is always available) and/or, but only where the relevant issuer issues its shares or units in that form, in dematerialised form; or
- they can deposit their bearer instruments with the depositary appointed for that purpose by the issuer.
Holders are recommended to enquire with the issuer (and/or in the case of investors in UCIs, with the agent of the relevant UCI identified in its prospectus for obtaining information) regarding the identity of the appointed depositary and on how to effect the deposit of their bearer instruments.
The sanctions for failing to comply with the above requirements is the suspension of the voting rights and of the dividends rights attached to the relevant shares or units and this suspension will apply until compliance is achieved. Ultimately, bearer shares or units which are not immobilised before 18 February 2016, must be cancelled.
- Issuers of in-scope bearer shares or units and issuers of units in UCIs(1) :
These issuers should:
- ensure holders of their bearer shares or units receive clear and complete information on the implementation of the Law;
- inform the holders of the option to convert their securities into registered and/or, where available, dematerialised form and on the practical steps to be taken to that end;
- assist the holders in bearer form in the deposit of their securities with the appointed depositary.
The CSSF does not indicate how the information on the implementation of the Law should be communicated to holders except for issuers of units of UCIs which are required to either publish a notice in at least two newspapers (one of which at least must be a Luxembourg newspaper) with adequate dissemination or make an adequate insertion in the convening notices published with respect to the upcoming annual general meeting.
- CSSF monitoring: The CSSF will monitor compliance with the Law by those professionals which are under its supervision (credit institutions, private portfolio managers, distributors of units in UCIs, specialised professionals of the financial sector (PFS) approved as Family Office, corporate domiciliary agents, professionals providing company incorporation and management services, registrar agents, professional depositaries of financial instruments, réviseurs d'entreprises (statutory auditors) and réviseurs d'entreprises agréés (approved statutory auditors)) and which have been appointed as depositary of bearer shares or units under the Law. The CSSF will by separate communication specify to those professionals its particular requirements including in terms of reporting. The CSSF will act in the same manner with respect to the issuers of securities within the scope of the Law and which are under its supervision.
See also the article on the update of the CSSF FAQ on the Law of 28 July 2014 regarding immobilisation of bearer shares and units published in the "Asset Management and Investment Funds" section of our newsletter.
(1) UCIs in corporate form and management companies of FCPs.