The register of beneficial owners (RBE)

The European fight against money laundering and terrorist financing has pushed French corporate law into the era of transparency.

Thus, Order No. 2016-1635 of December 1, 2016 transposed the provisions of the European Directive into French law, by attaching the register of beneficial owners to the RCS.

Directive (EU) 2018/843 of the European Parliament and of the Council of May 30, 2018, amending the Directive on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, was proposed by the European Commission as early as July 2016, in the aftermath of the revelations of the "Panama Papers" case. It strengthened the procedures for keeping registers of beneficial owners. It has been transposed into French law by Order n°2020-115 of February 12, 2020 and Decree n°2020-119 of February 12, 2020, published in the Official Journal on February 13, 2020.

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1. THE LEGAL EFFECTS OF THE ELECTRONIC SIGNATURE

1.1. DEFINITIONS

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1.1.1. RBE

An integral part of the RCS, the register of beneficial owners lists the individuals who directly or indirectly hold more than 25% of the capital or voting rights of a company or who control it.

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1.1.2. DIRECT HOLDING

Direct ownership is characterized by the fact that the partner or shareholder is the direct owner of the corporate rights.

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1.1.3. INDIRECT HOLDING

The holding of securities is said to be indirect when the executive owns a company which itself owns the social rights of the company concerned by the obligation to declare a beneficial owner.

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1.1.4. NOTION OF CONTROL IN THE CONTEXT OF THE IDENTIFICATION OF THE BENEFICIAL OWNER

Article L.233-3 of the French Commercial Code distinguishes the cases in which control can be considered to exist. However, control in the context of the identification of the beneficial owner is understood only in the sense of 3° and 4° of I of article L.233-3 of the Commercial Code, namely :

" I. For the purposes of sections 2 and 4 of this chapter, any person, whether natural or legal, shall be deemed to control another person:

(3) When it determines in fact, by the voting rights it holds, the decisions in the general meetings of that company;

(4) When it is a partner or shareholder of such company and has the power to appoint or remove the majority of the members of the administrative, management or supervisory bodies of such company."

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1.1.5. DETERMINATION OF BENEFICIAL OWNERS

Article L.561-2-2 of the Monetary and Financial Code defines beneficial owners as the natural persons who own or control the company or on whose behalf a transaction or activity is carried out.

Natural persons are considered as such if they:

• Either hold, directly or indirectly, more than 25% of the capital or voting rights of the company;

• Or they exercise, by any other means, a power of control over the company, i.e. they determine in fact, by the voting rights they hold, the decisions in the company's general meetings or they have the power to appoint or dismiss the majority of the members of the company's administrative, management or supervisory bodies.

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1.1.6. DETERMINATION OF THE DEFAULT BENEFICIAL OWNER

When no natural person could be identified, the beneficial owner to be declared is the legal representative of the company. The following are therefore concerned :

• The manager of an SNC, limited partnership, SARL or civil partnership;

• The general manager of a corporation with a board of directors ;

• The sole managing director or the chairman of the board of directors of a corporation with a board of directors ;

• The President and, if applicable, the Chief Executive Officer of SAS.

If the legal representatives are legal entities, the beneficial owner is the natural person(s) who legally represent(s) this legal entity pursuant to article R561-1 of the Monetary and Financial Code.

Deputy General Managers are excluded from this restrictive list established by the text.

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1.2. SCOPE OF APPLICATION

The register of beneficial owners concerns :

• French companies (with their registered office in a French department), civil, agricultural and commercial, excluding those whose securities are admitted to trading on a regulated market and public establishments of an industrial and commercial nature;

• Foreign commercial companies (with headquarters outside the EU) with an establishment in France;

• Economic Interest Groups (EIGs) and European Economic Interest Groups (EEIGs);

• Other legal entities that must be registered with the RCS, such as associations that issue bonds or engage in manual foreign exchange transactions.

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2. RBE - LEGAL FRAMEWORK

2.1 RBE - FORM TO BE COMPLETED

The medium of the beneficial owner declaration has changed since the adoption of the provisions transposing Directive (EU) 2018/843 into French law.

Indeed, the DIBE (document for the identification of beneficial owners) is no longer valid since the availability of the new Cerfa forms on 09/03/2020.

From now on, entities subject to the BPR must make this declaration when registering the company using the M'BE form (Cerfa 16062*01).

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2.2 CONTENT OF THE DECLARATION

Article R.561-56 of the Monetary and Financial Code states that the BPR must contain:

"1° In the case of the company or legal entity, its name or corporate name, its legal form, the address of its registered office and, where applicable, its unique identification number followed by the words RCS followed by the name of the city where the registry office where it is registered is located;

2° With respect to the beneficial owner:

a) The name, surname, pseudonym, first names, date and place of birth, nationality, home address of the natural person(s);

b) The nature and terms of the control exercised over the company or legal entity referred to in 1°, determined in accordance with Articles R. 561-1, R. 561-2 or R. 561-3, as well as the extent of such control;

(c) The date on which the individual or individuals became the beneficial owner of the company or legal entity referred to in 1°."

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2.3 DECLARATION MODALITIES

It should be noted that :

• The companies and entities registered in the RCS before 01/08/2017 had a deadline expiring on 31/03/2018 to submit this information to the clerk's office.

• Companies and entities registered with the RCS as of 01/08/2017 had 15 days from the date of registration to submit them. If they have not done so, they will have to do so in the future in the form of a declaration to the RCS and no longer through the filing of a BE document.

• For a Company or entity registered with the RCS which is not a collective investment: "the information relating to the BE must be declared to the RC simultaneously with the application for registration in an M'BE insert following a M0 or M2 form (registration on transfer of registered office).

Since April 1, 2021, companies can complete this formality through the electronic business formalities window. Note: this option will be mandatory in 2023.

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2.4 UPDATING

Once the initial declaration has been made, it must be kept up to date in accordance with Article R.561-55 of the Monetary and Financial Code, which stipulates that a new declaration must be filed within 30 days of any fact or act that makes it necessary to rectify or supplement the information mentioned in the M'BE form.

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2.5 ADVERTISING THE SRB

The procedures for accessing information in the register of beneficial owners have been reformed (Article L.561-46 of the Monetary and Financial Code).

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Thus, a full copy of the declaration of beneficial ownership information can only be given to authorized persons upon presentation of a request for disclosure:

• Or directly to the clerk's office, in paper form;

• Either through the GIE Infogreffe.

Article R.561-58 of the Monetary and Financial Code states that, in the context of the implementation of due diligence measures, persons subject to the AML/CFT regime have access to all information relating to beneficial owners, provided that they have drawn up a declaration signed by the legal representative of the person subject to the AML/CFT regime or by a duly empowered person within the person.

This declaration includes the designation of the reporting person and, where applicable, its legal representative, and indicates that the reporting person belongs to one of the categories of persons defined in Article L. 561-2 of the Monetary and Financial Code.

Access to information relating to beneficial owners is free of charge, regardless of how the information is accessed or communicated.

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3. RBE - CONSEQUENCES OF FAILURE TO REPORT

3.1. THE DECLARATION INJUNCTION PROCEDURE

The president of the commercial court has the power to order the declaration of information relating to the beneficial owners to the RCS.

On its own initiative or at the request of the public prosecutor, or of any person having an interest in the matter, it has the power to issue orders to enjoin any entity to declare or have declared to the RCS the information relating to the beneficial owners, if necessary under penalty.

He may also appoint a proxy to carry out this declaration formality. If the person does not comply with the injunction, the clerk of the court shall notify the public prosecutor.

This is a similar mechanism to the one that exists for the order to file accounts, but the legal regime is not strictly identical.

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3.2. CRIMINAL SANCTIONS

Non-compliance with the obligation to declare information relating to beneficial owners or a declaration containing inaccurate or incomplete information is a criminal offence.

This is punishable by heavy penalties, pursuant to Article L.574-5 of the French Commercial Code, for both the individual and the legal entity committing the offence.

Individuals are liable to 6 months' imprisonment and a fine of 7500 euros and additional penalties:

• Prohibition to manage;
• Partial deprivation of civil and civic rights.

Legal entities are subject to a maximum fine of 37,500 euros and additional penalties:

• Dissolution;

• Placement under judicial supervision ;

• Facility Closure;

• Exclusion from Public Procurement;

• Prohibition on making a public offering or admitting securities to a regulated market (listed companies);

• Prohibition on issuing checks or using payment cards;

• Display of the decision or its dissemination by any means of communication

• electronic (e.g. publication on a website)