As part of the controversial anti-corruption ‘Sapin II’ law of December 2016, any non-listed French and foreign legal entities registered with the French Trade and Companies Registry before 1 August 2017 must comply with company beneficial ownership reporting obligations before 1 April 2018, or potentially face a fine of EUR 37,500.
In the context of the fight against money laundering, the executive Order of December 1, 2016 and the “Sapin II” law of December 9, 2016 created a new obligation for non-listed French and foreign legal entities registered with the French Trade and Companies Registry (companies, association, Economic Interest Groups etc..).
Since August 1, 2017, such legal entities have to disclose information concerning their beneficial owners. ? Legal entities registered before August 1, 2017 must comply with this obligation before April 1, 2018.
Who are the beneficial owners?
The current provisions of the aforementioned legal texts do not provide a clear definition of the “beneficial owners”. However, French commercial court clerks have published a notice providing their own definition of who should be regarded as beneficial owners.
According to that notice, the beneficial owner is defined as the individual(s) who either:
- (i) hold(s), directly or indirectly, more than 25% of the company’s capital or voting rights;
- or (ii) exercise(s) by any other mean a power of control over the management, administration or governing bodies of the company or over the shareholders meeting.
If none of the above criteria allows to designate a beneficial owner, it could be the individual who is directly or indirectly the legal representative of the company.
What are the reporting obligations?
Legal entities registered before August 1, 2017 have to file their declaration on the specific form available on the website https://www.infogreffe.fr/rbe (cf. document attached) and send it to the French Trade and Companies Registry where the entity is registered before April 1, 2018.
The cost related to the filing of the declaration with the French Trade and Companies Registry is €54.32 V.A.T. incl. per legal entity.
Failure to comply may lead to criminal penalties and could be punished by up to six months of imprisonment and a €7,500 fine for individuals (€37,500 for legal entities).
Despite the uncertainties around those new rules, and considering the criminal penalties that might apply, we highly recommend to comply with this obligation before April 1, 2018.