The law on the immobilisation of bearer shares (the "Law") entered into force in Luxembourg on August 18th 2014 (the "Effective Date"). The Law aims to facilitate anti-money laundering efforts by improving transparency with regard to the identity of shareholders in Luxembourg companies.
The Law applies to bearer shares or units issued by the following commercial entities:
- SAs (société anonyme);
- SCAs (société en commandite simple); regulated investment funds (SICAVs (société d'investissement à capital variable) and SICAFs (société d'investissement à capital fixe); and
- contractual co-ownership schemes (fonds commun de placement).
The Law requires shares or units issued in bearer form to be deposited with a depositary authorised under the Law (the "Depositary"). Persons authorised to act as a Depositary include: credit institutions; asset managers; domiciliation agents; lawyers; auditors; accountants; and notaries.
The Depositary is responsible for maintaining the register of bearer shares in Luxembourg which shall include:
- details of the holder of the bearer shares;
- date on which the shares were deposited; and
- details of any transfers of such shares, or their conversion into registered form. The Depositary may not be a shareholder of the company.
The Depositary is responsible for holding the bearer shares on behalf of the shareholders and it is not authorised to transfer those shares, except to the company (in specific instances) or to a successor Depositary.
The holding of a bearer certificate is no longer sufficient evidence of ownership. Ownership of bearer shares is evidenced by a registration in the bearer share register.
The Law amends the law of 5 August 2005 on financial collateral arrangements in providing for the granting of security over bearer shares by way of the registration of a share pledge in the bearer share register.
The issuers of bearer shares issued prior to the Effective Date are subject to a transitory regime under the Law.
They are required to appoint a Depositary by February 18th 2015.
This includes having filed with the Luxembourg commercial register (Registre de Commerce et des Sociétés) and published in the legal gazette (Mémorial C) an extract of the decision to appoint the Depositary.
The bearer shares must be deposited with the appointed Depositary by no later than February 18th 2016. Voting rights attaching to bearer shares not deposited within this timeframe shall be suspended until such time as they are deposited.
Bearer shares issued after the Effective Date must comply immediately with the new regime. Therefore, the above mentioned deadlines are not applicable to such shares.
For further information on mandatory immobilisation of bearer shares and units, please see our dedicated Newsflash of January 2015.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.