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Immobilisation of Shares and Bearer Shares

1. Context

In order to meet the recommendation to prevent money laundering or financing of terrorism supported by the Financial Action Task Force (FATF), the Bill 6625 relating to the immobilisation of shares and bearer shares has been introduced before the Chamber of Deputies on October 4th, 2013 and passed on July 16th, 2014.

2. Objectives

The purpose of this bill is to strengthen the transparency of beneficial owners of legal entities and regulate the issuance and circulation of bearer shares.

3. Measures

The bearer shares shall be deposited and secured with a professional depository, who cannot be the shareholder of the issuing company, appointed by the board of directors of the company. Attorney at law may be appointed as a depository. The depository shall hold a register of the bearer shares and the identification of shareholders. The shareholding of bearer shares shall be established by registration in the share register. Therefore, the transfer of bearer shares shall not operate by simple “tradition” of the title, but by a registration in the share register.

4. Transitional Period

As the regulation would apply to all shares and bearer shares already issued before the new law enters into force, transitional periods are set forth. Different periods have been established: - Appointment of a depositary within 6 months from the entry into force of the new provisions by the issuer. - Deposit of shares or bearer shares with the depositary within 18 months from the entry into force of the new provisions to carry out their registration by the shareholders. - Where the titles have not been deposited within 6 months, the voting rights attached to the titles shall be suspended until their immobilisation. - The shares that have not been transferred within an 18-month period shall be cancelled and the issuer must carry out a reduction of its corresponding subscribed share capital.

5. Sanction

In the event of a breach of the obligations by the depositary or the organs of management, they may incur a fine of up to EUR 125,000.

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