The objectives of transparency and the fight against money laundering and terrorist financing imposed by European law have led to the adoption of a new system which requires certain groups, essentially companies, to identify and declare their beneficial owners, i.e. the individuals who ultimately own or control the entity or on whose behalf a transaction or activity is carried out.
How is beneficial ownership controlled in France?
Transparency and the fight against money laundering and terrorist financing require groups to declare their beneficial owners under the EU's 4th Anti-Money Laundering Directive and French Order No. 2016-1635.
Thus, entities required to register with the Trade and Companies Registry must comply with this reporting regime, including cooperative societies and economic interest groups.
- Non-profit organizations such as associations do not have beneficial owners due to their legal nature.
- Companies whose only partners are non-profit legal entities must file a default return, identifying the legal representative of the company or the individual indirectly holding that position.
- Associations and foundations that issue bonds and are required to register with the Trade and Companies Registry must also declare their beneficial owners, who must be natural persons who directly or indirectly hold more than 25% of the capital and/or voting rights of the entity, or who exercise control over the administrative bodies.
In the absence of natural persons fulfilling these conditions, the beneficial owner will be the legal representative of the reporting entity.
What is the content of the declaration of beneficial owners?
Since French Ordinance No. 2020-115, information relating to the name, surname, pseudonym, first names, month, year of birth, country of residence and nationality of beneficial owners and the nature and extent of their beneficial interests in the company or entity is publicly available free of charge, regardless of the manner of access or disclosure.
The declaration of beneficial owners must be filed by the company or entity with the clerk of the commercial court of the place of its registered office in order to be annexed to the trade and companies register.
Since French Ordinance No. 2020-115 and French Decrees No. 2020-118 and No. 2020-119 of February 12, 2020, information relating to beneficial owners is no longer communicated by filing a specific document attached to the Registry of the Commercial Court, but by a declaration directly to the register of beneficial owners.
Failure to file the document relating to the beneficial owner is punishable by up to six months' imprisonment and a fine of €7,500.
Information on beneficial owners is accessible to certain authorized persons and authorities, such as reporting companies or legal entities, competent authorities such as TRACFIN, or persons subject to the fight against money laundering and terrorist financing.
French law governing the beneficial owner:
- Monetary and Financial Code, art. L. 561-2-2art. L. 561-46 ff., R. 561-1 ff.
Basic decision:
- T. com. Bobigny, May 18, 2018, n° 2018S07031