CSSF press release on urgent reminder to companies to appoint a depository of bearer shares by 18 February 2015

The CSSF issued on 26 January 2015 a press release in respect of “urgent reminder to companies: 18 February 2015, final deadline for appointing a depositary of bearer shares and units”. The CSSF reminds all public limited liability companies (sociétés anonymes), limited partnerships by share capitals (sociétés en commandite par actions) and management companies of UCI incorporated under the form of mutual funds (FCP) which issued bearer shares or units that they must designate for 18 February 2015 at the latest a depositary for these titles.


CSSF publishes FAQs on bearer share immobilisation law

The CSSF has published on December 30 last year a set of frequently-asked questions and responses regarding the impact on Luxembourg-domiciled investment funds of the legislation of July 28, 2014
regarding immobilisation of bearer shares and units.
In addition to definitions of terms used in the legislation, the Q&As clarify points such as the date of entry into force of the law (August 18, 2014), and the types of funds it affects (UCITS, UCIs, SIFs and SICARs incorporated in the form of an S.A., S.C.A. or FCP and that have issued bearer shares or units which are still outstanding).
The legislation obliges the board of directors or management board of the fund or its management company to appoint a depositary (not necessarily the depositary used by the fund for the safekeeping of its assets) and obliges the holder of bearer shares or units to deposit them with the depositary. Criminal sanctions are applicable to the management board of investment funds and depositaries in the event of non-compliance. A service provider to the fund (registrar, transfer agent or depositary bank) may be appointed as depositary for the purposes of immobilising bearer shares.
Bearer shares or units issued after August 18, 2014 must be deposited with the depositary immediately on their issue. Entities with pre-existing bearer shares had six months – up to February 18 to comply, after which the voting rights linked to the shares or units must be suspended and payment of distributions deferred.
At the latest 18 months after the entry into force of the law, by February 18, 2016, bearer shares and units not deposited with the appointed depositary must be cancelled. The same deadlines apply to shareholders or unit holders to deposit their securities. In the event of cancellation, the cash equivalent or if need be other assets of equivalent value will be deposited with Luxembourg’s Caisse de consignation.
The Q&A document can be consulted at http://www.cssf.lu/fileadmin/files/Metier_OPC/FAQ/FAQ_Law__28_July_2014_v1.pdf. Please also see the article on the law on immobilisation of bearer shares and units published in our newsletter last November (https://www.cs-avocats.lu/2009/wordpress/wp-content/uploads/chevalier-sciales-quarterly-luxembourg-newsletter-November-2014.pdf)

Changes to Luxembourg's bearer shares regime

The law of July 28, 2014 regarding the immobilisation of shares and bearer shares and the the registers of registered shares and of bearer shares has been published in Luxembourg’s Official Gazette on August 14, 2014, The legislation, which amends the law of August 10, 1915 on commercial companies and that of August 5, 2005 on financial collateral arrangements, also reflects Financial Action Task Force recommendations on appropriate measures to guarantee the transparency of shareholdings in Luxembourg companies.

The law aims to facilitate identification of the beneficial ownership of bearer shares and the ability of the authorities to combat money laundering and terrorist financing. The new rules oblige the management body of the Luxembourg company to deposit bearer shares with a professional depositary and immobilise them through a share register.


The following entities fall within the scope of the law:
– Public limited companies (S.A. or société anonyme);
– Partnerships limited by shares (S.C.A. or société en commandite par actions);
– Investment funds such as SIFs (specialised investment funds), SICAVs (open-ended investment companies), SICARs (risk capital investment companies) and FCPs (mutual fund).
The legislation applies to existing bearer shares and those yet to be issued, which must be deposited with a professional depositary appointed by the board of directors or the management board.

Conditions regarding the depositary

The depositary may not be a shareholder of the issuing company and must be one of the types of professional entity:
– Credit institutions;
– Private portfolio managers;
– Distributors of fund shares and units;
– Specialised financial sector professional entities (PSFs) approved as family offices, domiciliary agents, providers of incorporation and management services, registrar agents or professional depositaries of financial instruments;
– Lawyers (lists I and IV);
– Notaries;
– Statutory auditors and approved statuary auditors; and
– Chartered accountants.
The depositary must be located in Luxembourg and keep a register of the deposited shares containing information on the owner, the number of bearer shares held, the date of the deposit, transfers of bearer shares (with notice of transfer) or their conversion into registered shares (if applicable). The rights relating to bearer shares can be exercised only if they have been deposited with the depositary and the required information has been provided.

Shareholder rights

– Right to consult: a holder of bearer shares is only allowed to consult his/her/its registrations in the register.
– Ownership rights: the right of ownership is subject to registration of the bearer shares in the register and provision of the information. The depositary holds the bearer shares or units on behalf of the their owner. A certificate confirming registration of bearer shares can be delivered by the depositary at the shareholder’s written request.
– Right to transfer: A transfer of bearer shares becomes enforceable upon its inscription in the share register, on the basis of documents or notice, delivered to the depositary, establishing the transfer of ownership of the shares between the transferor and the transferee.
– Dispossession of a security by registration: the dispossession of bearer financial instruments deposited with the depositary under article 42 of the amended law of August 10, 1915 on commercial companies can occur by registration of the security in the margin of the registration of financial instruments on the depositary register.
Managers or directors of the company may incur a fine of between €5,000 and €125,000 if they wilfully fail to comply with their obligations (i) to maintain a register of registered shares, (ii) to designate a depositary (iii) to suspend the rights of holders of bearer shares that do not comply with the provisions of the law or (iv) cancel bearer shares not deposited in accordance with the provisions of the law.
Key dates