A mandatory procedure

The law No. 2016-1691 dated December 9th, 2016 known as “Sapin II”, as well as Regulations No. 2017-1094 (June 12th, 2017) and No. 2018-824 (April 18th, 2018) transposed in French law an obligation resulting from a European Directive No. 2015/849 / EU dated May 20, 2015.
These provisions were issued regarding as to sanction money laundering more effectively, and to prevent the financing of terrorism.
The Ultimate Beneficial Owner (UBO) is a legal concept intended to designate the natural person who holds, directly or via another legal person, 25% or more of the capital or voting rights of a company. The definition is even extended to the individuals capable of exercising control over the governing bodies. It is therefore possible to have several UBO per company.
When it is impossible to identify such a natural person, and only after carrying out all relevant research (for which any entity must be able to justify when requested by the authorities), it is accepted, alternatively, to declare the legal representative(s) of the declaring entity (eg manager, president, etc.)

Being assisted by a lawyer to proceed with such a declaration

Who has to comply with the declaration?

All entities registered in the Commercial Court Register (excluding listed companies subject to other more stringent provisions) are concerned. It is therefore aimed at commercial companies (SARL, SAS, SA, SCA, SNC, …), civil companies (SC, SCI, SCM, SCP, …) but also Economic Interest Groups (GIE), associations, and collective scheme investment. Branches of foreign companies registered in France are also required to do so.

How to prepare the declaration?

The forms provided for this purpose (ie DBE-S-1, DBE-S-2 and possibly their annexes such as DBE-S-bis), should be completed. It is necessary to fill in as many forms as actual UBO identified. These must then be signed by the legal representative(s) of the declaring entity.

How to verify that the declaration is effective?

When you apply for your UBO declaration, whether it is electronic or postal, the Registry will provide you with a receipt that should be kept and stored by the company. This document must be updated in any event of a change in the situation of the UBO.

Complex cases

When the declaring company itself is involved in a complex chain of shareholding, the declaration must mention this chain, and can be traced back to the natural person or persons who can be identified as UBO.

Sometimes, identifying all shareholders do not allow to reach the
25% threshold, however the legislation also provided in these cases that they can be grouped together, as for instance if the capital and voting rights held by a family, they must be identified as such (“family group”) or when voting agreements exist between shareholders (eg shareholders’ agreement) as well. This will then be integrated into the category of people with control over management decisions.

Cost of this formality

For any newly incorporated entity after August 1st, 2017, the formality amounts to €23.62. It must be completed either at the time of filing the application with the Commercial Court, or at the latest within 15 days after the receipt of application.

For all entities incorporated before August 1st, 2017, this formality amounts to €54.42.

It should be noted that any changes in the UBO must also be subject to a new declaration, the cost of which is €46.41.

All of these costs correspond to the costs of the Commercial Court Registry expenses, and are exclusive of any fees you may have for any external assistance.

Sanction in case of absence declaration

The absence of a declaration is punishable by a fine of €7,500 (multiplied up to 5 times for legal personalities: €37,500) and up to 6 months of imprisonment for legal representatives and the declaring entity, excluding penalties. Additional sanctions can also be pronounced (ex: infringement from managing a company, injunction to submit the declaration, deprivation of civil rights …).

UBO declaration update

If the situation of your entity evolves, you are obligated to send a new declaration within 30 days of the event that changed the situation.

This is for example the case of a share transfer, a restructuring, a merger operation, a change of legal representative(s)… any situation that could impact the identity of the UBO.

Declaration assistance: better call your lawyer

A lawyer may be helpful in helping you determining the actual UBO, assist you in identifying the shareholding chain and the exact holding percentage calculation, verify the accuracy of information contained on the form(s) to be filed, and, more generally, secure you in this process. Indeed, in some cases where it is too complex to identify the actual UBO, it will be necessary to justify the steps and research carried out.

To obtain a fee proposal, please go to the contact form.