All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

Securities that may take the form of bearer securities are, pursuant to Article L. 211-7 of the Monetary and Financial Code, financial securities admitted to the operations of a central depository . Furthermore, financial securities that are not mandatorily registered cannot be traded on a trading platform  except in bearer form . This includes shares issued by SICAVs, real estate investment compa …

Principle

Securities that may take the form of bearer securities are, pursuant to Article L. 211-7 of the Monetary and Financial Code, financial securities admitted to the operations of a central depository . Furthermore, financial securities that are not mandatorily registered cannot be traded on a trading platform  except in bearer form . This includes shares issued by SICAVs, real estate investment companies with variable capital, or professional real estate investment companies with variable capital .

Bearer securities are registered in an account maintained by an intermediary mentioned in Article L. 211-3 , and are transferred by account-to-account transfer . Since all financial securities are now only materialized by an entry in the securities account of the owner(s)  or for the benefit of the owner(s) in a shared electronic recording system , bearer securities are now anonymous only with respect to the issuing company. For the purpose of identifying their holders, the statutes may provide that the issuing company or a third party designated by it is entitled to request, at any time and at its own expense, that the information concerning the owners of its shares and the securities that immediately or eventually confer the right to vote in its own shareholders' meetings be transmitted to the company . The request for information may be made by a third party designated by the issuing company, for the purpose of collecting the information and transmitting it to the company . It may be addressed to a central depository, to the intermediaries mentioned in points 2 to 7 of Article L. 542-1 of the Monetary and Financial Code, to the intermediaries registered under the conditions provided for in Article L. 228-1 of the Commercial Code , and to any other person established outside France who provides services of administration or custody of shares or maintenance of securities accounts on behalf of securities owners or other intermediaries .

In companies whose shares are admitted to trading on a regulated market established or operating in a Member State of the European Union, the ability to identify the owners of bearer securities is a matter of right, any contrary provision in the statutes being deemed unwritten .

In accordance with para. II of Article L. 228-2 of the Commercial Code, any intermediary receiving a request for information must transmit the requested information, concerning the owners of securities and the intermediaries registered in its books, to the person designated for this purpose in the request. Furthermore, it must forward the request for information to the intermediaries registered in its books, unless expressly opposed by the issuing company or the third party designated by it at the time of the request. Finally, it is required to transmit to the issuing company or the third party designated by it, upon request, the contact details of the intermediaries registered in its books who hold shares or securities that immediately or eventually confer voting rights in the shareholders' meetings of the issuing company.

With regard to bonds, unless otherwise stipulated in the issuance contract and despite the silence of the statutes, any legal entity issuing bonds or negotiable debt securities, other than public law legal entities, has the option to request the identification of the holders of the securities under the conditions and in the manner mentioned above .

CMF, Art. L. 420-1, para. 1: “A trading platform is a regulated market within the meaning of Article L. 421-1, a multilateral trading system within the meaning of Article L. 424-1, or an organized trading system within the meaning of Article L. 425-1.”

In accordance with the third paragraph, when the company's equity securities or bonds have been admitted to trading on a regulated market and their owner does not have their domicile in French territory, as defined in Article 102 of the Civil Code, any intermediary may be registered on behalf of this owner. This registration can be made in the form of a collective account or in several individual accounts, each corresponding to an owner.

Commercial Code, Art. L. 228-2, I, para. 3.

Commercial Code, Art. L. 228-2, I, para. 4.

CMF, Art. R. 211-2, which designates as “authorized intermediaries” the credit institutions established in France; the investment firms established in France; the legal entities whose members or partners are indefinitely and jointly liable for debts and commitments, provided that these are the aforementioned institutions or firms; the legal entities established in France whose main or sole purpose is the activity of custody or administration of financial instruments, as well as those whose exclusive purpose is to administer one or more collective occupational retirement institutions; the Public Treasury; the Bank of France; the Post Office; the issuing institute of the overseas departments; the overseas issuing institute; the Caisse des Dépôts et Consignations; and under conditions set by the general regulation of the Financial Markets Authority, the credit institutions, investment firms, and legal entities whose main or sole purpose is the activity of custody or administration of financial instruments that are not established in France.

CMF, Art. L. 211-15. - See for an application, Cass. com., 19 May 1998, LawLex202200009186JBJ.

CMF, Art. R. 211-1.  For an illustration see CA Paris, 15 April 2021, LawLex202300005738JBJ, considering that ownership of bearer securities is not established by the person claiming it without proving their account registration after payment.  On the rules prior to the Finance Act of 1982, see Cass. 1re civ., 7 April 1998, LawLex202300005854JBJ, considering that the presumption attached to the possession of bearer securities exempts the possessor from proving their acquisition title and imposes on the claimant the burden of proving that this possession is flawed, or that the securities are actually held for another reason, such as a deposit; Cass. com., 15 July 1987, LawLex202300005888JBJ, specifying that ownership can, with a receipt, be established on bearer company shares deposited with a third party, as long as the registration of the securities' numbers on the deposit certificate provides specification, meaning it links them to specific securities; Cass. 1re civ., 8 February 1983, LawLex202300005889JBJ, holding that it is the banker's responsibility to ensure the holder's right to the securities, even if they are legally presumed to belong to the person in possession, as long as the circumstances under which they receive the securities are likely to arouse suspicion.

Commercial Code, Art. L. 228-2, I, para. 1 - See for an application, Cass. com., 15 December 2009, LawLex202300005835JBJ, holding that the fact that all the shares of a company are bearer shares does not in any way prevent it from implementing a mechanism that allows it to identify the holders of its securities, in order to benefit from the exemption from the tax on the market value of real estate owned in France by legal entities provided for by Article 990 E 2° of the General Tax Code.

Commercial Code, Art. L. 228-2, I, para. 2.

Company Law (en cours)

69. Principle

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69. Principle

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