Failure to declare beneficial owners: risk of sanctions

Companies are now facing stricter consequences for failing to declare their beneficial owners. If a company does not declare its beneficial owners within three months after receiving a formal notice or an injunction, it may be removed from the Trade and Companies’ Register (RCS(1)).

Unlisted companies, including SARL, EURL, SAS, Sasu, SA, civil companies, and associations, must declare the identity of their beneficial owner(s) to the RCS either at the time of registration or within 30 days following any changes.

A beneficial owner is defined as a natural person:
- who directly or indirectly controls the company by holding more than 25% of its capital or voting rights,
- or who exercises control by other means.

Previously, companies that failed to comply with this requirement could receive an injunction from the president of the commercial court, potentially with a penalty, compelling them to make the declaration. Criminal sanctions exist, but they have not been widely enforced.

Automatic Removal from the RCS

Since June 15, companies failing to declare or update their beneficial owners’ risk automatic removal from the RCS. The clerk of the commercial court is now authorized to remove a company after three months have passed following formal notice, if the company has not complied.

The same applies if a company ignores an injunction from the president of the court for more than three months after notification.

If a company is removed from the RCS but later regularizes its situation, it may request the clerk to revoke the removal and be reactivated.

Important: It is important to note that removal from the RCS means the company ceases to exist legally.

(1) Registre du Commerce et des Sociétés (RCS)