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 by clicking here. Please also see the article on the law on immobilisation of bearer shares and units published in our newsletter last November which can be consulted by clicking here.
Olivier Sciales
Chevalier & Sciales
Partner
Route de Thionville 51
2611 Luxembourg
Office: + 352 26 25 90 30
Fax: +352 26 25 83 88
Email: oliviersciales@cs-avocats.lu
website:
www.cs-avocats.lu
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.