Announcement

Luxembourg: Immobilisation of bearer shares and units issued by Luxembourg companies

Custody | Luxembourg

Reference

Code
A14178
Service level
CBL
Last Updated
22.12.2014

Further to Announcement A14138 of 30 October 2014, we wish to provide additional information with regards to the Luxembourg Law on immobilisation of bearer shares and units issued by Luxembourg companies (the “Law”).

Mandatory immobilisation of bearer shares and units

In July 2014, Luxembourg legislation was modified by adopting the new Law on the mandatory immobilisation of bearer shares and units. This new Law, that entered into force on 18 August 2014, introduced a new immobilisation mechanism that consists of registering bearer shares and units and the identity of their holders within a dedicated register, maintained by a professional depository.

A transition period has been defined for existing bearer shares and units:

  • Appointment of the depository by the issuer by 18 February 2015; and
  • Deposit of bearer shares/units with the appointed depository by 18 February 2016.

Supervisory boards of issuing companies and professional depositories that fail to comply with the new requirements shall incur civil and criminal sanctions, while for the shareholders, non-compliance with the immobilisation requirement may result in the suspension of their voting and distribution rights and finally cancellation of their holding.

Shares and units already immobilised with a Securities Settlement System or Central Securities Depository

The European Regulation on settlement and Central Securities Depositories (CSDR), that entered into force on 17 September 2014, mandates the immobilisation or dematerialisation of securities issued by EU issuers and traded on trading venues as well as their recording in book entry-form with a CSD.

Following our legal interpretation of the Law and based on the clarification published in the Luxembourg draft Bill 6625, securities that are held within a recognised Securities Settlement System (SSS), and transfers made by book-entry are to be considered as already immobilised within the meaning of the Law.

Therefore, it is our understanding that all bearer shares and units deposited with Clearstream Banking S.A. and Clearstream Banking AG are out of the scope of the Law.

This means that if a holding in bearer shares and units remains with CBL or CBF, no further action is required from issuers or from our customers or custodians with regards to this holding.

Shares/units in circulation

Our understanding of the main goal of the Law is the immobilisation of the physical bearer shares and units that are currently in circulation to allow the identification of their shareholders.

Therefore, only holdings in physical bearer shares and units are subject to the new Law’s requirements of identification (for example, new depository appointment for immobilisation purposes, certificates delivery and immobilisation, etc).

Alternatively, the holders of these bearer shares and units can decide to immobilise their securities through the recognised Clearstream SSS. To do so, they can simply deliver their bearer certificates to their bank or any other professional financial entity having an account with CBL or CBF.

Conversion of bearer shares and units

Registered and dematerialised securities are out of scope of the Law. In that sense, the conversion of the bearer shares and units into either registered or dematerialised form could be an alternative for the issuers, in order to comply with the Law’s requirements.

Further information

For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.