RCS declaration: the core of companies' obligations regarding beneficial owners

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Have you identified your company's beneficial owner(s)? This is a necessary step, but the work does not stop there. The central obligation arising from this identification is the official declaration of this information with the Registre du Commerce et des Sociétés (RCS). This is not a trivial formality: it is at the heart of the transparency system, and failure to comply can have serious consequences. This article explains what you need to know about this declaration: when, how and what to declare, how to keep it up to date, and what the risks are if you fail to do so. For an overview of the main obligations, see our summary article on the register of beneficial owners.

Registering with the registry: a compulsory formality

Before making your declaration, it is essential to understand the following who is considered to be a beneficial owner and how to identify them.

For most companies and entities registered in France (excluding listed companies, as discussed in our previous article), the declaration of information on beneficial owners is an essential legal obligation, as set out in article L. 561-46 of the French Monetary and Financial Code.

When and who should declare?

The key moment for the first declaration is when you apply to register your company with the RCS. This step should therefore be taken as soon as the company is set up. It is the company's legal representative (manager, chairman, etc.) or a designated agent who makes this declaration.

In addition to this initial declaration, don't forget the general obligation, set out in Article L. 561-45-1 of the French Monetary and Financial Code, to obtain and provide the following information keep accurate and up-to-date information on your beneficial owners throughout the life of your company. This updating obligation is an essential corollary of the initial declaration.

What information must be sent to the registry?

It is not enough to declare that a beneficial owner exists. Decree 2020-118 of 12 February 2020 confirms and clarifies the detailed requirements, putting an end to certain past interpretations. Article R. 561-56 of the Monetary and Financial Code precisely lists the information required:

• About your company or entity : its name or company name, its legal form, the address of its registered office and its unique identification number (SIREN) followed by the RCS and the town or city of the registry.  
• For each individual beneficial owner :
  • Name, surname, pseudonym, forenames.
  • Date and place of birth.
  • Its nationality.
  • Your personal home address.
  • La the nature, procedures and scope of the control on the company. This is an essential point that requires precision. It is not enough to state that you hold "more than 25%". You must specify the exact percentage of capital or voting rights held, directly and/or indirectly. If control is exercised by another means (shareholders' agreement, power of appointment, etc.), these procedures must be clearly described. Case law (confirmed by the 2020 decree) has been very clear on this need for precision (see, for example, T. com. Bobigny, 18 May 2018; CA Lyon, 12 Sept. 2019). The objective of transparency requires knowing how and to what extent the person controls the entity.  
  • The date on which this person became the beneficial owner.

It is therefore essential to provide complete and accurate information. A vague or incomplete declaration could be considered non-compliant.

Practical details of the declaration

How do you send this information to the registry? There are several options available to you, as detailed in Article R. 561-55 of the Monetary and Financial Code:

• Directly to the registry of the competent commercial court, by the legal representative or an authorised representative.
• Through the Business Formalities Centre (CFE) responsible for registration or modifications.
• Via the electronic one-stop shop for business formalities (guichet-entreprises.fr), which centralises the procedures. Electronic filing is possible, provided that a secure electronic signature is used (in accordance with article R. 123-77 of the French Commercial Code).

Transplants generally offer standard forms (such as forms DBE-S-1, DBE-S-Bis and their appendices) to make declarations easier. Although their use is not strictly compulsory - case law has accepted that a declaration on plain paper is valid if it contains all the information required (CA Lyon, 12 Sept. 2019) - these forms are very useful for ensuring that nothing is forgotten.

Finally, this formality has a cost. An order dated 1 August 2017 sets the fees charged by the registry for filing this information (around €20 on registration, and slightly more for subsequent amendments or declarations for companies existing before August 2017).

Keeping your declaration up to date: a permanent necessity

The initial declaration is not a one-off formality. The register must reflect the reality of your company's control at all times.

Events triggering an update

You must submit a amending declaration as soon as any fact or act making it necessary to rectify or supplement the information which have been declared (article R. 561-55 C. mon. fin.). This may include :

• The arrival of a new beneficial owner (for example, following an increase in capital, a transfer of shares, or the signing of an agreement).
• Loss of beneficial ownership by a previously declared person.
• A change in the personal details of a declared beneficial owner (change of personal address, change of surname, etc.).
• A change in the terms or extent of control exercised (for example, a shareholder increases its stake from 20% to 30%, or conversely from 30% to 20%).

On the other hand, if none of this information changes, there is no no need to make a new declaration each year (confirmed by ministerial reply no. 27006, JOAN 19 May 2020). The obligation is linked to the actual change.

The mandatory deadline: 30 days

Responsiveness is essential. The application for amending registration must be filed with the registry within a period of thirty days following the event that makes it necessary (article R. 561-55 C. mon. fin.). This period is short and requires constant vigilance with regard to changes in the control structure of your company.

Absence or error in declaration: what are the consequences?

Not declaring, declaring late, or providing inaccurate or incomplete information is not without risk. The legislator has introduced a number of mechanisms to ensure that these obligations are met.

Injunction proceedings to force your hand

If a company fails to file its declaration, or if the information provided is deemed to be incorrect or incomplete, the President of the Commercial Court may intervene. At the request of the public prosecutor, any person with an interest, or even on his or her own initiative, he or she may order the company to make the declaration or rectify itif applicable under penalty (article L. 561-48 C. mon. fin.). The astreinte is a financial penalty calculated per day of delay, which can quickly become very costly.

The Chairman may even appoint an agent (for example, a court-appointed administrator) to carry out these formalities at the company's expense. This is a restrictive procedure that signals a serious breach. The procedure is detailed in Articles R. 561-60 et seq. of the Monetary and Financial Code.

The regularisation procedure if a discrepancy is reported

Since the Order of 12 February 2020, another mechanism exists. Professionals subject to LCB-FT obligations (your bank, your chartered accountant, etc.) and certain authorities (ACPR, AMF, etc.) are now required to report any discrepancies to the Registrar that they observe between the information recorded in the RCS and the information they have on the beneficial owners (Article L. 561-47-1 C. mon. fin.).

When the Registrar receives such a report, he must invite the company concerned to regularise your file within one month. If the company fails to comply, the Registrar will refer the matter to the President of the Court, who may then initiate the injunction procedure described above. Important point: for as long as the discrepancy persists and is not corrected, the clerk of the court must mention this discrepancy on the RCS extract of the company, specifying what information it relates to (article R. 561-64 C. mon. fin.). Imagine the potential impact on your company's credibility with its partners.

Criminal sanctions: a real risk

Failure to comply with the reporting obligation is also a criminal offence. Article L. 574-5 of the Monetary and Financial Code is very clear: failure to declare the information required, or declaring information that is not required, is a criminal offence. inaccurate or incompleteis punishable by :

• For the individual manager responsible : six months' imprisonment and a fine of €7,500. In addition, there are possible complementary penalties such as a management ban or partial deprivation of civic rights.
• For the legal entity (the company itself) a fine of up to 37,500 euros (five times the fine for individuals), and other penalties such as the posting of the conviction or, in the most serious cases, dissolution.

These criminal penalties also apply to a company's failure to provide information on its beneficial owners when requested to do so by an AML/CFT professional as part of his due diligence obligations (reference from article L. 561-45-1 to article L. 574-5). The legislator's intention is therefore to use strong means to ensure that this information is not only declared, but is also accurate and accessible.

In addition to the penalties for the company, the beneficial owner may also be directly affected, and it is important to be familiar with the rules governing access to sensitive information.

The clerk's supervisory role

The clerk of the commercial court is not simply a receiver of declarations. He has an important formal control role. He must check that the information declared is complete, compliant texts, correspond to the supporting documents and are compatible with the company's file (article L. 561-47 C. mon. fin.).

If it finds any gaps or glaring inconsistencies (for example, unspecified ownership percentages, a discrepancy with the known partners for an unlimited liability company, a manifestly incorrect address, etc.), it can and must refuse registration of the declaration or request a regularisation (TC Bobigny case law, 18 May 2018). Once the declaration has been validated, the registrar enters it in the RCS and sends it electronically to the Institut National de la Propriété Industrielle (INPI), which centralises the data at national level.

The declaration of beneficial owners is an administrative formality with significant legal and criminal implications. Make sure that your declarations are complete, accurate and up-to-date. To benefit from expert, tailor-made legal support in commercial lawTo find out more about our services, including your regulatory compliance obligations, contact our firm.

Sources

• Monetary and Financial Code: in particular articles L. 561-45-1, L. 561-46, L. 561-47, L. 561-47-1, L. 561-48, L. 574-5, R. 561-55, R. 561-56, R. 561-60 to R. 561-64.
• French Commercial Code: in particular article R. 123-77.
• Penal Code: in particular articles 121-2, 131-26, 131-27, 131-38, 131-39.
• Decree no. 2020-118 of 12 February 2020.
• Order of 1 August 2017 on the regulated tariffs of the clerks of the commercial courts.
• Case law: T. com. Bobigny, 18 May 2018, no. 2018S07031; CA Lyon, 12 Sept. 2019, RG no. 19/02040.
• Ministerial reply no. 27006, JOAN Q 19 May 2020, p. 3545.

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