Immobilisation of securities

As part of the international effort for greater transparency in financial activities, the Luxembourg government has taken new measures by introducing the law on the immobilisation of bearer shares and units, in order to identify the shareholders of Luxembourg companies and funds (including fund units).

This Law of 28 July 2014 came into force on 18 August 2014 and affects all issuers of Luxembourg shares and shareholders (irrespective of their place of residence).

The ABBL would like to call upon its members, issuers and shareholders who may be affected by this law.

1) Who is affected?

  • Commercial companies under Luxembourg law, notably SMEs and funds which have issued bearer shares or units. With regard to funds, please refer to the FAQ which have been published on this topic by the CSSF;
  • Any person who owns bearer shares or units in a Luxembourg company.

2) What does the law entail?

This law requires the mandatory deposit of bearer shares by their owner with a professional depositary designated by the management company.

3) What is meant by immobilisation?

Immobilisation consists of physically handing over bearer shares to the designated depositary, who will from now on hold the bearer shares and will register the shareholder on the register of bearer shares, for which he is responsible.

Ownership of the bearer shares is thus established by filing this information on the register. From now on, the ownership of bearer shares is the result of inscribing them on the register and not through physical ownership of the securities.

4) What are the procedures to carry out?

The immobilisation process consists of two stages:

  • the management body of any issuer affected by the law (bearer shares/units) must nominate a depositary within the meaning of the law (bank or other established entity) by 18 February 2015. This depositary must be established in Luxembourg and may not be a shareholder of the issuing company;
  • investors who are owners of bearer shares or units must deposit their securities with the designated depositary before 18 February 2016. The nominative register is another alternative put forward to issuers of these bearer shares, the objective of which is to identify the investor. In this case, we recommend that you check the law on companies.

Please note that the law allows for different types of depositaries such as banks, authorised FSPs, etc. amongst the most common.

5) Who must inform the bearer shareholders/unitholders?

It is a ‘corporate event’ and the notification relating to the depositary must be carried out by the issuer of shares/units.

In all cases, the issuer shall file the nomination of the depositary with the RCS and publish the information in the Luxembourg Official Gazette (Mémorial).

6) What is the timeline for the implementation of the law?

The law stipulates that there are two phases for immobilisation:

1. 18 August 2014 to 18 February 2015:

Nomination of the depositary by the issuer (company or fund).

Bearer shares shall be deposited with this depository by the shareholders.

2. 19 February 2015 to 18 February 2016:

Bearer shares shall be deposited with this depository by the shareholders.

Please note, as from 19 February 2015, voting and dividend rights attached to bearer shares which have not been deposited will be suspended and will not be counted for the calculation of assembly quorums.

Once this deadline has passed, the law stipulates that it will no longer be possible to deposit bearer shares and the issuer must cancel the bearer shares which have not been deposited.

7) How much will it cost?

There is no reference to the cost of the procedure in the law, neither for issuers or for holders of bearer shares/units. However, this procedure is likely to result in certain charges. Any possible costs for the depositary as well as indirect costs relating to the communication and notification of shareholders must be taken into account, with each case being different.

8) What are the possible sanctions in the event of non-compliance?

The management bodies of the company risk sanctions in the event they:

  • do not designate a depositary; do not deposit the shares issued with a depositary;
  • allow the holder of bearer shares who has not been inscribed on the Registry to exercise his voting rights;
  • pay out dividends to a shareholder and did not terminate the non-deposited bearer shares/units, reducing the subscribed capital and depositing these funds with the Caisse de Consignation.

The fine shall be between EUR 5,000 and 125,000.

Shareholders who have not deposited their bearer securities by 18 February 2016 will have the shares cancelled, and will lose all shareholder rights.

9) Conclusion

It is therefore imperative that you take this law and its impact into account, whether you are an issuer or shareholder.

For more information, the ABBL recommends that you contact a legal or financial advisor (check the list of members on the ABBL website).


Association des Banques et Banquiers, Luxembourg


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