On 16 July 2014, the Luxembourg Chamber of Deputies passed Bill n°6625 (the "Immobilisation Law"), further to which the notion of immobilisation of bearer shares was introduced, pursuant to which bearer shares will have to be put in the hands of a depositary and information concerning their holder contained in a specific registry. Immobilisation duty concerns all bearer shares issued before and after the entry into force of the Immobilisation Law. 

Bearer shares' legal nature does not change as the Immobilisation Law does not create a new class of shares, but merely provides for a new practical modality.

1. AMENDMENTS

1.1 Creation of a depositary

Henceforth, bearer shares shall be deposited with a recognised depositary, whom shall be appointed by the board of directors or the management board of the S.A. or the S.C.A. This depositary shall be held to a number of strict conditions and may be chosen from an exhaustive list which includes notably lawyers admitted to the Luxembourg Bar (Lists I and IV), financial institutions, family offices, professionals of the financial sector and so forth.

1.2 Creation of a registry

Bearer shares shall be entered into a specific share register. Said register shall contain detailed information concerning the bearer shares' holder (including the holders' identity, the date of the shares' deposit, the date of transfer of shares and so forth). 

Such register is not intended to be publically accessible but rather to allow an easier access for information by judicial and fiscal authorities whilst maintaining confidentiality with regard to third parties and shareholders of the issuing company.

1.3 Ownership

Bearer shares' ownership is subject to registration in the official register. Any disposal is made effective by a detailed entry in such register by the depositary.

1.4 Transitory provisions

Some transitory provisions are provided for by the Immobilisation Law, including a six-month period from the date of entry into force of the Immobilisation Law for the shareholder to appoint a depositary and a period of eighteen months to deposit the bearer shares with the chosen depository. 

At the end of this six-month period, if bearer shares have not been registered and deposited, voting rights attached to such shares will be automatically suspended until the immobilisation procedure is fulfilled. 

Furthermore, in order to ensure legal certainty, the bearer shares which have not been deposited within eighteen months after the entry into force of the Immobilisation Law shall be cancelled. 

Finally, criminal penalties are foreseen for non-compliance with the Immobilisation Law for the depositary and management entity (EUR 125,000 if the depositary is not designated within the specified deadline).

2. OPEN QUESTIONS

Certain queries remain open, but to which only practice may bring an answer. We notably refer to the unclear superimposition of the delay to appoint a depositary and the delay to immobilise shares (six months). In addition, as the function of depositary per se is new, in practice the delays may well turn out to be unreasonably short.