Monaco to remove bearer shares and impose accounting obligations on SCIs


Draft Monaco law removes bearer shares and imposes accounting obligations on "civil" companies (Law adopted by the Conseil National 7.12.2012)

In reaction to criticism in the OECD Global Forum Peer Review1 on Monaco, the government has published a draft of a new law to put in place legislation to deal with the limited number of issues that were raised. It was considered that certain elements of Monaco’s legislation might not be in complete conformity with current global best practice in terms of transparency to prevent tax evasion and increasing economic development.

While current practices in Monaco are to a great degree in compliance with international standards, the Monaco authorities acknowledge that there are certain elements that could be improved. The changes proposed in the recently published draft law are made with the intention of confirming Monaco’s place as one of the financial and commercial jurisdictions participating in the growth of a world founded upon transparency.

In summary, the draft law proposes first, the revocation of bearer shares and their replacement by registered shares and the obligation to maintain a share register of members. Second, the imposition of an obligation on Monaco registered non-commercial companies and Monaco trusts to maintain accounts and accounting records.

Bearer Shares
It is proposed that all company shares must be registered shares and a register be maintained containing details of the identity of the shareholders. The register must be available for inspection by the company’s auditors and the Monaco authorities. On the transfer of shares, the transfer must be recorded with details of the new shareholder and the details maintained at the company’s registered office.

All existing bearer shares must be re-issued in the form of registered shares with details of the shareholder recorded by the company.

Where the statutes of the company need to be modified in compliance with the law, it is proposed that this must be completed within a set timescale and confirmed by a declaration made to the authorities.

In separate amendments to existing legislation Monaco civil companies, ie non-commercial companies such as SCIs (société civile immobillière), as well as trusts will be obliged to maintain accounts and to maintain the accounting documents for a fixed period. Law 214 concerning trusts will be amended in this respect. Under this law a trust established by an individual who is –

(i) resident in Monaco and
(ii) whose national law permits the creation of a trust

is recognised in Monaco.

We consider that the proposed law confirms what is already widely practiced in Monaco and would bring a welcome regulatory structure in accordance with international norms.

1 Global Forum on Transparency and Exchange of Information for Tax Purposes – Peer Review Report – Phase 1, Legal and Regulatory Framework published in September 2010