Non-trading (civil) companies Moneyval): changes up to date with Law no. 1.559 of 29 February 2024 (PART IV)

UP TO DATE WITH THE LATEST AMENDMENTS 2024 made by Law no. 1.559 (Part IV) and Sovereign Order no. 10.450 of 15 March 2024.

Entry into force on 25 September 2023 of the new provisions governing civil companies (non-trading companies), following the recommendations of the MONEYVAL Report focusing on the strengthening of measures to ensure greater transparency, extended access by the competent Monegasque authorities to basic information and information on beneficial owners (accurate and up-to-date):

• Law 797 of 18 February 1966 relating to civil companies as amended by Chapter II of Law 1.550 of 10 August 2023 adapting legislative provisions to combat money laundering, financing of terrorism and the proliferation of weapons of mass destruction (Part II) and Law 1.559 of 29 February 2024 (Part IV);
• Sovereign Order 10.117 of 21 September 2023 and Sovereign Order no. 10.450 of 15 March 2024, amending Sovereign Order 3.573 of 11 May 1966 implementing Law 797 of 18 February 1966 relating to civil companies.
• Ministerial Order no. 2023-576 of 26 September 2023 authorising seven agents from the Economic Development Department (control)

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SUMMARY

The main changes for non-trading companies ("sociétés civiles") from 25 September 2023:

• Sovereign Order 3.573 sets out the requirements for identifying the parties to the share transfer and usufruct agreement ("convention de cession de parts et de constitution d'usufruit"), failing which registration will be refused;
• New deadline for registration in the special register: in the month following completion of the registration formalities; or where the creation of the company is subject to the issue of a receipt for the declaration of activity or to the obtaining of an administrative authorisation, the registration deadline is 1 month from the date of obtaining the said receipt or administrative authorisation;
• Obtaining, declaring new basic information and information on beneficial owners, kept in Monaco, updated and available;
  
• Retention period of information of 10 years (in line with the statute of limitations for public prosecution for money laundering and terrorist financing);
• Designation of a person responsible for basic information and information on beneficial owners;
• Keeping a register of company members or shareholders;
• Clarification of the circumstances in which a supplementary or amending declaration must be made, and annual declaration;
• Clarification of the rules governing declarations for the purpose of deleting entries from the register;
• Enumeration of the entries to be made automatically in the special register and details of the conditions under which these entries will be struck off automatically;
• Extension of the retention period for accounting documents to 10 years (instead of 5 years);
• Supervision of non-trading companies by the Direction du Développement Economique ("DDE"), regulation of documentary and on-site inspections.
• The new obligations are accompanied by new administrative, financial and criminal penalties for non-compliance.

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IN DETAIL

¤ Identification of the parties to the share transfer and usufruct agreement

— Under penalty of refusal of registration (instead of "nullity"), the agreement must in particular contain the surname, given name(s), date and place of birth, nationality(ies), home address, family situation and, where applicable, the matrimonial property regime of the parties. Where the parties to the agreement are legal entities: name or corporate name, legal form, address of their registered office, number and place of registration in a public register, as well as the surname, customary name, forenames, date and place of birth, nationality(ies), and home address of a) the persons with power to administer, direct, manage or bind them on a regular basis with regard to third parties or their equivalents under foreign law; b) the permanent representative, where his appointment is provided for by a legislative or regulatory text. (art. 3, 2nd paragraph L. 797; new art. 13 0S 3.573)

¤ Entry in the special register kept by the RCI service

— Entry in the register must be made within a reasonable and verifiable timeframe: unless otherwise provided by law, within one month of completion of the registration formalities (instead of "within two months of incorporation"). Where the creation of the company is subject to the issue of a receipt for the declaration of activity or to the obtaining of an administrative authorisation, the registration period is one month from the date of obtaining the said receipt or authorisation. (art. 5 L. 797, art. 4 OS 3.573)

• Failing this, entry in the register is refused. In addition, the declaration of activity or the administrative authorisation lapses and the file is closed without further action in the case of non-trading companies subject to the issue of a receipt for the declaration of activity or to obtaining such authorisation.
• The aforementioned registration deadlines may be extended by the Director of Economic Development (DDE) for a period to be determined by him, upon request, for a legitimate and duly justified reason.

Applications must be sent by post or handed in to the Economic Development Department (DDE).

— The application for registration, sent to the Economic Development Department (DDE), must include the "basic information" relating to the company as well as the supporting documents needed to establish its accuracy, failing which it will be inadmissible. The form that the application must take, the method of transmission to the DDE and the list of basic information relating to the company that must be attached to it are determined by sovereign order (new art. 5-1 L. 797; art. 5 0S 3.573)

Basic information:

1. the legal form of the company ;
2. the company's name or corporate name, followed, where appropriate, by its acronym;
3. the company's objects;
4. the duration of the company as set out in the articles of association;
5. the address of its registered office and, if applicable, the address of its secondary establishment or ancillary premises in Monaco;
6. the date of incorporation of the company and: a) for non-trading companies other than public limited companies: the date of registration of the company's articles of association with the Directorate of Tax Services; b) for public limited companies: the date of filing at the general registry of the copy of the articles of association and the date of publication of the said articles of association in the Journal de Monaco;
7. the amount of the company's share capital, the number of shares representing it and their nominal value;
8. the closing date of the company's financial year;
   
9. the surname, usual name, nickname or pseudonym, forenames, date and place of birth, nationality(ies), home address, marital status and, if applicable, the date and place of marriage and the matrimonial property regime of: a) each of the persons authorised to administer, direct, manage or bind the company and the term of their office; b) each partner or shareholder of the company. Where the above-mentioned persons are legal entities, the application for registration must include the name or corporate name, the legal form, the address of the registered office, the number and place of registration in a public register, as well as the surname, customary name, nickname or pseudonym, first names, date and place of birth, nationality(ies) and home address of : a) the persons authorised to administer, direct, manage or bind them on a regular basis with regard to third parties, or their equivalents under foreign law; b) the permanent representative, where his appointment is provided for by law or regulation;
10. where applicable, the name of the credit institution established in Monaco where the deposit account is opened for the exercise of its professional activity pursuant to the aforementioned law no. 1.492 of 8 July 2020; and
11. the status of the company as at the date of commencement of business.

In addition to the basic information relating to the company, it must also include the following supporting documents to establish its accuracy, failing which it will be inadmissible:

I- Supporting documents relating to the company

1. an original copy of the articles of incorporation registered with the Direction des Services Fiscaux and signed by all the shareholders and, where applicable, by the person(s) authorised to administer, direct, manage or bind the company; in the case of a Monegasque public limited company, a copy of the registered articles of incorporation and the copy of the ministerial order, a copy of the minutes of the constituent general meeting, a copy of the minutes of the meeting of the board of directors and a copy of the declaration of subscription and payment of the share capital;
2. where the person or persons authorised to act on behalf of the company is not named in the articles of association, an original copy of the instrument appointing him or them. In the case of a legal entity, the deed must include details of the persons authorised to administer, direct, manage or bind the company and the term of their office, or of each partner or shareholder of the company;
3. where the registered office is not established at the domicile of a member or shareholder or at the address of the person authorised to administer, direct, manage or bind the company, any document justifying the establishment of the registered office.

II- Supporting documents relating to the persons authorised to administer, direct, manage or commit the company and the duration of their mandate or of each partner or shareholder of the company

1. For individuals:

• a) a completed individual information form available online on the Monaco Government website or from the Economic Development Department;
• b) a copy of the national identity card or passport for Monegasque nationals, a copy of the residence permit for residents of Monaco or a copy of the identity card or passport for non-residents;
• c) proof of address dated within the last three months;
• d) only for persons authorised to administer, direct, manage or bind the company, and when they are domiciled abroad, a signed sworn statement that they have not been convicted of a criminal offence or an extract from the criminal record dated less than three months, issued by the judicial or administrative authorities of the country in which the applicant is domiciled.

2. For legal entities:

• a) an original extract of the company's registration in a public register, dated less than three months and a copy of its current articles of association certified as true by the person authorised to act on its behalf;
• b) a copy of the deed recording the partners' agreement to subscribe to the company's share capital and/or to represent the company;
• c) a completed individual information form concerning the person(s) authorised to act on behalf of the legal entity, available online on the Government of Monaco's website or from the Economic Development Department;
• d) a copy of the residence permit or a copy of the identity card or passport of the person(s) authorised to act on behalf of the legal entity;
• e) an extract from the birth certificate or marriage certificate of the person(s) authorised to act on behalf of the legal entity;
• f) proof of address dated less than three months for the person(s) authorised to act on behalf of the legal entity.

— Communication to the RCI service of the identity of the person or persons designated as responsible for the basic information of the legal entity and, if different, for the information on the beneficial owners, within one month of the entry of the company in the register. Any change to the designated person(s) must be notified within one month of the change. The one-month period may be extended by the Director of Economic Development (DDE) for a period that he determines, upon request, for a legitimate and duly justified reason (new art. 5-2 L. 797).

Non-trading companies that do not have a deposit account with a credit institution in Monaco may only appoint as the person responsible for providing basic information and information on their beneficial owners a person referred to in point 6°) [persons who habitually carry out operations for the creation, management and administration of legal persons, legal entities or trusts], 13°) [legal advisors], 19°) [multi family offices] or 20°) [chartered accountants, certified accountants] of Article 1 or 1°) [notaries] or 3°) [lawyers] of Article 2 of Law 1. 362 (art. 22-1 L.1 .362).

With regard to basic information, this designated person or persons shall be responsible for :

• a) maintaining adequate, accurate and up-to-date information as referred to in Article 5-1;
• b) communicating this information to the Economic Development Department and updating it so that it can be recorded in the special register;
• c) providing the authorised agents of the Direction du Développement Économique and the competent authorities referred to in article 7-1, on request and within the time limit specified, with the information referred to in article 5-1, and any other form of assistance to these authorities;
• d) keeping the information and documents referred to in article 5-1 for ten years after the date of dissolution or liquidation of the company at a location in Monaco notified to the Trade and Industry Register Department.

¤ Retention and updating of basic information

— Non-trading companies are required to obtain and keep adequate, accurate and up-to-date information relating to basic information, together with the corresponding supporting documents, for a period of 10 years after the date on which they cease to be customers of the bodies and persons referred to in articles 1 and 2 of law no. 1.362 of 3 August 2009, as amended (new art. 5-3, I. L. 797). This information and these documents shall be kept and made available at the registered office of the company or, failing this, at the offices of one of the aforementioned persons or bodies referred to in items 6°), 13°), 19°) or 20°) of article 1 or in items 1°) or 3°) of article 2 of law no. 1.362 of 3 August 2009, as amended.

— Directors or liquidators are required to keep the basic information recorded in the special register of civil companies kept by the Economic Development Department (DDE) and the corresponding supporting documents for 10 years after the date of dissolution or liquidation of the company (new art. 5-3, II. L. 797, new art. 1-1 OS 3.573).

• This information and these documents must be kept and made available in Monaco in a place communicated to the RCI service.
• They may also be entrusted for the same purposes to one of the aforementioned persons or bodies referred to in points 6°), 13°), 19°) or 20°) of Article 1 or in points 1°) or 3°) of Article 2 of Act no. 1.362 of 3 August 2009, as amended, whose identity is communicated to the RCI department.

— The register of members or shareholders ("registe des associés ou actionnaires") must be kept up to date at all times, indicating their identity. The register must be kept and made available at the registered office of the company or, failing that, at any other place in Monaco and, in particular, with one of the persons or bodies referred to in numbers 6°), 13°), 19°) or 20°) of article 1 or in numbers 1°) or 3°) of article 2 of Law no. 1.362, whose identity is communicated to the Trade and Industry Register Department. (new art. 5-4 L. 797; new art. 11 OS 3.573)

• The company's register of members or shareholders must include their surname, usual name, nickname or pseudonym, forenames, date and place of birth, nationality(ies), home address and family situation and, where applicable, their marital status, as well as their contact details.
• Where the persons referred to in the previous paragraph are legal entities, the register of members or shareholders shall include their name or corporate name, their legal form, the address of their registered office, their registration number and place of registration in a public register, as well as the surname, common name, nickname or pseudonym, first names, date and place of birth, nationality(ies), and home address : a) the persons with the power to administer, direct, manage or bind them on a regular basis with regard to third parties or their equivalents under foreign law; b) the permanent representative, where his appointment is provided for by a legislative or regulatory text.
• The register shall also indicate the number of shares held by each member or shareholder, the categories of shares, the corresponding numbering of the shares and the voting rights attached thereto.

The register must indicate the identity of any partner, shareholder, manager or director acting on behalf of another person, and designate the principal and the agent, failing which the agreement will be null and void.

Access by competent authorities and communication to foreign authorities (art. 5-5, 7-1 L. 797):

The basic information, the supporting documents and the register are accessible, upon request and within the timeframe they determine, to authorised agents of the DDE and other competent authorities:

• authorised officials of the Monegasque Financial Security Authority (and through it, the Bar Council) ;
• authorised personnel of the judicial authorities ;
• judicial police officers from the Public Safety Department acting at the request of the Public Prosecutor or on delegation from an Examining Magistrate;
• authorised agents of the seized or confiscated assets management department of the Directorate of Judicial Services.
• police officers of at least the rank of captain, individually and specially authorised by the Director of Public Safety;
• authorised agents of the Budget and Treasury Department;
• authorised agents of the Tax Department;
• authorised agents of the Commission de Contrôle des Activités Financières (CCAF);

The information and documents provided or made accessible pursuant to the preceding paragraph may be communicated to foreign authorities by the authorities referred to in the first paragraph of Article 7-1 under the conditions provided for in Article 51-1 and Chapter VIII of Act no. 1.362, or by means of international mutual legal assistance.

¤ Supplementary, amending or annual declaration

— Any change in one of the basic items of information must be the subject of a supplementary or amending declaration before it can be entered in the special register, failing which it cannot be enforced against third parties.

The declaration and supporting documents must be sent to the RCI department within one month of the date of the change or, where applicable, of the registration of the act amending the basic information concerned, of the receipt for the declaration of activity or of the issue of the administrative authorisation. This period may be extended by the Director of Economic Development for a period that he determines, upon request, for a legitimate and duly justified reason.

— Clarification of the circumstances in which a supplementary or amending declaration for entry in the special register must be made (art. 6-1, L. 797; art. 7 and 7 bis OS 3.573)

The following must be declared i.a.:

1. the total and definitive cessation of business activity, whether temporary or definitive, with the possibility of declaring the continued registration, in the event of total cessation, for a period not exceeding six months;;
2. dissolution of the company
3. the death of a partner, shareholder or manager.

Any supplementary or amending declaration must include the following basic information:

• the legal form of the company;
• the company's name or business name, followed by any acronyms used;
  the address of its registered office and, where applicable, the address of its secondary establishment or ancillary premises in Monaco;
• the surname, given name(s), nickname(s) or pseudonym(s), forename(s), date and place of birth, nationality(ies), home address, marital status and, if applicable, the date and place of marriage as well as the matrimonial regime of: a) each of the persons authorised to administer, direct, manage or bind the company and the duration of their mandate.

These declarations must also state :

• the company's registration number in the special register,
• the status of the company and the purpose of the amendment or rectification of any of the prescribed basic information.

All amending or amending declarations must be accompanied by the documents required to prove :

1. the identity of the declarant;
2. the accuracy of the information given on the declaration;
3. that the various formalities have been completed, that the conditions prescribed by the laws and regulations in force have been met, and that prior authorisations have been obtained.

In addition, all declarations must be accompanied by:

• a copy of the act, decision or resolution amending the basic information,
• an updated copy of the articles of association registered with the Direction des Services Fiscaux, if applicable.

— A company entered in the special register must confirm each year, in the month following the anniversary date of its entry in the register, that it is continuing in business. By the same declaration, the company confirms the registration or amendment declarations provided for in articles 5-1 and 6, even if one or more amending or correcting declarations have been made during this period. (art. 6-2 L. 797; art. 8 OS 3.573)

The annual declaration must include the following basic information:

• the legal form of the company ;
• the name or trading name of the company, followed by any acronyms used;
• the company's objects
• the address of its registered office and, if applicable, the address of its secondary establishment or ancillary premises in Monaco;
• the amount of the company's share capital, the number of shares representing it and their nominal value;
• the surname, usual name, nickname or pseudonym, forenames, date and place of birth, nationality(ies), home address, marital status and, if applicable, the date and place of marriage and the matrimonial property regime of: a) each of the persons authorised to administer, direct, manage or bind the company and the term of their office; b) each partner or shareholder of the company. Where the above-mentioned persons are legal entities, the application for registration must include the name or corporate name, the legal form, the address of the registered office, the number and place of registration in a public register, as well as the surname, customary name, nickname or pseudonym, first names, date and place of birth, nationality(ies) and home address of : a) the persons authorised to administer, direct, manage or bind them on a regular basis with regard to third parties, or their equivalents under foreign law; b) the permanent representative, where his appointment is provided for by law or regulation;
• where applicable, the name of the credit institution established in Monaco where the deposit account is opened for the exercise of its professional activity pursuant to law no. 1.492 of 8 July 2020.

It must also indicate :

• the company's registration number,
• the status of the company
• the identity of the person or persons designated as responsible for the company's basic information and, if different, information on the beneficial owners.

¤ Declaration for the purpose of deletion from the register (art. 6-3, 6-3-1 L. 797; art. 9 OS 3.573)

It is the responsibility of the liquidator to request the removal of the civil partnership from the register within one month of the registration of the deed recording the close of the liquidation operations.

Furthermore, in the cases provided for in Articles 1703-1 and 1709 of the Civil Code, i.e. in the event of dissolution of the company as a result of all the shares being held by a single shareholder at the end of the one-year period, or in the event of the takeover, merger or demerger of a company, it is the responsibility of the person authorised to act on behalf of the company, its representative, the person responsible for basic information and information on beneficial owners, or the sole shareholder, to apply for deregistration within one month of the deed recording the transfer of assets and liabilities.

If the non-trading company, which is not subject to authorisation, no longer has any assets or liabilities, the partners may, by simple declaration, dissolve the company early without liquidation and remove it from the special register. This declaration, addressed to the Director of Economic Development, must be signed by all the partners or their successors, as well as by the managing director(s). Under the terms of this declaration, the signatories certify that:

• they wish to wind up the company early;
• the company no longer has any assets or liabilities, so there is no need to proceed with liquidation;
• they wish the company to be struck off the special register of non-trading companies;
• the name(s) of the person(s) responsible for keeping the basic information and the information on the beneficial owners, and the address of the place where this information is kept.

The application for deletion must indicate, in particular:

• the company's registration number in the special register,
• the date of cessation of activity, the reason for deletion,
• the place where the basic information is held.

The supporting documents required to process the deletion request are specified on the deletion request form.

¤ Automatic entries and deletions

The following are automatically entered in the special register: (art. 6-5 L. 797)

1. decisions ordering a measure for the protection of incapacitated adults with regard to a person registered in the register, measures of incapacity or prohibition from carrying out a professional activity, managing, administering or directing a legal entity resulting from a final court decision or prohibition from carrying out an activity, from carrying out certain operations, or from managing, administering or directing a legal person resulting from a final administrative decision, and administrative decisions suspending or rendering ineffective the declaration of activity, suspending or revoking the authorisation to practise or the authorisation to incorporate the company;
2. judicial decisions ordering the dissolution or nullity of the legal entity;
3. the dissolution of a company on expiry of the term set out in the Articles of Association, except in the event of an extension decided by the partners under the conditions set out in article 1704 of the Civil Code;
4. failure to file an annual return;
5. total and definitive cessation of business;
6. final court decisions ordering the compulsory liquidation of the company or the total sale of its assets;
7. the impossibility of carrying out an audit or if the audit proves unsuccessful;
8. failure to communicate the identity of the person responsible for the basic information and the information on the beneficial owners within one month of the company being entered in the register;
9. the death of a partner, shareholder or manager;
10. the reunification of all the shares in a single hand, as well as the date of occurrence of this event, or the court decision granting an extension under the conditions set out in article 1703-I of the Civil Code.

The Economic Development Department is informed of the decisions and judgements referred to in points 1°), 2°), 6°) and 10°) as well as the death of a partner, shareholder or manager, under the conditions defined by Sovereign Order.

Entries made pursuant to the aforementioned point 1 are automatically struck off: (art. 6-6 L. 797)

1. when a decision of rehabilitation, removal of incapacity or amnesty is made, removing the incapacity or prohibition;
2. when the ban set by the court expires;
3. when the executive who is the subject of an incapacity or ban no longer performs his duties.

In the event of failure to file an annual declaration, failure to communicate the identity of the person responsible for the basic information and information on the beneficial owners, or if it is impossible to carry out an inspection or if the inspection has proved unsuccessful, the Director of Economic Development will give formal notice to the company to complete the formality. If the formalities are complied with, the company will be re-registered. These provisions do not preclude the implementation of a sanction procedure. (art. 6-7 L. 797)

¤ Publicity

Basic information is available to the public by means of an extract from the special register: (art. 7 L. 797; art. 10 OS 3.573)

1. the date of incorporation of the company, its date and number of entry in the register;
2. its legal form;
3. its name or business name followed, where applicable, by its acronym;
4. its corporate purpose;
5. its duration;
6. the address of its registered office and, if applicable, the address of its secondary establishment or ancillary premises in Monaco;
7. the amount of its share capital;
8. the closing date of its financial year;
9. the surname, first names, date and place of birth and nationality(ies) of each of the persons authorised to administer, direct, manage or bind the company. In the case of legal entities, their name or corporate name, their legal form, the address of their registered office, their number and place of registration in a public register and the full name of its permanent representative;
   a) for non-trading companies other than public limited companies: the date of registration of the company's articles of association with the Directorate of Tax Services; b) for public limited companies: the date of filing at the general registry of the copy of the articles of association and the date of publication of the said articles of association in the Journal de Monaco;
10. the particulars automatically entered in the register;
11. the main elements governing the operation of the company; and
12. the status of the company.

Communication to foreign authorities:

The information in the special register may be communicated to foreign authorities by the authorities referred to in the first paragraph of Article 7-1 of Law no. 797 under the conditions set out in Article 51-1 and Chapter VIII of Law no. 1.362, or by means of international mutual legal assistance.

¤ Retention of accounting documents

Non-trading companies are required to record all their transactions in the form of a statement of income and expenditure. (art. 8 L. 797; art. 15 OS 3.573).

The documents relating to the accounts and all the corresponding supporting documents must be kept at the registered office of non-trading companies for a period of 10 years (instead of 5 years).

¤ Supervision of non-trading companies by the DDE

Professional secrecy may not be invoked in respect of information and documents relating to the non-trading company being supervised.

— Documentary and on-site inspections (art. 10, 11 L. 797; art. 18 OS 3.573).

Authorised officers of the DDE, specially commissioned and sworn for this purpose, may carry out documentary inspections and in particular:

• carry out all necessary checks ;
• obtain all documents necessary for the performance of the duties provided for in this article, regardless of the medium, and of which they may take copies by any means ;
• obtain from shareholders, directors and any other person any information, documents or evidence necessary for the performance of their duties;
• interview any person likely to provide them with information.
  

In the event that the documentary inspection proves impossible or unsuccessful, the said officers may access all the business premises or premises used for business purposes located in Monaco of the non-trading company, after prior notification of the company or its representative, or of the registered office of the company, with the exception of the parts of the premises used for the private residence, in order to carry out the operations provided for in points 1°) to 4°). Access to premises or parts of premises that are not accessible to the public must have the prior consent of the civil company or its representative.

At the end of an inspection, the authorised agents of the Economic Development Department who took part in the inspection draw up a report, in accordance with the conditions laid down by Sovereign Order.

During inspections, company premises may only be visited between 9am and 6pm, or outside these hours when access to the public is authorised or when a professional activity is in progress.

Officers authorised under this article are bound by professional secrecy, subject to the penalties provided for in article 308 of the Penal Code.

¤ New sanctions

The new provisions implement the recommendations of the Moneyval report, which found that the sanctions applicable to non-trading companies and their directors or persons involved in their administration were insufficient and not dissuasive in the event of failure to comply with their obligations in terms of the fight against money laundering and terrorist financing.

• Administrative and financial penalties (articles 12 to 16 of L. 1.797)
• Criminal penalties (art. 17 to 22 L. 1.797)

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