Public limited and limited liability companies: Use of a digital recording device on a shared registry (Bill No. 1039)
Bill No. 1039 on the use of a digital recording device on a shared registry (covering the main features of Blockchain technology)[1] by public limited companies (Sociétés anonymes) and limited liability companies (Sociétés à responsabilité limitée) (11 articles) was filed with the National Council on May 27, 2021. It follows the National Council’s draft Law No. 246, which was adopted in Public Session on December 4, 2019.[2]
Blockchain technology has already received legislative consecration, Law No. 1.491 of June 23, 2020 on Initial Coin Offerings (ICO) and Security Token Offerings (STO) governing fundraising carried out using this technology.
Bill No. 1039 is part of the legislative block dedicated to the digital transition of the Principality of Monaco as an extension of the Extended Monaco program, but also as part of the work to overhaul and modernize business law (company law and corporate structure) currently being undertaken by the Government.[3]
>> Projected uses of the digital recording device on a shared registry (DENP):
• Public limited companies would have the possibility to keep the register of transfers in the digital form DENP under the conditions of article 43 of the Code of Commerce: registration of the issued registered securities; in case of transfer of shares, transcription of the transfer form and issue of a new registered certificate). The Government specifies that it “envisages, in the long term, the possible revision of the Franco-Monegasque treaty provisions on the specific subject of the obligation of material creation of “unlisted” securities in order to allow the dematerialization of the securities concerned”.[4]
• Limited liability companies would have the option of recording in the DENP the distribution of shares fixed in the company’s articles of association in accordance with article 47 of the Commercial Code, the deed of transfer of shares carried out under the conditions of article 51-2 of the Commercial Code.
• For both types of companies, the DENP could also be used to share information that they deem necessary or that they are required to deliver by virtue of a legal or regulatory provision, or a provision of the articles of association, under the conditions defined by ministerial decree (e.g., registration of decisions and deliberations of the administrative bodies or general meetings).
• In addition, joint stock companies and limited liability companies could use smart contracts [5] to execute the agreements between them.
The trust service provider would be in charge of the administration of the DENP under the conditions of Law no. 1.383 of August 2, 2011, for a Digital Principality, amended.
For more information, see our following publications:
> Law No. 1.482 for a Digital Principality
> Law N° 1.483 on Digital Identity
> Monaco adopts Legislation on Initial Coin Offerings (ICO) and Security Token Offerings (STO)
[1] Bill No. 1029 uses the definition of Law n° 1.383 of August 2, 2011, for a digital Principality, amended (“a digital recording device that makes it possible to guarantee the availability, authentication, traceability, integrity, confidentiality and preservation of transactions”), specifying that “it may be public or private, depending on whether access to this register is open or restricted, in accordance with criteria established by ministerial order”.
[2] The Government of Monaco had informed the National Council on June 2, 2020 of its decision to transform the drfat law No. 246 into a bill, in accordance with article 67 of the Constitution.
[3] Explanatory Memorandum to Bill No. 1039, 2021-12, May 18, 2021, pp. 2 and 3.
[4] Ibid, p. 3. See also: Article 1 of Sovereign Order No. 3.147 of February 21, 1964 relating to the physical creation of securities issued by joint stock companies, as amended, according to which shares “must be physically created”, except for “companies whose securities are admitted to the market of one of the French stock exchanges”; the Franco-Monegasque Tax Convention of May 18, 1963, including its Protocol of signature and the exchange of letters.
[5] Bill No. 1029 uses the definition of Law No. 1.383 of August 2, 2011, for a Digital Principality, amended (“a computer program that uses a digital recording device on a shared register and allows for the automatic execution of a series of predetermined actions when the conditions predefined in the program are met”).