FRANCE Law and Practice Contributed by: William Julié, Amélie Beauchemin and Camille Gosson, WJ Avocats
At the same time, the Commission recalls that this presumption can be rebutted, “if it can be demon - strated that some or all of its assets are outside the control of the listed person, and/or that funds or eco - nomic resources made available to it would in fact not reach or benefit the listed person”. Ownership and control have generated extensive liti - gation. The Commission has published two opinions on Article 2 (19 June 2020 and 8 June 2021) to guide practitioners. Some guidance can also be found in the EU best practices, where ownership is defined as “the possession of 50% or more of the proprietary rights of an entity or having majority interest in it”. Where there is no ownership, control is determined based on a non-exhaustive set of criteria. The French Treasury Department (Direction Générale du Trésor, or DGT) has published a compliance guide in which it defines the notion of ownership as follows: “Ownership is established by a title of ownership or a debt instrument; in the absence of such a title and in the case of movable property, ownership is presumed if the asset is in the possession of the person subject to a freezing measure”. From this definition, the fol - lowing can be inferred: • when ownership is established by a title, the asset must be frozen – it is irrelevant whether the asset is under the control of the designated person or held by a third party; • when ownership is presumed, the asset must be frozen – it is up to the actual owner to claim true ownership of the frozen asset and to request the lifting of the freezing measure. Regarding the notion of control, the guide reads as follows: “Control is a legal concept or one that can be inferred from the facts: • There is legal control when it is established by a legal instrument. When a document (such as a company’s articles of association, a sharehold - ers’ agreement, a contract, or a law) states that a person exercises control over an asset, it does not
matter whether such control is actually and effec - tively exercised. The asset must be frozen; • There is factual control when, in practice, a person has the power to exercise some or all of the rights attached to ownership: usus, fructus and abusus. The asset must be frozen”. The French Commercial Code offers further guidance on control and ownership, as follows. • When a company owns more than half of the capi - tal of another company, the latter is considered a subsidiary of the former (Article L. 233-1). • When a company owns a share of the capital of another company of between 10% and 50%, the former is considered, for the purposes of this chap - ter, as having a stake in the latter (Article L. 233-2). • A company is considered to control another (Article L. 233-3.I): (a) when it directly or indirectly holds a share of the capital giving it the majority of voting rights at general meetings of that company; (b) when it alone holds the majority of voting rights in that company by virtue of an agreement with other partners or shareholders that is not con - trary to the interests of the company; (c) when it effectively determines, through the vot - ing rights it holds, the decisions of the general meetings of that company; and (d) when it is a partner or shareholder of that com - pany and has the power to appoint or dismiss the majority of the members of the administra - tive, management or supervisory bodies of that company. • Control is presumed when a company holds, directly or indirectly, more than 40% of the voting rights, and no other shareholder or partner holds a greater share (Article L. 233-3.II). • Two or more persons acting in concert are deemed to jointly control a company when they jointly determine decisions made at general meetings (Article L. 233-3.III). • Any shareholding, even below 10%, held by a con - trolled company is considered to be indirectly held by the company exercising control over it (Article L. 233-4).
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