FRANCE Law and Practice Contributed by: William Julié, Amélie Beauchemin, Camille Gosson and Elena Moreno, 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”. Concepts of ownership and control have created many disputes before the court since their creation. To guide legal practitioners, the Commission has pub - lished two opinions on Article 2, on 19 June 2020 and 8 June 2021. 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”. Further clarification is provided based on the French Commercial Code, offering guidance on the notions of control and ownership. • 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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