Dematerialisation of Unlisted Financial Investment Registration: The Advent of Blockchain Technology
The 8 December 2017 ruling 2017-1674 enables the registration and transfer of specific unlisted financial securities using a distributed ledger technology system. This new way of dealing with security transfer uses blockchain technology, a dematerialised database.
The electronic registration into the distributed ledger system will have the same effects as a physical registration, but without the need for holding a registry.
The entry into force of this ruling is subject to the issuance of a decree, to be published 1 July 2018 at the latest, specifying the type of blockchain admitted (open or closed to the public), the distributed ledger system’s guarantees (mainly regarding authentication) as well as the terms for pledging securities.
Even if the company is always the one deciding to register securities using this technology, it’s important to pay close attention to the company’s statutory provisions. If the latter include that the securities be registered in an account, statutory modifications will be required.