Bill of law - Blockchain law IV aiming at facilitating the use of distributed ledger technology in dematerialised securities
On 24 July 2024, bill of law 8425 (the “Bill of Law”) was filed with Luxembourg Parliament.
The Bill of Law aims at improving the current legal framework for dematerialised securities to ensure greater flexibility, security and transparency for issuers and investors. Thus, it further amends inter alia the law of 6 April 2013 on dematerialised securities, in the continuity of the changes brought by the so-called Blockchain laws in Luxembourg (Blockchain laws I, II and III).
To achieve that objective, the Bill of Law introduces a new player: the control agent for the issuance of demateralised securities (the “Control Agent”).
The Control Agent may be (i) an investment firm, (ii) a credit institution or (iii) a settlement organisation (“organisme de liquidation”). The Control Agent is appointed by the issuer to (i) maintain the issuance account in or through a secure electronic recording device, including a distributed ledger technology (“DLT”) or database; (ii) monitor at any time the chain of custody of dematerialised securities held in securities accounts and (iii) carry out the reconciliation between the aggregate amount of securities issued recorded in an issuance account and the sum of securities recorded in the account holders' securities accounts.
The Control Agent is expected to make full use of the DLT to carry out its supervisory role in relation to the issuance of securities.
Furthermore, the activity of central account keeper for unlisted debt securities is extended to unlisted equity securities.
Reliance on the Control Agent will constitute an alternative to the current model which relies on a double layer custody chain. It is yet another important step to facilitate reliance on the DLT within the financial sector.
Should you have any questions on the above, please do not hesitate to contact one of our experts of the digital assets team and the capital market team.
