Bearer shares abolished !

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rnBearer shares abolished – with far reaching consequences.   rn

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rnAs a foreign investor/shareholder it is of the utmost importance to stay up to date with the local legal developments in the country/countries that you are investing in.   rn

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rnOne of the most important recent changes as far as Belgium is concerned, is the fact that it will become impossible for a shareholder to withhold his/her identity to the company that he is investing in.   rn

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rnAs from the 1^st of January 2008 it is impossible for the company to issue bearer shares. The main advantage of the abolishment of the anonymous securities will be the greater security. The risk of loss or theft of the security is excluded.  rn

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rnIt will however still be possible to issue “dematerialized securities” which exists only through the booking on an account in the name of the securities holder with a recognized account holder, which can be a credit institution or a stock market company which has the license for that purpose. This is be the most “anonymous” way to hold shares in a company. rn

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rnAn important point to consider is that all existing bearer shares held in Belgian Companies will have to be converted by the end of 2013. If this is not the case the rights of the shareholder will be suspended until their regularization.  rn

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rnOver and above the abovementioned requirement to convert your bearer shares, all shareholders still holding anonymous shares (up until 2013 by which date that will have to be converted) or dematerializes shares that have a substantial voting right, will be obliged to declare their shareholding to the company as from 5 February 2010.   rn

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rnYou will be deemed to have a substantial shareholding whenever the threshold of 25% of the shareholding will be reached by one shareholder, be it the purchase of shares of a shareholder not yet holding 25% of the shares to a shareholding of 25% or more, or a shareholding that has 25% of the shares that sells some of his shares with the effect that they will fall below the 25% threshold will have to give notice hereof to the board of directors and this within 5 working days after the transfer of the shares.   rn

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rnAll shareholders of companies currently holding 25% or more of the shareholding will be obliged to give notice thereof to the company and this before 5 august 2010.  rn

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rnIf this obligation is not fulfilled the voting rights associated with these shares will be suspended – this will apply also if the notice was given less than 20 days before the next general meeting. rn

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rnThe company will be allowed to postpone the meeting for a maximum of 3 weeks if a notice is received in this 20 days timeframe. rn

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rn A more severe sanction is however the fact that the company or the shareholder can approach the court to request that the general meetings should be suspended and that the voting rights of these shares can be suspended for up to one year.   rn

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rnThe court may even, by way of ultimate sanction order the holder of these shares to sell it to a third party!  rn

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rnThe court will in that case supervise the selling of the shares to ensure that the buyer is in no way affiliated with the sanctions seller.  rn

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rnThe purpose of this is to make the shareholding of companies more transparent and to combat money laundering.   rn

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rnDue to the strict sanctions most shareholders will probably register their shares in their names to avoid the publications requirements.   rn

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rnIt is however of the utmost importance to either convert your bearer shares to dematerialized shares and declare to the company if you reach the 25% threshold or to convert your bearer shares in your name to avoid the pitfalls as described above. rn

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rnIf you have any questions or concerns in this regard, please do not hesitate to contact us.   rn

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rnPatricia LEERS
rnManaging-partner
rnp.leers@a-law.eu 
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