Through the Act of 14 December 2005, the legislator decided to gradually cancel bearer securities, resulting in their total abolition by 31 December 2013. Recently, and for budgetary reasons, shareholders were “encouraged” to convert their bearer shares by the introduction of a conversion tax provided for in the Act of 28 December 2011. Since this conversion tax will double as from 1 January 2013, it is recommended to do the conversion still this year.
1. Current situation
Pursuant to the Act of 14 December 2005, it is no longer possible to issue bearer securities. The existing bearer securities must be converted into registered or dematerialised securities no later than 31 December 2013.
In the event that bearer securities are not “voluntarily” converted into registered or dematerialised securities ultimately by 31 December 2013, the legislator provided that such bearer securities shall be automatically converted into dematerialised securities or, if the articles of association do not provide for the possibility to issue dematerialised securities, into registered securities as from 1 January 2014.
As a result of such an automatic conversion of bearer securities as from 1 January 2014, the non-converted securities shall be registered on the name of the issuing company until the rightful owner presents himself. If the rightful owner does not claim his securities prior to 1 January 2015, the issuing company shall offer these securities for sale. The revenues of this sale must be deposited with the Belgian Deposit and Consignment Office (“Deposito- en Consignatiekas” / “Caisse des Dépôts et Consignations”). In addition, as from 31 December 2015, the rightful claimant willing to collect the revenues from the sale (or the securities, if they have not yet been sold) shall be subject to a penalty at a rate of 10% per year of the value of the securities.
2. Conversion tax
To speed up this process, the Act of 28 December 2011 introduced a tax of 1% on the conversion of bearer securities that take place in 2012 and 2% for conversions in 2013. This tax will be calculated on a different basis, depending on the type of security:
a) for listed securities, on the last price preceding the deposit date;
b) for non-listed securities representing receivables, on the amount of the receivable;
c) for participations in open-end investment funds, on the last inventory preceding the deposit date; and
d) for all other securities, on the estimated book value of these securities (without possible interest).
With respect to the conversion of the last category of bearer securities, the legislation does not provide for a definition of “book value”. The Federal Public Service of Finance informally confirmed that the book value of capital shares must be determined based on the net asset value of the company, divided by the total amount of shares.
The conversion tax has to be calculated on the date on which the securities are deposited. The tax must be paid by the recognised account holder in case the bearer securities are dematerialised, or by the issuer of the securities (i.e. the company) if the bearer securities are converted into registered securities. They must file a declaration form, which is available on the website of the Federal Public Service of Finance (My Minfin or My Minfin Pro).
3. Conversion procedure
Bearer securities can be converted into registered securities or dematerialised securities.
Dematerialised securities are represented by an entry in a securities account opened with an account holder, e.g. a bank (or a clearing institution). Such conversion is only possible if the issuing company has adapted its articles of association and has made an arrangement with an account holder. The security holder shall then deposit his bearer securities with the account holder.
Registered securities are represented by an entry in a register (e.g. a share register), kept at the company’s registered office. For such conversion, the articles of association do not need to be adapted. Even if the company has made an arrangement with an account holder, the security holder can still request the conversion into registered securities. He shall deposit his bearer securities with the company.