An update on the disclosure of shareholdings in joint stock companies

On 16 July 2009 [1], the Belgian Chamber of Representatives adopted a draft law aimed at preventing the use of the financial system for the purpose of money laundering and financing terrorism. This draft law is currently being examined by the Senate.

The draft law aims at extending the obligation to disclose major shareholdings within unlisted joint stock companies which have issued bearer or scriptless shares.

Any legal entity or individual who, following the acquisition of voting securities in such a company, regardless of the fact that they represent the share capital or not, would be in possession of 25% or more of the total voting rights, must inform the company of the number of shares they hold.

This notification must be made within the five working days that follow this acquisition. The same mandatory disclosure must be made, following the same terms and conditions, in case of share transfers if for instance, following this transfer the voting rights fall below the threshold of 25% [2].

Consequences linked to the mandatory disclosure

Nobody can take part in the votes at the company’s general meeting with a number of votes superior to those linked to the total number of shares declared to be in their possession at least 20 days before the general meeting is due to take place [3].

Furthermore, the board of directors is entitled to delay a general meeting by three weeks if the company receives a notification that the 25% threshold has been reached or is informed that such a notification shall or should have been made in accordance with the Belgian Companies Code [4], within the 20 days preceding the scheduled general meeting. The agenda of this meeting can be modified or amended [5].

Penalties for failure to disclose shareholdings

Failure to disclose shareholdings can lead to the following sanctions applied at the request of the company or one of its shareholders with voting rights by the President of the Commercial Court of the company’s registered office as in summary proceedings:

  • The suspension of all or part of the rights related to the relevant shares for a duration of maximum one year
  • The temporary suspension of the general meeting that has been convened
  • The obligation to sell the relevant shares to a third party that has no ties with the current shareholder within a specific time limit [6].