In execution of the act of 14 December 2005 on the abolition of bearer shares, two royal decrees dated 25 July 2014 have introduced further rules for the practical organisation of the next steps in the dematerialisation process as of 1 January 2015. The decrees organise (i) the mandatory sale of securities for which no rightful owners have come forward, (ii) the subsequent transfer of the amounts deriving from the sale of the unsold securities to the Deposit and Consignments Fund ("Deposito- en Consignatiekas"/"Caisse des Dépôts et Consignations") , and (iii) the fine due after 1 January 2016 upon the return of such amounts or securities to the rightful owners.
Pursuant to the Act of 14 December 2005 on the abolition of bearer securities ("the Act of 14 December 2005"), as last amended by the Act of 21 December 2013 (see Eubelius Spotlights March 2014), with effect from 1 January 2014 bearer securities which have not been converted on the initiative of their owners have been converted by force of law into dematerialised securities or registered securities and registered in the name of the issuer. If the rightful owners have not come forward by 1 January 2015, the issuer must sell these securities on a regulated market or through a public auction (if the securities are not admitted to trading on a regulated market).
In accordance with article 11 of the Act of 14 December 2005, two royal decrees of 25 July 2014 (both published in the Official Gazette on 8 September 2014) have stipulated further rules on (i) the sale of securities by the issuer, (ii) the transfer of the proceeds from this sale and the unsold securities to the Deposit and Consignments Fund, (iii) the restitution of securities, and (iv) the calculation of the fine due by persons claiming the restitution of either the unsold securities or the proceeds of sale after 1 January 2016. The rules concerning the calculation of the fine are included in a separate royal decree, because they required deliberation in the Council of Ministers.
Sale of securities between 1 January and 30 November 2015
As of 1 January 2015, the securities for which no rightful owners have come forward must be sold by the issuer on a regulated market, in accordance with the rules applicable on that regulated market, or through a public auction (if the securities are not admitted to trading on a regulated market).
The royal decree of 25 July 2014 specifies that the public auction should be held in accordance with the rules of the Public Auction Market organised by Euronext Brussels. Insofar as no recent transactions have taken place, the auctioneer determines the first target price taking into account, for shares and other securities equivalent to shares, the net asset value of the issuer as derived from the most recent approved annual accounts. The issuer provides the auctioneer with these annual accounts and all other documents on the basis of which the auctioneer can set the target price. The royal decree of 25 July 2014 also stipulates the valuation method for other securities, such as (convertible) bonds and other debt instruments, units in UCITS and real estate certificates. Where some of the securities remain unsold after the first round of auction, there must be at least four subsequent rounds, unless all such securities have already been sold.
This sale takes place at the earliest 1 month, and at the latest 3 months, after the publication, on the issuer’s initiative, of an announcement in the Official Gazette and on the website of the market operator (of either the regulated market (listed securities) or the public auction platform (non-listed securities)). In addition to the Act of 14 December 2005, the royal decree stipulates which information the announcement should contain.
If the issuer itself purchases the securities that are offered for sale, the rules on the acquisition of own shares must be complied with. However, the issuer can deviate from the condition that the total nominal amount or, in the absence of a nominal amount, the total par value of all purchased shares or profit sharing certificates may not exceed 20% of the subscribed share capital (article 620, §1, 1, 2° of the Companies Code). If the (other) conditions of article 620 of the Companies Code are not satisfied, the repurchase can only be carried out for the purpose of immediate annulment of the securities within the framework of a capital decrease by the issuer (article 621, 1° of the Companies Code).
Transfer of the proceeds of sold securities and transfer of unsold securities to the Deposit and Consignments Fund
The proceeds of the sale of the securities must be paid immediately to the Deposit and Consignments Fund, after deduction of the costs which the issuer has incurred for the maintenance and management of the securities and their automatic conversion by force of law (however, apparently the costs of the mandatory sale and publications are not included). This deposit takes the form of a voluntary deposit in the name of the Deposit and Consignments Fund. The interest on those amounts will accrue to the Deposit and Consignments Fund.
Securities which have not been sold by 31 November 2015 (although they were offered for sale) must be deposited with the Deposit and Consignments Fund in December 2015. Since the securities no longer exist in physical form, the royal decree of 25 July 2014 stipulates that the deposit takes the form of a registration in the name of the Deposit and Consignments Fund in the securities register of the issuer. However, the Deposit and Consignments Fund does not become the owner of these securities, and the rights attached to these securities remain suspended. The registration is accompanied by an announcement of certain information to the Deposit and Consignments Fund, in a manner still to be determined by the latter. The information includes, among other details: information on the number of unsold securities and the certificate of registration of those securities in the name of the Deposit and Consignments Fund, the number of sold securities, the total proceeds from the sale and the deducted costs, the average sale price, and, if no securities were sold, the last known price on the date the securities were deposited with the Deposit and Consignments Fund (if the securities are admitted to trading on a regulated market) or the target price determined by the auctioneer at the time they were offered for sale.
The statutory auditor (or, in the absence of a statutory auditor, an external auditor, accountant or authorised bookkeeper) must confirm in writing to the issuer's administrative body that these formalities have been completed. The issuer must send this confirmation to the Deposit and Consignments Fund electronically and must mention this explicitly in the explanatory notes to the 2015 annual accounts.
Restitution by the Deposit and Consignments Fund (after recovery of the fine) as of 1 January 2016
From 1 January 2016 onwards, the rightful owner can claim from the Deposit and Consignments Fund restitution of either the amounts derived from the sale or of the unsold securities, provided that he can prove his capacity of rightful owner. The foregoing assumes submission of the securities in paper form or, if this is not possible (e.g. due to a merger, demerger or acquisition), the evidence of earlier operations (in principle in writing, unless the issuer, at its own risk, is willing to accept some other form of evidence). The Minister of Finance will announce the exact commencement date in the Official Gazette, since it is not yet possible to determine the number of unsold securities and thus the amount of time it will take for the Deposit and Consignments Fund to organise itself.
The Deposit and Consignments Fund must first restitute the unsold securities and only afterwards the amounts derived from the sale of the securities.
Prior to this, the Deposit and Consignments Fund has to collect the fine, which, as of 1 January 2016, amounts to 10% of the amount of the sold securities or of the equivalent value of the unsold securities which are the subject of a request for restitution per commenced year of arrears.
The calculation of the fine is governed by the second royal decree of 25 July 2014.
- For securities none of which were sold, the fine is based on the last known market price on the date the securities were deposited with the Deposit and Consignments Fund (if the securities are admitted to trading on a regulated market), or the target price determined by the auctioneer at the time they were offered for sale (if the securities are not admitted to trading on a regulated market), as communicated by the issuer.
- For partially unsold securities, the fine is calculated on the basis of the weighted average price which was obtained from the sale of the securities. This weighting is necessary since the sale may be spread over several days.
- Where all the securities were sold, the royal decree of 25 July 2014 likewise requires that the weighted average price which was obtained for the sale of those securities is taken as basis for calculation.
Therefore, as of 1 January 2025, the person requesting from the Deposit and Consignments Fund restitution of the net proceeds of the sold securities or restitution of the unsold securities will be obliged to pay a fine which amounts to 100% of the equivalent value. Nevertheless, he still can get the unsold securities back with priority (insofar as there still are any, and in any event against payment of the full equivalent value as of 1 January 2025).
The Deposit and Consignments Fund notifies the issuer of the identity of the person who obtained the restitution and of the number of returned securities, with a view to the registration of that person in the issuer's register instead of the Deposit and Consignments Fund. The Deposit and Consignments Fund issues a certificate to the person concerned, as evidence of the restitution.
As of 1 January 2026: Automatic attribution to the State, unless repurchased by the issuer
The amounts for which no restitution was requested on 31 December 2025 will be attributed to the State. Nevertheless, the rightful owner should have asked for restitution by 31 December 2024 at the latest if he wants to recover a fraction of the equivalent value, since the fine, as of 1 January 2025, already amounts to 100% (cf. supra).
Unsold securities can be repurchased by the issuer, if it notifies the Deposit and Consignments Fund that it wishes to do so, up until 31 December 2025 at the latest. The issuer will then be asked to submit a bid at a minimum price to be determined by the King. Otherwise the securities will accrue to the State. The issuer arranges the transfer via registration of the securities in the name of the State (or in the name of the issuer) in the issuer's securities register.