Certification of securities issued by commercial companies

On 15th July, 1998 new legislation was passed relating to the ownership of shares and convertible bonds issued by both Belgian public limited companies (NV or SA) and private companies (BVBA or SPRL). The legislation makes it possible to separate legal ownership (mainly voting and subscription rights) from beneficial ownership (the right to dividends and other distributions) in securities of this type.

Separation can be achieved by vesting legal ownership of the securities in an intermediate incorporated vehicle, such as an investment company or a non-profit association. The vehicle will be the holder of the registered or bearer shares issued by the operating company and will issue certificates representing the right to dividends and other distributions in respect of those shares. The certificates may be issued in registered, bearer or dematerialised form, but bearer certificates may not be issued if the underlying shares are registered.

The intermediate vehicle will be fully tax transparent and will be under a duty to redistribute immediately to the beneficial owner all dividends or other cash distributions received in respect of the underlying shares, after the deduction of its costs.

If the shares are publicly traded, the intermediate vehicle is not allowed to sell the underlying shares. In the absence of any provision to the contrary, certificates may be exchanged at any time at the request of the beneficial owner. This right may only be waived for a limited time. These new provisions will enter into force at a date yet to be determined. Marc Van Der Haegen, Liedekerke Wolters Waelbroeck & Kirkpatrick.

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