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Good Governance: The End of Anonymous Shares?

By Reinier W.L. Russell, LL.M.
Russell Advocaten B.V.
Amsteram, Netherlands

A new bill provides far-reaching measures to end the anonymity of shareholders in NVs (public limited companies) that are not listed. What are the consequences for shareholders and companies?

Bearer Shares

NVs can issue two types of shares: registered shares and bearer shares. Bearer shares are not registered in the name of the shareholder and easily transferrable to any other individuals. The person who “bears” the share (hence: “bearer”) will be considered as the owner of the share.

The anonymity of shareholders and the free transferability of shares allows for abuse, such as tax evasion, money laundering and the financing of terrorism. The Act identifying holders of bearer shares must end this.

The Legislative Proposal

The legislative proposal makes it possible to identify all holders of bearer shares by the following measures:

  • Holders of bearer shares must deposit them with a so-called intermediary (generally, a bank or investment company).

  • Shares issued after the legislative proposal has come into force also have to be deposited with an intermediary.

  • Intermediaries must keep records of the data of the shareholders.

If necessary, investigation authorities can obtain the data of the shareholders from the intermediary. In this way the bill brings the rules for bearer shares of NVs that are not listed in line with the regulations for the trade in shares of listed companies.

If bearer shares are not deposited for custody with an intermediary, the rights attached to the shares (such as the profit entitlement and the right to attend meetings) will be suspended one year after the Act has come into force. Holders of these shares will then not be able to execute the rights until the shares will have been deposited.

After two years, the bearer shares that have not been deposited will expire. Holders of these shares will lose their share of the company.  Instead, they will be granted a claim on the consignation office of the State. This compensation equals the nominal value of the share which can be significantly lower than the economic value. Besides, by the expiration of the bearer shares the outstanding capital of the company can get under the minimum of EUR 45,000.

The Anonymity of Shareholders

This is not the first attempt to restrict the anonymity of shareholders. The central register of shareholders proposed in 2015 has not been introduced yet but has been reinvigorated by a new legislative proposal in January. Who exactly will be given access to the central register of shareholders is not yet known, but the explanatory memorandum accompanying the proposal lists several government authorities (including the tax authorities) and notaries.

More Information

Russell Advocaten will gladly provide you with advice on what the legislative proposal means for you and what you have to do. Do you have (a business with) bearer shares? Then you should keep an eye on the developments. Naturally, we will gladly keep you informed! Please contact us.

The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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