A share register is an indispensable element for every company, as it not only summarises who holds shares and how many but it also records the share transfer transactions.
The information recorded in the share register is essential when it comes to a company running smoothly, especially for convening the annual general meeting as well as when amending the articles of association, liquidating the company, applying for credit and in many other cases.
The new Companies and Associations Code (Wetboek van Vennootschappen en Verenigingen) allows public limited companies, private limited companies and cooperative companies to now keep an electronic share register.
The general meeting is no longer required to adopt this resolution, and henceforth the management body can decide to do so.
Most companies still keep a hardcopy register, while an electronic version means that the rather careless attitude that some companies have to keeping a share register is no longer an issue. In other words, keeping an electronic share register is not just an unnecessary luxury.
The law does not only abandon the principle of one share, one vote, but it does also provide that the transfer restrictions under the articles of association and, when one of the parties requests such, the transfer restrictions that arise out of agreements or the conditions for issuance must be stated in the share register.
The authorities are also requesting an increasing amount of data from companies and organisations about their shareholders (through instruments such as the UBO register).
2. Required information in the share register
In accordance with the Companies and Associations Code, the following information must be recorded in the share register:
- the total number of shares issued by the company and, where applicable, the total number of shares by type;
- for every shareholder, the names and addresses of natural persons and the names, registered offices and identification numbers of legal entities;
- the number of shares held by each shareholder and the types of shares they hold;
- the payments made on each share;
- the transfer restrictions under the articles of association and, when one of the parties requests such, the transfer restrictions that arise out of agreements or the conditions for issuance;
- the transfer and assignment of shares, together with the date it was performed. If an electronic register is kept, the transfer declaration can be in electronic form and be signed using electronic data that can be linked to a specific person and that can demonstrate that the integrity of deed has been retained; and
- the voting rights and profit entitlements associated with each share as well as their share in the liquidation balance, if that differs from the profit entitlements.
3. Reliability and discretion guaranteed
Keeping an electronic share register boils down to keeping personal data in electronic form. The primary points for attention concern the protection of that data, which means preventing manipulation and/or the ability for unauthorised persons to access the data.
A company can keep its own electronic share register or outsource the work of keeping and managing it to an external confidential party. The administrator of the electronic share register is obliged to create a system that controls access in order to prevent unauthorised parties gaining access to the personal data contained in the register. There are three parts to the access control: (i) the identification of the person, (ii) checking the legal capacity that serves as the basis for claiming access to the data, and (iii) the relevant nature of the requested data.
The administrator of an electronic register must also employ all necessary measures in order to track down consultations of and operations performed in the electronic share register, whether normal or abnormal ones. The administrator must identify the authors of such actions, record the date thereof, and retain this information as long as the affected personal data is recorded in the electronic share register. What this means is that the administrator is responsible for the integrity of the register and must prevent outside parties from being able to manipulate it. This means that, where necessary, the administrator can limit the number of parties who are able to access it.
The Institute of Accountants and Tax Consultants (IAB) and the Civil-Law Notaries' Federation have already jointly launched a reliable electronic share register through the "eSTox" tool. Notaries, accountants and tax consultants will be able to register shareholder information electronically and, at a later stage, a company's management body will be able to register such information itself, although in that event one will be able to see what information has been verified by a notary, accountant or tax consultant.
But there is more than that under the hood of the new IAB platform, and a business that uses it will be able to automatically send to the FPS Finance that information required under the UBO rules using the electronic share register. That makes life considerably easier for company directors, in view of the fact that they are responsible for compliance with the UBO rules. The intention is that, in due course, a company can gain access to all the deeds concerning the company that a notary retains (articles of incorporation, amendments to the articles of association, etc).
4. Turning your hardcopy share register into an electronic one
The Companies and Associations Code has introduced the principle that registration in an electronic register holds as the presumption of shareholdership until evidence to the contrary is presented.
However, this presumption does not apply to hardcopy share registers. When a hardcopy share register is converted into an electronic one, the hardcopy version must be retained for its evidentiary value when it comes to the registration of shareholders from before the electronic share register was introduced.
Companies are not obliged to keep electronic versions of all securities registers, and a company could decide to, for example, have an electronic register of bondholders and a hardcopy share register. If a company discontinues keeping an electronic register it must be printed out in full, dated, signed and retained by the company.
Where an electronic share register is discontinued because the company is dissolved, a printout must be kept for at least five years after the liquidation concludes.