Dematerialisation

The Act on the abolition of bearer securities took effect on 1 January 2008. This act applies to all securities of Belgian origin: government bonds, bank savings certificates, subordinated certificates, funds, listed or unlisted company shares etc.

The act and its background

This act was adopted in 2005. The intention was to address frequent forms of fiscal fraud, such as bank savings certificates that change owners unnoticed, or shares discreetly transferred to heirs. It goes without saying that this is only possible with written securities. For this reason the legislator addresses the ‘material’ character and demands ‘dematerialisation’ of these securities.

Dematerialisation is possible by means of registration of shares (in the books of the issuing company, financial institution etc) or by means of deposit of the securities into a securities trading account.

Practical implementation

Preparatory stage (2008-2013)

The legislator gives shareholders plenty of time to deposit their current securities into a securities trading account. Paper securities can no longer be bought in case of new investments or in case of reinvestment of matured securities.

Conversion (2014)

Shareholders who have not undertaken any action by 2014 have to pass on the initiative. The company issuing the securities, Sioen Industries NV, has to convert any remaining securities itself. The company does this by entering the securities in its books as registered securities of Sioen Industries until the rightful owner presents himself. Pending dematerialisation, the securities can no longer be cashed or reinvested and the voting right at the shareholders’ meeting is suspended. The depositing of these securities into a securities trading account is the only way to be restored to all rights of the security.

Sales (2015)

If the shareholders still have not undertaken any action by 2015, their securities are offered for sale at the stock exchange at the applicable price. They can still claim the profits from the Deposit and Consignment Office, but will have to pay administrative costs.

Fine (2016, 2017, 2018, ...)

Shareholders can still claim the profits of their securities from the Deposit and Consignment Office, but a fine will be charged on top of the administrative costs. For every year they wait they have to pay an additional 10% for every started year. This means that nothing will remain of the original sale price by 2025: the investment is completely absorbed by the fine.