The now well-known process for the progressive dematerialization of bearer securities, the guiding principles of which are set out in the Act of 14 December 2005, as amended by the Act of 21 December 2013, is entering the home stretch. The Act has been implemented by numerous royal decrees, including the Royal Decree of 25 July 2014 containing long-awaited provisions on the sale of bearer securities when the holder's identity is unknown ("Royal Decree of 25 July 2014").

The Act of 14 December 2005, as amended by the Act of 21 December 2013, provides for the gradual abolishment of bearer securities on two main dates, namely 1st January 2008 and 1st January 2014.

1st January 2008

Since 1st January 2008, it has been forbidden for any company, regardless of whether it is listed on a regulated market, to issue new bearer securities. New securities may only be issued in registered or dematerialized form. Until 31 December 2013, it was still possible for bearer securities issued prior to 1st January 2008 to be in circulation.

1st January 2014

The second watershed event in the dematerialization of bearer securities under Belgian law, which is already behind us, was the conversion by operation of law on 1st January 2014 of all bearer securities which had not yet been converted on that date into book-entry or registered form.

This step concerned companies that had issued bearer securities before 1st October2008 which were still in circulation and for which they did not know the identity of the holders at midnight on 31 December 2013. Indeed, many holders of bearer securities had not yet requested conversion. The purpose of conversion by operation of law was to avoid having bearer securities linger indefinitely.

a. Conversion by operation of law into book-entry (dematerialized) form

On 1st January 2014, all outstanding bearer securities were converted by operation of law into book-entry form, provided the issuer had taken, by 31 December 2013, the necessary measures to ensure conversion into dematerialized form. These measures included amendment of the company's articles to provide for dematerialized securities as well as the conclusion of an agreement with a financial institution (authorized account holder) or clearing house (Euroclear Belgium).

The securities must be booked in the issuer's name on a dematerialized securities account held with a financial intermediary. All dematerialized securities held by the issuer with the financial intermediary (the top of the pyramid) must be recorded in the issuer's securities register. The costs of opening and maintaining the account are borne by the issuer.

b. Conversion by operation of law into registered form

If an issuer did not wish to allow the issuance of dematerialized securities or if it simply neglected to amend its articles to provide for this possibility or failed to take the necessary measures with a clearing house or authorised account holder, its bearer securities were converted by operation of law into registered form on 1st January 2014.

The registered securities were then recorded, or should have been recorded, in the issuer's securities register.

c. Suspension of the rights of shareholders whose identity is unknown

Since 1st January 2014, the rights attached to bearer securities converted by operation of law into dematerialized or registered form have been suspended. This means that persons who held bearer shares on 31 December 2013 and did not notify the issuer of their existence have had their corporate rights, such as the right to participate in and vote at general meetings, and economic rights, such as the right to receive dividends, suspended.

Issuers must keep the dividends and interest due on securities whose rights have been suspended. The holder's rights are suspended until the holder declares itself to the issuer and requests recordation in its own name (thus not in the issuer's name) in a securities account or the issuer's securities register, provided however that the holder comes forward no later than the date indicated by the issuer in the notice preceding the sale. If the securities have not been sold by 30 November 2015, it could still be possible to allow holders to make themselves known to the Deposits and Consignments Fund between 1st January 2016 and 31 December 2025, given that any unsold securities must be transferred to the Deposits and Consignments Fund on 1st December 2015. The holders would then have to turn to the issuer to recover the dividends and interest held by the latter. If the securities holder does not come forward by 31 December 2025, the issuer must remit interest and dividends accrued on the securities to the state.

Between 1st January 2015 and 30 November 2015 - sale of securities for which the identity of the holder is unknown

The next milestone in the dematerialization of securities is the obligation for issuers to sell bearer (physical) securities for which the identity of the holder is unknown on 1st January 2015.

a. Publication of a notice prior to sale of the securities

A notice must be published in the annexes to the Belgian State Gazette, as well as on the website of Euronext, i.e., the market operator (i) responsible for the regulated market and for the multilateral trading facility (MTF) on which the securities will be sold (for securities admitted to trading on a regulated market or on a MTF) or (ii) organising the public auction of the securities (for securities which are not admitted to trading on a regulated market.

Note that Euronext announced on 2 December 2014 the launch of the Euronext Expert Market, which is the first electronic trading platform for non-listed securities. The Euronext Expert Market is classed as a MTF and it will be launched on Tuesday 9 December 2014. The Euronext Expert Market replaces the former floor-traded Belgian Public Auction Market (Marché des Ventes Publiques/Markt van de Openbare Veiligen), which was still organised under an open outcry format.

Of course, issuers are free to use any other means or channels of communication as they see fit, such as publication on their own website (provided they have one, which is the case for listed companies but not necessarily for smaller ones) or in a local, regional or national newspaper.

The notice must contain the entire text of Article 11 §2 of the Act of 14 December 2005 as well as the items of information listed in Article 2 of the Royal Decree of 25 July 2014. A model notice for the publication required by Article 11 of the Act of 14 December 2005 has been prepared by the Dmat Task Force and is available on its website ( It is strongly recommended to use this notice, which contains all required statutory mentions.

b. Preparation for the sale

Issuers which have not already done so must first proceed with a reconciliation of their capital. This means that they must verify the number of former bearer securities still in circulation compared to the total number of such securities issued since incorporation.

The securities will then be sold on the market in question through a financial intermediary (Euroclear Belgium or an authorised account holder). Issuers must thus first designate one or more financial intermediaries to handle the sale of the securities.

c. Sale of the securities

No sales can take place prior to expiry of a one-month period following publication of the abovementioned notice on the website of Euronext (the so-called "frozen period") or more than three months after this publication date. As sales can start on 1st January 2015, issuers that so wish may already (i.e. in 2014) proceed with publication of the information notice, so that the waiting period runs (in full or in part) in 2014.

Securities admitted to trading on a regulated market, for which the holders are unknown on 1st January 2015, must be sold on the regulated market concerned. Thus, securities listed on a regulated market will be sold on the regulated market in question or Euronext Brussels. Securities listed on Alternext or the Free Market will be sold on Alternext or the Free Market, as the case may be.

The sale of all other securities shall be carried out on the Euronext Expert Market (former Public Auctions Market), in accordance with the same publication formalities applicable to the sale of listed securities (namely, publication of a notice of sale in the Belgian State Gazette and on Euronext's website).

In all cases, sales shall be conducted in accordance with the operating rules applicable to the market in question (available on Euronext's website).

The securities must be presented for sale during at least four consecutive sessions in order to maximize the number of securities sold. The objective is to deposit as few securities as possible with the Deposits and Consignments Fund. The four sessions need not all take place between the first and third months following publication of the notice on Euronext's website, only the first session need be held during this period; further, if all securities are sold at the first session, no other sessions need be organised.

For publicly traded securities, determination of the sales price will not pose a problem, as the listing price at the time of disposal will be used.

On the other hand, for unlisted securities, if the issuer has never been involved in a transaction on the Public Auctions Market (replaced as from the 9 December 2014 by the Euronext Expert Market, the commissioner must fix the sales price. In order to do so, various documents are required. To this end, the issuer must submit to the commissioner its last approved annual accounts as well as any other document allowing the latter to establish the indicative (share) price.

d. Deposit of the sales proceeds with the Deposits and Consignments Fund

The net proceeds from sales of all securities, listed or not, must be deposited immediately by the issuer with the Deposits and Consignments Fund.

e. Compliance check

The legislature wished to ensure that all parties concerned respect their obligations in the context of dematerialization. Issuers must therefore have their statutory auditor or an external accounting professional or auditor confirm that three main obligations have been fulfilled. These obligations are: (i) publication of a notice announcing the sale, (ii) organisation of the sale of securities whose holders have not come forward, and (iii) transfer of the sale proceeds and/or unsold securities to the Deposits and Consignments Fund. This confirmation must be addressed to the issuer's management organ, which in turn is obliged to (i) forward it as soon as possible to the Deposits and Consignments Fund by electronic means and (ii) mention it in the annexes to its annual accounts for FY 2015.

1st December 2015 - deposit of unsold securities with the Deposits and Consignments Fund

Any unsold securities remaining at the end of the sale must be transferred no later than 30 November 2015 to the Deposits and Consignments Fund, which will then become the sole entity from which the securities can be recovered.

1st January 2016

If all securities of an issuer are sold by 1st January 2016, the issuer has no further obligations. On the other hand, as from 1st January 2016, any person which can prove having held former bearer securities may request restitution from the Deposits and Consignments Fund of either the sales proceeds or the unsold securities. A fine equal to 10% of the sales proceeds or the exchange value of the securities, for unsold securities, must be paid by the securities holder per year of delay. Thus, the longer a securities holder waits before requesting restitution, the less the securities will be worth. Upon expiry of a period of 10 years, the value of the securities will be reduced to nil.

31 December 2025

What will happen to unsold securities and sales proceeds deposited with the Deposits and Consignments Fund for which restitution not requested within a period of 10 years as from 2015? With respect to sales proceeds, the answer is simple: they will revert to the state. Unsold securities will also become state property. There is however another possibility, namely the issuer of the unsold securities can redeem them, provided a written redemption request is submitted to the Deposits and Consignments Fund no later than 31 December 2025. If the state refuses the issuer's offer (e.g., the price proposed by the issuer is less than the minimum that will be established by royal decree) or if the issuer does not submit a redemption request, the securities shall be allocated to the state and the issuer shall ensure the transfer of title to the securities by making the necessary entries in its securities register;

This acquisition of securities in 2025 by the state will have a surprising consequence. The state will indeed become a shareholder in certain companies, which could be family-owned businesses or SMEs, for instance.

The dematerialization process will undoubtedly continue to attract substantial attention until 2026.