ABOLITION OF BEARER SHARES IN BONAIRE
Legislative amendment as of 1 July 2019
With effect from 1 July 2019, Book 2 of the Civil Code of the BES islands (Bonaire, St. Eustatius and Saba) has been partially amended. Bearer shares will be completely abolished; in the Netherlands, where the law has also been amended, an exception has been made for “book entry” (girale) bearer shares, unlike on the BES islands.
The consequence of the amendment of the law is that only registered shares can be held in a public limited liability company (NV). The NV is under an obligation to convert bearer shares into registered shares by means of an amendment to the articles of association. The conversion must take place no later than 31 December 2019. After the conversion, shareholders will not be able to exercise their rights until the share certificate has been surrendered to the NV and the shareholder has been registered in the shareholders’ register: these rights will therefore (temporarily) be suspended.
Bearer shares are automatically converted into registered shares in the articles of association in the event that the shareholders’ meeting does not pass an approving resolution on a proposed amendment to the articles of association before 1 January 2020 and this amendment has been implemented. This could be the case, for example, because the company did not submit an amendment to the articles of association in time or because the shareholders did not consent to a proposed amendment to the articles of association in time. The very next time the articles of association are to be amended, they must be brought into line with the law. The civil-law notary must ensure this.
It has also been provided that the shares, the share certificates of which have not been surrendered to the NV by 31 December 2020 at the latest, will be acquired by the NV free of charge (i.e. without consideration). This applies regardless of whether the articles of association exclude or restrict such an acquisition. In this exceptional case, a deed is not required because the acquisition takes place on the basis of the law (Article 3:80 paragraph 3 BW-BES).
It is not excluded that there will be companies that, as a result of the acquisition, will hold all the shares in themselves. In that case, one share is transferred to the joint managing directors. The NV may designate one share for this purpose and the joint managing directors may subsequently be registered as shareholders of this share in the companies register on the date on which the NV acquires the remaining shares free of charge. This will prevent the NV from acting in breach of the provisions of Article 2:100 of the Civil Code (BW-BES). The shareholding of the directors is linked to their function and, in the event of resignation, must be transferred to a successor director in accordance with the regular manner of transfer of shares.
Bearer shares will lapse if no shareholder presents himself within five years after the conversion into registered shares, with a share certificate. However, a shareholder who still reports to the NV with a share certificate after his shares have expired, but before 2 January 2026 at the latest, will receive registered replacement shares. This claim expires after five years. This corresponds to the limitation period that is currently customary for claims (Section 3:307 of the BES Civil Code). This regulation ensures that a shareholder can still exercise his shareholder rights during a transitional period, even after his share has lapsed. The shareholder can only claim suspended rights, such as profit distributions, until such time as the shares have been acquired by the NV free of charge.
This legislative amendment is a consequence of the recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes and of the Financial Action Task Force, which focus on combating tax evasion, money laundering and the financing of terrorism. These organizations have repeatedly recommended that the Netherlands and Dutch Caribbean identify holders of bearer shares or abolish such shares.
Karel Frielink
(Lawyer/Attorney)
(30 June 2019)
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