The summer holidays are fast approaching, and we hope you'll be able to get away for a while to relax and enjoy this special time of year. However, before you set off for your holidays, we would like to remind you of the new notification obligation, which entered into force on 5 February 2010, applicable to the holders of bearer or dematerialized shares constituting a stake of at least 25% in a private limited liability company. Such shareholders must notify the board of directors of their shareholdings before 5 August 2010. It could be advisable to send these shareholders a reminder to this effect before the summer holidays.
Please find below a short overview of the new notification obligation.
New notification obligation for certain shareholders of private limited liability companies
The Belgian legislature recently introduced new Article 515bis into the Belgian Company Code, by way of the Act of 18 January 2010 amending the Act of 11 January 1993 on the prevention of the use of the financial system for the purposes of money laundering and the financing of terrorism (hereinafter the "Anti-money Laundering Act"). New Article 515bis imposes a notification obligation on certain holders of dematerialized or bearer shares with voting rights in limited liability companies (naamloze vennootschappen/sociétés anonymes) that are either not listed or that have not provided for notification thresholds in their articles of association. This notification obligation does not apply to the holders of registered shares.
Since 5 February 2010, the abovementioned shareholders have been obliged to notify the company if their stake rises above or drops below 25%. The notification must be made within five business days following the date of the acquisition or sale by which the aforementioned 25% threshold is crossed.
Purpose of the notification obligation
Article 515bis was introduced in order to give companies the possibility to do business with natural persons and legal entities subject to a reporting obligation under the Anti-money Laundering Act, such as banks and other financial institutions. Under the Anti-money Laundering Act, companies and financial institutions are required to report the names of their ultimate beneficiaries, which must always be natural persons. Therefore, if a company's shareholder is a legal entity, it must be possible to go up the chain and identify a natural person as the ultimate beneficiary.
Transition period for existing 25% shareholders
For shareholders who met the requirements for the notification obligation when the new rules entered into force on 5 February 2010, the Belgian legislature has provided for a six-month transition period, i.e. before 5 August 2010. It should be noted that the extended deadline only applies to shareholders whose stake in the company (of at least 25%) remains unchanged during the transition period. If such a shareholder's stake rises above or falls below the 25% threshold during the transition period, the duty to notify will apply; in this case, as mentioned above, the notification should be made within five business days following the date of the acquisition or sale that causes the 25% threshold to be crossed.
Sanctions for failure to fulfil the notification obligation
Three types of sanctions may be imposed if a shareholder does not fulfil its duty to notify the company of its shareholding within the six-month transition period or five business days, as the case may be.
Firstly, pursuant to Article 516 of the Company Code, the president of the commercial court of the place where the company's registered office is located may rule in summary proceedings to:
- suspend the exercise of the rights attached to all or part of the shares concerned for a period of up to one year;
- postpone a general meeting of shareholders which has already been called for; or
- order the sale of the shares in question to an unrelated third party, under court supervision and within a given period of time, which may be extended.
Such proceedings may be started either by the company or by a shareholder. If the shares concerned are voted with, even though the voting rights have been suspended, the decision(s) taken shall be deemed null and void if the required quorum or majority would not otherwise have been met.
Secondly, pursuant to Article 534 of the Company Code, the company's board of directors may postpone a general meeting of shareholders for up to three weeks if and when the board learns that a notification pursuant to Article 515bis of the Company Code should have been or will be made. The board must postpone the meeting no later than twenty days before its scheduled date. A new general meeting will then be called as usual, in which case the agenda may be supplemented or even amended.
Finally, pursuant to Article 545 of the Belgian Company Code, no shareholder may vote at a general meeting with more shares than s/he has notified to the company, at least twenty days before the date of the general meeting, in accordance with Article 515bis of the Belgian Company Code. If a shareholder nonetheless votes with shares whose voting rights have been suspended, the decision(s) taken shall be deemed null and void if the required quorum or majority would not otherwise have been met.
