Important Message Regarding the Conversion of Bearer Shares: Act before 31 December 2011

After lengthy negotiations, Belgium's government-in-waiting has finally agreed on a budget for 2012. The proposed budget provides for several new tax measures.

The purpose of this newsflash is to draw your attention to one specific measure which is particularly important for the holders of bearer shares. Effective 1 January 2012, a new tax of 1% will be applied to the conversion of bearer shares into dematerialised or registered form. This tax will be increased to 2% on 1 January 2013. Therefore, it may be wise to act before year's end.

The base on which the new tax will be calculated is not yet clear. For listed shares, the tax base will normally be the market value of the share. For unlisted shares, however, the tax base is likely to be determined either with reference to a price at which the share was recently traded or the company's net asset value.

In previous newsletters, we informed you that all bearer shares, for both listed and unlisted companies, must be recorded in the company's shareholders' register or in a securities account held by a financial institution by 31 December 2013. All bearer shares that have not been converted by this date will automatically be converted into dematerialised form or, if the company's articles of association do not allow this, into registered form. Most likely, automatic conversions carried out after 31 December 2013 will be subject to tax at a rate of 3%.

The new tax will normally be levied either by the financial institution or the issuer, as the case may be.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.