Pim Rank: Farewell to the bearer share
This column was originally written in Dutch. This is an English translation.
Since 1 January 2026, individual bearer shares in a public limited company have been a thing of the past. Individual bearer shares that were not surrendered to the company on that date have since become nothing more than (in principle worthless) pieces of printed paper.
By Prof. Pim Rank, Solicitor at NautaDutilh in Amsterdam and Professor of Financial Law at Leiden University
Securities positions within the meaning of the Securities Giro Transfer Act (Wge) corresponding to individual bearer securities held under that Act could no longer be delivered by giro transfer after 1 January 2013 due to an amendment to the Wge in 2010. This required the bearer securities to be embodied in a collective certificate. This also applied to securities positions within the meaning of the Wge corresponding to individual bearer shares in a public limited company held under that Act. Following on from this, the Bearer Shares Conversion Act has now also put an end to the use of individual bearer shares outside the book-entry system. The final deadline for this process expired on 1 January 2026.
Now that this date is behind us, it seems appropriate to me to take a moment in this column – following on from my previous column on this subject (FI 2019/3, p. 39) – to reflect on the abolition of the individual bearer share. After all, this is a security that for many years served as the instrument par excellence for participating in the capital of a public limited company and which now, if the share certificate has not been surrendered to the company by 1 January 2026, is really only suitable for framing and hanging on the wall.
Under the Wge, since 1 January 2013, securities positions corresponding to bearer securities can only be delivered in book-entry form if these bearer securities are embodied in a collective certificate. Individual bearer securities held in custody under the Wge had to be converted by the issuing institution into a collective certificate or registered securities before 1 January 2013 in order to be delivered in book-entry form. Subsequently, the Conversion of Bearer Shares Act has now provided for the abolition of non-book-entry individual bearer shares. Under this Act, bearer shares in a public limited company may, from 1 January 2020, only be issued in the form of a collective certificate held in custody in accordance with the Wge and may only be traded via a securities account with an intermediary within the meaning of this Act.
Outstanding bearer shares that were not held via the Wge could be converted into registered shares by the company by means of an amendment to the articles of association by 31 December 2019 at the latest. In the absence of such a conversion, the shares became registered by operation of law from that date. However, shareholders could only exercise the rights attached to their shares after surrendering the individual certificates to the company.
Individual bearer shares that had not been deposited in accordance with the Wge by 31 December 2020 at the latest or had not been surrendered to the company by this date were acquired by the company by operation of law and free of charge on 1 January 2021. However, the company was not allowed to dispose of or cancel the shares until 1 January 2026. By that date at the latest, a shareholder could still submit individual bearer shares to the company in exchange for replacement registered shares.
Outstanding bearer shares that had not been converted by that date are no longer shares in the corporate sense, but merely pieces of paper from which no rights can be derived. It's enough to make you feel wistful.
Read the original column in Financial Investigator magazine