The law of 14/12/2005 aims to abandon the bearer securities. The Royal Decree of 12/1/2006 extends the scope of the settlement system with some types of corporate bonds. This has an impact on the settlement system.
Law abolishing the bearer securities
The Law of 14 December 2005 abolishing the bearer securities was published in the Moniteur Belge on 23 December 2005 (erratum published on 6 February 2006). A correction has been published on 08 May 2007.
The main provisions of this Law are as follows:
- abolition of the bearer securities for the new issues as from 1 January 2008 (securities governed by Belgian law issued by Belgian issuers);
- dematerialisation ipso jure of certain bearer securities put into account on 1 January 2008 (notably the securities of Belgian companies quoted on a regulated market and the public securities). The other bearer securities must be converted into registered securities or in dematerialised securities, at the latest on 31 December 2013;
- ban on the physical delivery in Belgium as from 1 January 2008 (pertains to all securities).
Role of the National Bank as settlement body
No change takes place as to the securities which have already been issued in dematerialised form (linear bond (OLO), treasury certificate, Belgian Treasury Bill (BTB), commercial paper (treasury bond) and certificate of deposit). The National Bank remains the proper settlement body for those securities.
As to the company bonds referred to in article 485 of the Companies Code, the National Bank, pursuant to the Royal Decree of 12 January 2006 (published in the Moniteur belge on 3 february 2006), was designated, together with Euroclear Belgium, as settlement body.
The said Royal Decree recognised the National Bank as account holder.
As to the dematerialised securities of the Belgian companies, the following institutions have been granted recognition under the Royal Decree of 12 January 2006 (article 1):
- the credit institutions governed by Belgian law;
- the stockbroking firms governed by Belgian law;
- the clearing and settlement bodies based in Belgium;
- the branches of credit institutions or investment firms governed by foreign law established in Belgium which are authorised in their country of origin to hold securities on behalf of third parties.
Nevertheless, the above-mentioned institutions are held to inform the NBB - department Prudential supervision of banks and stockbroking firms in advance of the starting of this activity (article 2).
Issues in dematerialised form (book-entry issues)
The Regulations have been adjusted in such a way as to make issues in dematerialised form acceptable by the National Bank, in accordance with article 485 of the Companies Code. This applies to both new issues and the conversion of existing loans (cf annex 3.0 and in particular annexes 3.2a and 3.2b to the Regulations regarding the processing of the withholding tax on income from movable property when converting an existing loan).
The issuers must however verify whether their articles of association permit the issue of securities in dematerialised form.
In addition, the participants must previously inform the NBB of the commencement of their activity as account holder for dematerialised securities. This list is published on the website of the NBB.