EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 3 November 2005 
at the request of the Belgian Ministry of Finance   
on a draft law abolishing bearer securities and a draft royal decree concerning dematerialised 
corporate securities 
(CON/2005/43) 
 1. On 18 July 2005 the European Central Bank (ECB) received a request from the Belgian Ministry of 
Finance for an opinion on a draft law abolishing bear er securities (hereinafter the ‘draft law’) and a 
draft royal decree concerning dematerialised corpor ate securities (hereinafter  the ‘draft decree’). 
2. The ECB’s competence to deliver an  opinion is, for both the draft law and the draft decree, based 
on Article 105(4) of the Treaty establishing the European Community and on the third, fifth and sixth indents of Article 2(1) of Council Decisi on 98/415/EC of 29 June 1998 on the consultation of 
the European Central Bank by national authorities regarding draft legislative provisions
1, since: 
- the draft law: (i) abolishes bearer securities, inter alia  to enhance the protection of the 
integrity of the financial system against possi ble abuses; (ii) modernises the Belgian legal 
framework regarding the holding of demateriali sed corporate securities and the settlement of 
transactions therein; and (iii) changes the regi me applicable to certain types of collateral 
provided to the Nationale Bank van België /Banque Nationale de Belgique (NBB).  
- the draft decree designates and imposes cer tain requirements on the entities that are 
authorised to hold dematerialised corporate securities accounts, and designates the entities 
that are authorised to settle transactions in such securities, with the NBB being a designated 
entity in both cases (although only for corporate bonds in the latter case). 
3. The first objective of the draft law is to abolish bearer securities (e.g. corporate and public debt 
securities) through a gradual phasing-out of such sec urities. Under current Belgian law, securities 
are issued in registered, bearer or dematerialised  form, such forms being mutually exclusive. In 
summary, the abolition is effected through the proh ibition of new issuances of bearer securities 
from 1 January 2008 onwards and th rough the conversion of existing bearer securities into either 
registered or dematerialised securities by 1 Janua ry 2014. The abolition applies to bearer securities 
issued by Belgian issuers. Subject to r estrictions regarding their physical delivery2, certain bearer 
                                                           
1  OJ L 189, 3.7.1998, p. 42. 
2  Article 4 of the draft law. 
2 securities (e.g. commercial paper or corporate bonds) that are exclusively issued outside Belgium 
or are governed by foreign law do not fall within the scope of this abolition3. Moreover, since the 
draft law applies only to bearer securities issued  by entities incorporated under Belgian law, and 
since there is no limitation on the categories of secur ities that may be issued under Belgian law, the 
draft law does not prevent foreign entities from issu ing certain categories of bearer securities in 
Belgium under Belgian law, subject only to the r estriction that such securities are not physically 
deliverable in Belgium4. 
4. The ECB notes that the revised Forty Recommendati ons of the Financial Action Task Force on 
Money Laundering5 (hereinafter the ‘FATF Recommendations’), setting out international standards 
for safeguarding the integrity of the financial system, emphasise the importance of customer 
identification and specifically refer to the risks associated with  bearer securities6. Furthermore, the 
effective implementation of FATF Recommendati on 5 (‘financial institutio ns should undertake 
customer due diligence measures, including iden tifying and verifying the identity of their 
customers’) might also be of relevance in this c ontext. Under Belgian law the holders of registered 
and dematerialised securities can be easily identified,  which is, for instance, useful in the context of 
payments made in relation to securities, e.g. dividends or redemptions, and for ascertaining the 
capital ownership of legal pers ons, including financial instituti ons. A regime under which only 
registered or dematerialised securities can be i ssued might contribute to the protection of the 
integrity of the financial system, and could theref ore be an important factor in safeguarding that 
system’s stability. The ECB therefore welcomes the first objective of the draft law. Furthermore, 
the ECB notes that the abolition of bearer secur ities could assist the compilation of statistical data7, 
since statistical authorities in Member States are also often unable to identify the ultimate 
beneficial owners of bearer securities. In additio n, the ECB underlines the usefulness, including for 
statistical purposes, of systematically allocati ng a unique and official identification number, 
preferably the International Securities Iden tification Number (ISIN, which respects ISO 
Standard 6166), to securities issued. 
5. The second objective of the draft law is to modernis e the current legal framework, laid down in the 
Belgian Companies Code ( Wetboek van Vennootschappe n/Code des Sociétés ), regarding 
dematerialised and, to a lesser extent, register ed securities (e.g. shares, bonds and subscription 
rights) issued by a naamloze vennootschap/société anonyme  (NV/SA) or a commanditaire 
vennootschap op aandelen/société en commandite par actions  (Comm.VA/SCA) incorporated 
under Belgian law. Under the draft law, demateri alised corporate securities may be held not only 
with authorised account holders, as is already cu rrently provided for in the Companies Code, but 
                                                           
3  Last two indents of Article 2, 1º of the draft law. 
4  Article 4 of the draft law. 
5  June 2003; available on the FATF ’s website (www.fatf-gafi.org). 
6  See in particular FATF Recommendation 33; see also th e explanatory memorandum to th e draft law, pp. 2 and 3. 
7  See Article 5 of the Statute of the European System  of Central Banks and of the European Central Bank. 
3 also directly with securities settlement institutions8. Pursuant to the draft law9, the draft decree 
designates which securities settlement institutions are authorised to maintain dematerialised 
corporate securities (‘assurer la conservation des titres dématérialisés’) and settle transactions 
therein. The ECB notes that the supervision by the Commissie voor het Bank, Financie- en 
Assurantiewezen/Commission bancai re, financière et des assurances  (CBFA; the Belgian Banking, 
Finance and Insurance Commission) of the securities settlement institutions that are authorised to 
settle transactions in dematerialised corporate secu rities is already provided for in Article 23, §2 of 
the Law of 2 August 2002 on the supervision of  the financial sector and on financial services. 
However, contrary to what the Companies Code cu rrently provides, the draft law explicitly charges 
these securities settlement institutions with the ta sk of maintaining dematerialised corporate 
securities in addition to the task of settling tran sactions therein. The ECB understands that the 
CBFA’s prudential supervision under Article 23, §2 also encompasses these maintenance activities 
of the securities settlement institutions.  
6. The draft law10 inserts a new provision11 into the Companies Code, which allows authorised 
account holders of dematerialised corporate securitie s to act as the ultimate depository or custodian 
(i.e. without having to deposit these securities w ith a securities settlement institution), provided 
that: (i) these securities are not listed on a regulat ed market; (ii) the account owner has agreed to 
this ultimate holding; and (iii) the entire volume of  a particular securities issuance is booked with 
the issuer in the name of one account holde r only. The ECB understands that the NBB may 
exercise its system oversight in  respect of the securities holdings  falling under this new provision 
pursuant to Article 8 of the Organic Law on the Nationale Bank van België /Banque Nationale de 
Belgique, for instance if such holdings are, as a result, inter alia , of their nature and volume, of 
systemic importance. The NBB’s abilit y to exercise such oversight is important in view of the role 
played by central banks in the oversight of securities settlement systems. 
7. Finally, the draft law12 abolishes two Belgian statutory pr ovisions that prohibit and provide 
criminal sanctions for: (i) participation in a ge neral meeting vote by registering as an owner of 
securities which do not, in reality, belong to the participant; and (ii) the delivery of securities in order to allow such participation. The rationale fo r this abolition is to resolve the legal uncertainty 
surrounding participation in a general meeting vote with registered shares and bonds that are held 
through an intermediary
13. The ECB takes note of this aspect of the draft law, the aim of which is 
to enhance the efficiency and legal soun dness of intermediated book-entry securities. 
                                                           
8  Article 20, §1 of the draft law. 
9  Article 20, §2 of the draft law. 
10  Article 22 of the draft law. 
11  Article 475ter. 
12  Article 32 of the draft law. 
13  See pp. 23 and 24 of the explanatory memorandum. 
4 8. Another objective of the draft law is to amend two existing legal provisions that particularly 
concern the NBB. First, the draft law14 extends the application of the simplified enforcement 
procedure laid down in Belgian law15 in relation to in rem  collateral arrangements and loans for 
financial instruments, to claims ( schuldvorderingen /créances ) provided to the NBB as collateral in 
the framework of the NBB’s credit operations. The ECB welcomes this new provision, which will 
become particularly relevant when the NBB has to accept large quantities of claims, including bank 
loans, as adequate collateral with in the framework of the Eurosystem’s monetary policy operations. 
The ECB refers in this context to the introduction of a single list of eligible collateral for such 
operations, which will from 1 Ja nuary 2007 include bank loans16. Second, the ECB also welcomes 
another provision of the draft law17, which changes the current refe rence to ‘cash or financial 
instruments’ as the assets underlying ‘collatera l’ within the meaning of the Belgian law18 
implementing Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 
on settlement finality in payment and securities settlement systems19 (hereinafter the ‘Settlement 
Finality Directive’) with a new reference to ‘all r ealisable assets (including cash and claims)’. This 
broader reference is in line with Article 2(m) of the Settlement Finality Directive. Unlike the 
current reference, it also encompasses assets su ch as bills of exchange, promissory notes and 
claims, so that these assets may also benefit from the protection of the Settlement Finality Directive 
and the Law of 28 April 1999 if they are provide d as collateral within payment and securities 
settlement systems. 
9. The ECB has no comments on the draft decree. 
10. This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 3 November 2005. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                           
14  Article 37 of the draft law, inserting a new provision into the Organic Law on the Nationale Bank van België/Banque 
Nationale de Belgique. 
15  Article 8 of the Law of 15 December 2004 on fi nancial collateral and various tax provisions. 
16  See, for example, the ECB press release of 22 July 2005 entitled ‘Eurosystem collatera l framework: Inclusion of non-
marketable assets in the Single List’ (available at www.ecb.int). 
17  Article 39 of the draft law. 
18  Article 8, §3 of the Law of 28 April 1999 implementing Directive 98/26/EC on settlement finality in payment and 
securities settlement systems. 
19  OJ L 166, 11.6.1998, p. 45.