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Short news and ideas

Bearer shares: are their days numbered?


01/07/2012

Bearer shares have been extremely popular in the jurisdictions where the legislation allowed for the issue of such shares. Although in the past it really was possible to own a company anonymously with this type of shares, this possibility has no longer been available for at least 10 years. The majority of the world’s banks, for example, require from their clients a declaration regarding the true beneficiary, possessor or owner of bearer shares. If, that is, they will talk to such companies in the first place. As I mentioned in my leading article, numerous banks even close the door on companies which theoretically have the possibility of issuing bearer shares. It is worth thinking very carefully before opting to use this type of share, as it may lead to many complications in the future operation of the company, and in the face of meeting anti-money laundering laws, anonymity can no longer be maintained. The operability of a share company is another practical question. The most important decision-making forum of a share company is the shareholders’ meeting, which all authorised shareholders are entitled to attend and where they can exercise their rights. In the case of bearer shares, though, where does the director send the invitation to the shareholders’ meeting? Generally, they are sent out to the last address of the shareholder recorded in the share register, though other means may also be used. And although in today’s world the possibility is there to vote via the Internet, the lack of a postal address may lead to serious obstacles in the lawful operation of the company.

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