Certification of shares
The capital of a company consists of shares. Shares include profit rights and voting rights. However, it is possible to separate voting rights from profit rights. This is done with the certification of shares.
What happens during the certification of shares?
The shareholder can transfer his voting rights by transferring his shares to a specially created foundation. In exchange, he receives certificates of shares. Share certificates have basically the same value as shares. They also have the identical restrictions on transferability as the shares. The statutes of the foundation provide that the dividend is paid in full to the depositary receipt holder.
The foundation has a board that exercises the voting rights on the shares. The person who creates the foundation can compose a board in various ways. Initially, the director-shareholder himself will be the director of the foundation, but provision is made for his succession in case he dies.
Steps certification of shares
- Establishing a Foundation Trust Office;
- establishing terms of administration;
- transfer of shares against issuance of certificates.
Reasons certification - business succession
Certification of shares may be needed for a variety of reasons. For example, consider an arrangement for when the director-shareholder dies, to prevent the continuity of the company from being jeopardized. It may be his desire to give control of the shares to his corporate successor, while the profit rights should accrue to his (other) heirs. The heirs benefit from profit distribution, the company benefits from continuity.
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