Issue of depository receipts for shares

This can be required for several reasons. For example, arrangements on the decease of the managing director-shareholder. This can affect the continuity of the company. It may be his wish to give control of his shares to his business successor, while the profits entitlements should go to his (other) heirs. The heirs profit from profit distributions, the company profits from continuity.

The shareholder can transfer his voting rights by transferring his shares to a foundation established especially for that purpose. In return he can receive depository receipts for shares. In principle the depository receipts for shares have the same value as the shares. They also have identical transferability as shares. The articles of association of the foundation shall state that the dividends are paid out in full to the holder of the depository receipt.

The foundation has a board that exercises voting rights on shares. The founder of the foundation can compose the board in many ways. Initially he himself (the managing director-shareholder) shall be the board member of the foundation, but in case of his decease, he has arranged for his succession.

If shares are converted into depository receipts for shares, some steps shall have to be taken:

• Establishing a Trust Office Foundation
• Determining the trust conditions
• Transferring the shares on issue of the depository receipts for shares.