Digitize your corporate legal: focus on the holding of the register of title movements!

Essential for the smooth functioning of social life, the keeping and updating of a register of title movements is compulsory for all companies issuing unlisted shares. It is indeed intended to trace each of the operations that have occurred and to record any change in the distribution of capital among the shareholders.

Traditionally written on paper, this format quickly showed its limits (cost, error, loss, risk of falsification...). In the digital age, the dematerialization of the keeping of the register of title movements thus imposes itself as an obviousness.

The benefits of digital are indeed no longer to be proven and the French legislator himself has taken note of the need to dematerialize the keeping of the title register.

Keeping a register of title movements: is it compulsory?

The register of title movements is a document intended to chronologically list all the operations that have occurred (transfer of shares, donation, contribution, pledge, etc.) on the titles making up the capital (shares, options, BSPCE, etc.) since the registration of the company.

Title transfers are materialized by the issuance and the signature of a movement order and by the account entry of the operation. Indeed, each shareholder holds an individual account listing all the titles he owns.

Article L228-1 of the Commercial Code indeed confirms this: "these securities, whatever their form, must be registered in an account or in a shared electronic recording device in the name of their owner". The article continues and specifies that the transfer of ownership results from the registration of the securities in the buyer's account.

By virtue of this legal provision, all capital companies (public limited company, simplified joint-stock company (SAS/SASU)...) have the obligation to keep a register of title movements. Indeed, while the law does not provide for immediate sanction in case of company default, it does specify that the transfer of ownership of the securities will only be validly carried out by its registration in the register. The validity of the operations on titles thus depends on the correct keeping of said register.

What are the legal requirements for maintaining the register of securities movements?

In accordance with article R228-8 of the commercial code, the register must be kept and updated by the issuing company or by a person authorized to do so. The article also specifies that this register can be kept in chronological order “on paper or any durable medium, notably using a shared electronic recording device.”

Thus, the issuing company has a choice as to the form of its register: it can opt for a paper medium or a digital one.

The Equify digital register of securities movements: what are the advantages?

Legal value equivalent to the paper register

As specified in articles L228-1 and R228-8 of commerce, share companies can keep their register of securities movements in a digital form, on any durable medium, such as a shared electronic recording device.

The concept of “durable medium” is defined by the consumer code as being “any instrument allowing the consumer or professional to store information addressed to him personally in order to be able to refer to it later for a period of time appropriate to the purposes for which the information is intended, and which allows the identical reproduction of the stored information” (article L121-16 3° of the consumer code).

The digital keeping of the register of securities movements is thus allowed by law and offers significant benefits to the companies concerned.

Indeed, current regulations make no difference between the registration of capital securities in a paper register and that performed on a digital register. In the eyes of the law, these two types of registers indeed have the same legal value and grant the same rights to shareholders holding shares (right to vote, etc.). From a legal standpoint, digital keeping of the register of securities movements thus offers the same legal guarantees as a paper-based keeping.

Enhanced Security

Keeping a register of securities movements is of paramount importance. Practically speaking, this register indeed allows to verify the ownership of shares making up the share capital and thus to follow the distribution of the shareholders. Moreover, the validity of the transfer of ownership of the securities depends on their registration in the said register.

However, the manual transcription of securities movements is a source of insecurity:

• Errors; Loss of sheets; Alteration of the document (destruction or deterioration); Falsification of the register, etc.

The use of Equify's digital medium offers higher security. Indeed, the platform operates on an electronic database with a triple redundancy system for information.

Thus, the information is stored on a durable medium guaranteeing its immutability. The history of movements that have occurred and of the securities are transcribed by means of a secure electronic system, so that they cannot be falsified, lost, or altered. The risk of error, loss or fraud is thus considerably reduced.

Increased Transparency

The particularity of Equify's dematerialized share register is that it offers more transparency. It is indeed designed to be consulted by all authorized persons such as the shareholders of the company or even potential future investors, if they are authorized. The composition of the shareholding and the individual accounts of each shareholder are instantly accessible. The dematerialized keeping of the register thus allows for greater transparency than the paper-based register.

Automated and Simplified Management

The manual transcription of securities movements is a tedious, complex and costly task (not to mention the risk of errors). The digitization of the securities movement register represents a considerable time saving. Indeed, the keeping and updating of the register are automated. It is automatically updated, without any effort.