Essential to the proper functioning of corporate governance, maintaining and updating a securities register makes it possible to track transactions involving a company’s securities and monitor changes in the distribution of capital among security holders.
Traditionally maintained in paper form, this format quickly reveals its limitations, particularly in the event of errors, loss, or difficulty retrieving historical data.
Digital record-keeping is now permitted under certain conditions and can facilitate updates, traceability, and access to information, while remaining compliant with legal requirements.
Is maintaining a securities transaction register mandatory?
The securities transaction register is intended to chronologically list all transactions involving the securities comprising the company’s capital (sale of shares, gifts, contributions, pledges, etc.) since the company’s incorporation. It enables the tracking of security holders and provides a record of transaction history.
In practice, transfers of securities are carried out by issuing and signing a transfer order and by recording the transaction in an account. Each shareholder holds an individual account listing all the securities they own.
Article L228-1 of the Commercial Code confirms that: “these securities, regardless of their form, must be recorded in an account or in a shared electronic registry in the name of their owner.” The article goes on to specify that the transfer of ownership results from the registration of the securities in the buyer’s account.
Pursuant to this legal provision, all corporations (public limited companies, simplified joint-stock companies (SAS/SASU), etc.) are required to maintain a register of securities transactions.
Registration in an account: a condition that has become “constitutive”
Long viewed as a mere formality, the register is now central to the legal certainty of share ownership. A recent and extensive body of case law underscores its fundamental nature: registration is no longer a mere presumption; it is a constitutive condition for the transfer of ownership.
This development is clearly evident in a ruling by the Court of Cassation dated September 18, 2024 (No. 23-10.455), according to which only the date of actual entry in the register confers the status of shareholder, regardless of the date on which the agreement on the price of the securities was concluded. The Court further specifies that such an entry cannot have retroactive effect.
The scope of the registry also extends to the enforceability of corporate transactions. In a ruling dated December 18, 2024 (No. 23-21.435), the Court of Cassation thus held that entry in the registry is sufficient to render the amendment enforceable against the tax authorities, regardless of any other publicity formalities.
What are the legal requirements for maintaining the securities register?
Pursuant to Article R228-8 of the Commercial Code, the register must be maintained and updated by the issuing company or by a person authorized for that purpose. The article also specifies that this register may be maintained in chronological order “on paper or on any durable medium, in particular by means of a shared electronic recording system.”
Thus, the issuing company has the choice regarding the format of its register: it may opt for a paper format or a digital format.
The concept of a “durable medium,” defined in the introductory article of the Consumer Code (point 8°) —and reproduced in identical terms inArticle L311-7 of the Monetary and Financial Code —constitutes the applicable framework in this regard: Any medium is considered a durable medium if it allows information to be stored in such a way that it can be referred to at a later date for a period of time appropriate to the purposes for which it is intended, and which allows for its exact reproduction. Provided that a digital record meets these requirements, it has the same probative value as its paper equivalent.
The case law of the Court of Justice of the European Union has clarified the three operational criteria for classifying a medium as durable (CJEU, July 5, 2012, C-49/11, Content Services; CJEU, Jan. 25, 2017, C-375/15, BAWAG):
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the medium’s stability over time;
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the long-term readability of the data regardless of technological developments;
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the immutability of the information, that is, the impossibility of modifying its content after the fact.
A spreadsheet file that is unprotected or can be modified at any time by its owner cannot meet these requirements.
The Equify dematerialized securities register: what are the benefits?
Enhanced security
Maintaining a securities transaction register is of paramount importance. In practical terms, this register makes it possible to verify ownership of the shares comprising the share capital and thus track the distribution of shareholdings. Furthermore, the validity of a transfer of ownership of securities depends on their entry in said register.
However, manually transcribing securities transactions is a source of insecurity:
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- Errors;
- Loss of pages;
- Damage to the document (destruction or deterioration);
- Falsification of the register, etc.
Using Equify’s digital platform offers greater security. The platform operates on an electronic database with a triple redundancy system for data.
Thus, the information is stored on a durable medium that guarantees its immutability. The history of transactions and securities is recorded using a secure electronic system, ensuring that it cannot be falsified, lost, or altered. The risk of error, loss, or fraud is thus significantly reduced.
Greater Transparency
The dematerialized share register offered by Equify stands out for the level of transparency it provides to authorized users, particularly the company’s shareholders and, where applicable, potential investors authorized to view it.
Thanks to centralized and instant updates of information, the shareholder structure as well as each shareholder’s individual account can be viewed in real time. The dematerialization of the registry thus promotes a smoother and more secure flow of information, while ensuring greater visibility compared to a paper-based registry.
Automated and Simplified Management
Manually transcribing securities transactions is a task that is time-consuming, complex, and prone to errors. In contrast, digitizing the register allows for the automated maintenance and updating of entries, significantly reducing the administrative burdens associated with tracking shareholder information.
Each transaction is recorded and updated centrally and almost instantly, without the need for manual re-entry. Digitizing the securities transaction register thus saves a considerable amount of time, while enhancing the reliability and efficiency of securities management.
Conclusion
The securities transaction register is a key tool for ensuring the traceability of securities transactions and maintaining accurate information on security holders.
If your register is still paper-based or difficult to maintain, digitization can simplify management, provided that you remain compliant with requirements for record-keeping, retention, and traceability.
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