Ownership of shares: simple in appearance, legally layered

More than a name on paper

You are at the notary or with your advisor to set up a company. Afterwards, you sign the share register and the shares are registered in your name – simple, right? But ownership of shares is rarely as straightforward as it seems. Especially if you are married (or about to get married), there are legal nuances that are often overlooked.

Control or financial interest?

It is important to differentiate between control (who has a say in the company and exercises the voting rights) and economic ownership (who benefits economically from the shares and is entitled to financial distributions).

Control and economic ownership do not always go hand in hand. You can be the legal owner of the shares, yet still have to share their economic benefit with your partner. This depends on the chosen matrimonial property regime. In Belgium, three regimes are distinguished: the legal regime, the separation of property regime and the community of property regime. The way in which the shares are acquired or financed –  with personal or common/undivided funds – also plays an important role.

It is recommended to consider this division in due course and to clearly record the arrangements in advance, for example in the company’s deed of incorporation, your marriage contract or any other relevant agreement, to avoid surprises or discussions later on.

Share ownership in a dynamic environment

Moreover, share ownership is not static. Family events, such as marriage, divorce, death, illness/ incapacity, transfer of shares or estate planning, can affect the balance between legal and economic ownership. What feels normal today can suddenly change tomorrow due to specific circumstances.

From this perspective, it is wise to regularly assess whether the legal reality still reflects your expectations and/or those of your family, and to make adjustments where necessary, for example by reviewing or updating:

• Marriage contract: are control and ownership of the shares correctly assigned as individual or joint property, and do I have the necessary documents to prove this? What about income derived from the shares?
• Power of attorney: who is entitled to exercise the voting rights attached to the shares in case of temporary or permanent incapacity due to illness or an accident?
• Will: how are the shares inherited? What are the rights of the partner/spouse? Are there possibilities to reduce inheritance tax?
• Articles of association and/or shareholders' agreement: are there clear agreements in place to ensure smooth business operations and to manage the transfer of shares in the context of estate planning, succession or sale?

If you have any questions about this topic, please contact our experts. They will be happy to assist you with advice and support to protect your (family) assets.