The law that reformed the law of Societes Anonymes (: law 4548/2018), has occupied us, repeatedly-due to its importance, in the context of our articles. Some of its provisions concern all of the SAs. Others relate to those whose shares are listed on a regulated market. Among the latter are the regulations relating to the omnibus accounts.
The “intermediary” and their role
In the provisions of the law on SAs, we find references to an “intermediary”.
Through the intermediary it is possible to identify the shareholder in the central securities depository, when they (the shareholder) are not registered directly in it (article 40 par. 6). Through the intermediary it is possible to transfer shares (Article 41). Through the information provided by the intermediary, the proof of the shareholding status required for the participation in the General Assembly will be possible (article 124 par. 6 in fine).
The specific provisions are those that aim at the harmonization of the law of the SA with the reform brought by the CSDR Regulation (909/2014 EU) in the accounting representation of the corporate securities and their observance through the securities repositories.
The network of intermediaries between central repositories and customers was created with the aim of disseminating and wider trading of equity and other securities. Investors who are unable, for example, to have access to specific local markets and to maintain an individual account in specific local central repositories turn to this network, which consists of banks, financial institutions and investment firms (see art. 2 §1 a΄ law 4569/2018). Similarly, intermediaries can also turn to other intermediaries.
The status of possession of intangible property under national law
The system of keeping intangible securities was regulated by law 2396/1996. Its main feature was its character as a system of immediate observance. This meant that each investor’s securities account, their personal “portfolio”, was kept directly in their own name, in the Central Securities Depository (CSD) or in the DSS Administrator (Dematerialized Securities System). Therefore, based on the specific system, the one who was a registered beneficiary in the CSD was also considered a shareholder by the issuer SA.
This approach, however, is gradually abandoned with the introduction of law 4569/2018. The latter aims to achieve the adaptation of national law to the requirements of the CSDR Regulation, abolishing, at the same time, law 2396/1996.
The main changes of law 4569/2018
The application of the CSDR Regulation and, consequently, of law 4569/2018, has a significant impact on the operation of the Hellenic Capital Market system and the environment of intangible securities, which has been created since 1999 (: law 2396/1996).
The observance of intangible property titles undergoes two important changes with this Regulation:
(a) The maintenance of intangible assets ceases to be a monopoly of the State. The services of the Central Securities Depository are released. The national legislature complies in this respect with the CSDR Regulation and the licensing arrangements it introduces.
(b) The possibility of creating collective accounts (omnibus accounts) is provided. These are collective securities accounts, through which securities belonging to third parties are kept collectively (art. 2 §1 c’ law 4569/2018). However, the identity of the third parties is not immediately known. This is a deviation from the existence of an individual account for each investor.
In particular: the omnibus accounts
Omnibus accounts, as their name implies, are used for the collective collection and maintenance of securities, in the cases of involvement of intermediaries.
The accounts of the individual clients kept by each intermediary are, of course, numerous. Intermediaries’ omnibus accounts are the means of collecting and depicting securities, in a collective manner, following an accounting system.
law 4569/2018 provides for two categories of omnibus accounts:
(a) The Central Securities Depository accounts, as the highest level of keeping them, which is characterized as a collective depository of securities accounts.
(b) The collective accounts that are kept at each subsequent, lower, level by the intermediaries, the accounts, i.e., the inestruments of the intermediary.
Particularly:
The collective depository securities account is defined as “The collective securities account held in a central securities depository for purposes of total separation of customers, in accordance with Article 38 of Regulation (EU) 909/2014 (art. 2 par. 1 par. Of law 4569 / 2018).
Article 38 of the Rules provides, in particular, that “For each securities settlement system it operates, a CSD shall keep records and accounts that shall enable it, at any time and without delay, to segregate in the accounts with the CSD, the securities of a participant from those of any other participant and, if applicable, from the CSD’s own assets.” (§1).
This provision, implementing the principle of unbundling, aims to protect the property of investors from the risk of bankruptcy or, in general, of the insolvency of intermediaries. In fact, the possibility of both total separation of customers (article 38 par. 3) and separation per customer (article 38 par. 4) is provided.
The collective account of securities of a broker is defined as “the collective account of securities kept by a broker established in Greece and reflects securities held in a central depository of securities” (art. 2 §1 e΄ law 4569/2018).
The identification of the shareholder
An issue arises regarding the possibility of identifying the shareholders of the SAs with listed shares, when omnibus accounts are kept. Law 4569/2018 introduces a specific identification system.
It provides, in particular, that the registry services, through which the share registers of SAs are formed, “… are provided by a central securities depository, in accordance with Regulation (EU) 909/2014 and this law itself” (Article 14).
As we noted in the introduction, law 4548/2018 provides that the proof of shareholder status during a General Assembly is (also, alternatively) done through the intermediary. Indeed, as provided in article 17 of law 4569/2018 “in the cases of anonymous shares which are kept in the accounting form of collective accounts of deposit securities of law 2190/1920, the shareholder is the one identified through the registered intermediary, who keeps the relevant account. In the cases of registered shares of law 2190/1920 and law 4548/2018, the above-identified person is considered a shareholder of the issuing SA, by way of derogation from par. 7 of article 8b of law 2190/1920 and according to par. 6 of article 40 of law 4548/2018 “.
The regulations regarding the identification, however, were not directly applicable to our national legal system. On the contrary, as it results from law 4569/2018, they would start to be applied after the licensing of CSD, as a central repository of the CSDR Regulation by the Hellenic Capital Market Commission.
The Board of Directors of the Hellenic Capital Market Commission, with its decision No. 6/904 / 26.2.2021, on the one hand provided a license for a central securities depository to the company “Hellenic Central Securities Depository SA”, on the other hand, approved its Rules of Procedure. This decision is valid from April 12, 2021.
Omnibus accounts are already (also) a Greek reality, drastically facilitating the expression of interest and, of course, transactions in regulated markets.
They facilitate, in other words, the (necessary) achievement of depth (: sufficient number of traders) and breadth (: large volume of transactions) in the regulated markets. In other words, in the growth and health of the capital markets.
Therefore: both are welcome and absolutely necessary!
(And -especially) in our country.-
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (July 11, 2021).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.
