Selling a piece (shares) of property of your company

5 min read
May 9, 2023 11:34:25 PM

A blog about the beneficial ownership of shares and our research into new developments in this area of law. In this blog you will also find out how it can be made easier for the common man/woman to participate in unlisted companies.

How to simplify participation for the common man/woman (like you and me) in Europe (the Netherlands) in unlisted companies? This week I will discuss the answer to that question during my online search for economic ownership of shares. In the Netherlands, the possibilities are limited to make employees or outsiders actually co-owner of your company (I do not include bonus scheme, profit sharing and sham shares, etc.). I can now dream of the limited list of possibilities:

  2. stock options
  3. non-voting shares
  4. depositary receipts
  5. membership rights in a cooperative
  6. economic ownership of shares

The easiest and fastest way to make someone part owner of your business is option 6; the sale of beneficial ownership of shares (also referred to as the economic ownership right). This form of participation has kept me busy for years! I first came into contact with it after Sjoerd van der Velden (partner and founder of law firm Bruggink & Van der Velden in Utrecht), member of our Advisory Board, told me about it in 2015. This week I started a short online research into new developments in this field of law. Every week I share my research findings on this platform and the lessons learned. That should take us a little further.

Sale of economic ownership of shares

Back to basics for a moment. What does the sale of economic ownership of shares mean? Simply put, this means that there is a contractual waiver of the economic value (increase/decrease) and dividend rights to shares that you own. You will then remain the legal owner of the shares, but the economic ownership will pass to someone else. For lovers of a more complex formulation, I would like to quote the extensive definition of Bruggink & Van der Velden:

Economic ownership of shares can be qualified as a set of rights and obligations with regard to the ‘real’ shares that represents the full economic interest in these ‘real’ shares. This interest includes the risk of changes in value, both negative and positive, as well as the right to the income from the shares in any form (eg dividend, stock dividend, etc.). These rights and obligations do not include formal rights (including voting rights, right of reflection, right of inquiry, etc.) that the law and the articles of association of the BV grant to the shares/shareholder. These rights remain with the seller as the legal owner.

(artikel BvdV)

Economic ownership is interesting because it can be transferred easily with a sales agreement. A lot of links are cut from the chain, compared to the transfer of shares. For example, a notary is not required to transfer economic ownership. With a standard agreement (like Share Council’s), you can make someone else co-owner of your business.

Benefits transfer of economic ownership of shares

Economic ownership rights are not a new invention. Until the 1990s, this was widely used in transferring ownership of real estate. At the time, this had the advantage that no transfer tax was levied on the transfer of economic ownership of real estate. Nowadays it is mainly used to make transfer of value easy and fast. The simple transfer of economic ownership of shares is not the only advantage, however. The transfer also provides real ownership, which is not the case with a bonus, profit sharing, SAR (Stock Appreciation Right) and other derivatives. Persons who hold an economic ownership right are also seen economically as owners of the company – although legally they are definitely not. As a result, the value of their shares is related to the intrinsic value of the company.

Protective construction

For the sake of completeness, it is good to know that you can also (as protection against a takeover) separate the legal and economic ownership of shares by certifying them. The depositary receipts give financial rights – but no voting rights – and they are placed, while a Stichting Administratiekantoor (STAK) holds the real shares. A natural person or a top holding company can also be seen as the economic owner of a group, since this person or top holding company has the economic interests and indirectly also the decision-making power.

Legal versus economic ownership

Tax law also makes a sharp distinction between legal and economic ownership. The economic owner will have to bear a large part (or even all) of the tax liability related to the business and the legal owner will receive a corresponding discount, because his property is valued lower. Because the property is economically split, this also applies to the tax liability. Also, in some cases (for example in tax treaties with the US) only economic owners may use tax treaties. This is an attempt to combat abuse.

Why doesn’t everyone trade exclusively in economic property?

Trade in economic property has never really taken off in public world trade. This, of course, has its reasons. The main reason is the separation of economic and legal ownership. In a transfer of economic ownership, the economic owner has an interest in protecting his position. After all, the legal owner can go bankrupt. For example, he can be seized. Several lawyers have thought hard about this. In order to secure the position of the economic owner, the deed usually includes a (very) high fine (Blenheim). Will it be seized in such a situation? In that case, enforcement of the attachment will yield nothing for the attaching party. If the attaching party should nevertheless execute, this may constitute an abuse of rights. A lawyer can assess that. If it is the intention that legal ownership also transfers to the economic owner in the future, the buyer and seller can arrange this with each other in advance. The legal owner must then provide an irrevocable power of attorney for the economic owner.

Where is this economic ownership still used today?

Trading economic ownership is becoming more common. It is not only easy for shares, but also, for example, for bonds and loans. More and more funds are finding their way to this financial instrument. And what do you think of the gigantic financial injection required for the energy transition? It is not surprising at all to simply sell (a part of) the economic ownership of a wind farm or solar panel field to the community surrounding such projects. In this way, builders can move on to the next energy trajectories more quickly, local residents are proud of their own energy supply (instead of protests against horizon pollution) and society as a whole can take greater steps forward.


These are some examples of the use of economic ownership. I draw here from the experience I have gained at my IT company which is behind Share Council. We were able to easily and quickly give every employee the opportunity to become co-owner of our young, innovative company. I am therefore very proud that I have so many super-involved co-shareholders.

My research this week has mainly confirmed my knowledge of Economic Ownership. This way of working is very accessible for the SME of tomorrow, who want to transfer shares to employees and investors quickly – and without too many intermediaries and interference. That is why we support this principle. That is also why I will continue to fight to strengthen this way of sharing. “A fair share for everyone” – it’s getting closer and closer. Would you like to learn more about the economic ownership of shares or how you can participate in unlisted companies? Check out our Share Academy and learn more about it.

Do you want to find out more about participation plans and our platform? Book a demo with our CEO.