Usage of the platform and regulation of the AFM (Authority of Financial Markets)
Share Council Platform and AFM Supervision
The Share Council platform does not fall under the supervision of the Autoriteit Financiële Markten (AFM). This is based on the fact that no actual trading practices take place on the platform that would fall under an MTF license (Multilateral Trading Facility), as described in Article 2:80 of the Wet op het financieel toezicht (Wft) and the MiFID II Directive (Markets in Financial Instruments Directive). On the Share Council platform, there are no "bid and ask" offers, nor is there any form of price formation. The platform is not designed as a stock exchange or financial service provider, but as an administrative platform that facilitates the registration and transfer of securities for employee participation. Financial transactions are handled outside the platform, with the platform only playing an administrative role.
Platform Functionalities
Registration of Deviating Prices
It is possible to register a deviating price in the administration of a transaction between two entities. This is particularly relevant in situations such as the departure of an employee, where there is often an obligation to buy back certificates, sometimes at a different price than the current certificate rate. This can arise from contractual agreements upon the acquisition of the certificates, such as a vesting period.
Transfer within Closed Groups
A company can allow entities, such as employees, to transfer shares to each other within a closed group. In this case, there is again no possibility for bid and ask prices, and only the transaction of the certificates, options, SAR, CLA, or bonds is administered, in accordance with the guidelines for internal transactions as described in the Wft.
Closed Environment
No market is created on the Share Council platform, and supply and demand (as with Crowdfunding, for example) are not brought together, as required by the AFM for platforms that function as a trading facility. Each company has its own closed environment on the platform, where investors (employees) of one company cannot see the securities of another company unless they are affiliated (invited), for example, because they have worked there in the past.
Trading Day Functionality
It is possible to organize a trading day where the company can ask all participants (usually in share certificates) if they want to buy shares of the company or sell shares to the company. For this purpose, a Trade Request functionality has been built where the company can gather who would like to buy shares from the company and who would like to sell shares back to the company. It is possible to specify a price, but here too, no bid and ask prices are linked to each other, in accordance with the AFM guidelines for non-regulated trading activities.
AFM Regulation and Platform Limitations
AFM Regulation
An offer of securities to a group of 150 entities or more is considered a public offer by the AFM, as described in Article 5:2 of the Wft. In the case of a public offer, the AFM requires at least an Information Document that clearly describes the financial conditions and risks of the offer, in accordance with the requirements of the European Prospectus Regulation. Additionally, the total public offer within 12 months must be less than 12 million euros, as mentioned in the exemption provisions of the Prospectus Regulation. If the offer exceeds this amount, the AFM expects an official pre-approved prospectus.
Platform Limitations
Compliance with AFM regulations for public offerings or actual trading facilitation lies with the user of the platform (the company using the platform for the administration of its securities). Share Council does everything it can to ensure that a user does not "accidentally" violate the rules surrounding AFM regulations. For example, when the group for the trading day is larger than 149 entities, the platform blocks the functionality that makes an offer visible to everyone, in accordance with the AFM guidelines for public offerings. The platform also requires an Information Document, as prescribed by the AFM in the "prospectus exemption." Additionally, actual trading with price formation between participants is not possible, as required by the AFM for non-regulated trading platforms.