Changes brought by the new Book Entry Securities Act
It is almost a year since the new Book Entry Securities Act (Zakon o nematerializiranih vrednostnih papirjih, "ZNVP-1"), which was adopted with the purpose of joining the common European platform for the settlement of securities transactions ("T2S settlement platform"), entered into force. ZNVP-1 regulates transfer of book-entry securities, fulfilment of obligations arising in respect of book-entry securities, encumbrances on book-entry securities, central register on book-entry securities and access to the data maintained therein.
Furthermore, ZNVP-1 provides for a legal framework that will enable the use of TARGET2-Securities corporate actions standards on flows ("T2S corporate actions standards") and the Corporate Actions Joint Working Group Standards for corporate actions on stock ("CAJWG standards"). Namely, with regard to certain transactions, the previous regulation of book-entry securities market was not in line with the above-mentioned standards.
The most important change for the everyday lives of private individuals and legal entities that was brought by ZNVP-1 is termination of registry securities accounts maintained by the central securities clearing corporation ("KDD"). Currently, the purpose of registry securities accounts is solely a registration of shareholding, whereas the transfer of book-entry securities from such account on the registry account of another shareholder is possible only through the trading account, which shareholders have to open with a member of the KDD. Existing registry securities accounts of legal entities had to be terminated by the end of September 2016, whereas those of private individuals have to be terminated by 1 January 2017.
Due to the termination of registry securities accounts, each holder of the book-entry securities has to transfer such securities to his trading account opened with one of the members of the KDD. Holders of the book-entry securities that are still without a trading account will have to open one. Securities, which are already in the trading account managed by a KDD member, require no transfer. Since holders of the book-entry securities have to pay to the KDD member the costs of maintaining a trading account and the compensation for the safekeeping of securities, the termination of registry accounts means that the ownership of securities will no longer be maintained free of charge.
Any securities held on registry accounts after the above-stated deadline will be deposited at the court. It is worth noting that securities deposited with the court will no longer be registered in the name of their previous owner but in the name of the court. Therefore, the exercise of rights arising from these securities will be impaired for their previous holder. Moreover, if the securities are not acquired from the court deposit in five years, they will pass over to the Republic of Slovenia.
Should a shareholder later wish to acquire his securities from the court deposit, he will need to do so through a judicial proceeding (as stipulated by the Non-litigious Civil Procedure Act governing court deposits).
As regards third-party rights on securities, the ZNVP-1 allows now only for the entry of lien or restriction on transferability of securities into the central register, however it does not allow anymore entries of the rights of benefit, redemption rights and pre-emptive rights.