The share transfer register: obligations, formalities and dematerialization through blockchain

The share transfer register is one of the most structuring documents in the life of a joint-stock company, and yet one of the most frequently mishandled. This article reviews its definition, its legal framework, its formal requirements, as well as the revolution introduced by blockchain and the tokenization of financial securities.

The share transfer register: definition

The share transfer register is a document intended to record every change in the distribution of capital among the shareholders and to trace each of the share movements carried out within the company, particularly within a SAS (simplified joint-stock company) or a SA (public limited company). It constitutes a true chronology of share ownership, in which each operation is logged: transfer, contribution, pledge, gift of shares, conversion of options, forced sale, etc.

Some companies also record there the creation of new shares issued during a capital increase, or conversely the cancellation of shares as part of a capital reduction through the repurchase and cancellation of securities.

Beyond its evidentiary role, this register fulfills an essential function of legal certainty: it makes it possible at any time to know with certainty the composition of the shareholding, to identify the holders of rights over the securities and to trace the origin of each position. In the event of a dispute between shareholders, a fundraising round, an acquisition audit (due diligence) or a sale of the company, it becomes a central document.

This register must comply with certain formalities to be valid. When kept in paper form, it must imperatively be initialed and numbered (cote et paraphe), traditionally with the clerk of the commercial court (greffe du tribunal de commerce) of the jurisdiction where the company is registered or, depending on practice, by the legal representative themselves.

In which cases is the share transfer register mandatory?

The share transfer register is mandatory for public limited companies (SA) and simplified joint-stock companies (SAS), particularly when they have fewer than one hundred shareholders and are not admitted to trading on a regulated market.

Article L. 228-1 of the French Commercial Code provides that securities must be registered in an account or in a shared electronic recording system in the name of their owner. This wording, as we will see, explicitly opens the way to blockchain.

The law requires that this register be maintained, but this obligation is not accompanied by any immediate administrative penalty in the event of the company's failure to do so. The consequence is in reality much more serious: the article specifies that the transfer of ownership of the securities results only from their registration in the register. In other words, in the absence of compliant record-keeping, the transfers and assignments carried out are not enforceable and may be weakened, or even challenged. A deficient register may thus be enough to block a transfer operation or to call into question the reality of a shareholding during a fundraising round.

Be careful: the share transfer register is not the only formality to be completed when a share movement occurs. Other obligations are attached to it:

• The transfer deed and tax registration. Any transfer of securities must be the subject of a deed allowing the operation to be registered with the tax authorities. SAS companies may complete form No. 2759-SD for this purpose.
• Registration duties. Each movement must be registered with the corporate tax office (Service des Impots des Entreprises, SIE) to be in order. The transferee pays a duty generally corresponding to 0.1%, 3% or 5% of the amount of the operation, depending on the type of company, its possible predominance of real estate assets and subject to the applicable allowances.
• Capital gains taxation. The capital gain realized by the transferor is in principle subject to the single flat-rate levy (the "flat tax"), at a global rate of 30% including social levies and income tax, unless the option for the progressive scale is chosen.
• Updating the register of beneficial owners. It is necessary to declare to the court clerk (greffe) the natural persons holding, directly or indirectly, more than 25% of the capital and/or voting rights. However, these persons are likely to change on the occasion of a share movement. In the absence of an identified beneficial owner, the company director is deemed to be the beneficial owner for the purposes of this declaration.
• Formalities related to a change of director. If the share movement is accompanied by a change of director, the corresponding formalities are added (declaration of modification, declaration of non-conviction and filiation) to be carried out with the court clerk (greffe) or the single window (guichet unique).

This accumulation of obligations illustrates an essential point: a share movement is rarely an isolated act. It triggers a chain of legal, tax and reporting consequences that must be handled in a coordinated manner to avoid any irregularity.

The legal requirements for keeping the register

It is Article R. 228-8 of the French Commercial Code that provides most of the details regarding the keeping of the register. This provision states that each company must designate an authorized person, responsible for keeping the register up to date.

The regulations do not impose any specific form. For reasons of immediate simplicity, the companies concerned have historically turned to paper registers, with the limitations we know: risk of loss, transcription error, deletion, desynchronization with individual shareholder accounts, or difficulty of remote access.

Most often, registers for accounting for registered securities take the form of individual cards. One card is reserved for each securities holder, or for each group of holders in special situations (co-ownership, dismemberment between bare ownership and usufruct, lease, etc.). Each sheet must mention all the transfers carried out as well as the balance of securities held after each operation.

For each of the operations carried out, the register must indicate:

• the date on which the operation took place;
• the identity (or corporate name) and the address (or registered office) of the former holder of the securities;
• the identification number assigned to the shareholders or partners concerned;
• the different categories of securities affected;
• the nominal value of the securities;
• the number of securities concerned by the movement;
• the nature of the movement carried out (contribution, gift, transfer, forced sale, etc.);
• the identity (or corporate name) and the address (or registered office) of the beneficiary of the movement.

The rigor of this list shows how demanding and time-consuming the manual keeping of the register is. Each omission or inconsistency weakens the evidentiary value of the whole. This is precisely where dematerialization provides a decisive answer.

The "Blockchain" Ordinance: a boost in favor of dematerialization

Through Ordinance No. 2017-1674 of December 8, 2017 relating to the use of a shared electronic recording system for the representation and transmission of financial securities, known as the "Blockchain" Ordinance, the formalities of the share transfer register have profoundly evolved in favor of dematerialization.

This text makes it possible to record any movement of securities in a shared electronic recording system (dispositif d'enregistrement electronique partage, DEEP), in other words a blockchain, and recognizes this registration as having the same legal value as a registration in an account. The transfer of ownership then results from the registration in the blockchain, exactly as it previously resulted from registration in the paper register.

This development is major: it transforms a static, isolated and manual document into a living, shared and automated register. Each share movement becomes a timestamped, traceable and tamper-proof transaction, which drastically reduces the risks of error, loss or dispute.

Tokenization of securities with Equisafe

This is precisely the area in which Equisafe operates. Relying on EVM-compatible blockchains, Equisafe enables companies to represent their financial securities in the form of tokens and to keep their share transfer register directly on a shared electronic recording system, in compliance with the framework set by the "Blockchain" Ordinance.

In concrete terms, the platform provides several benefits:

• An always up-to-date and reliable register. Each transfer, contribution, gift, capital increase or reduction is recorded in real time, timestamped and kept in an immutable manner. The capitalization table (cap table) reflects the reality of the shareholding at all times.
• Integrated regulatory compliance. Equisafe operates within the European MiCA framework and the requirements of the AMF (French financial markets authority), with compliance checks (KYC, anti-money laundering, verification of transfer conditions) applied at the level of each share movement.
• Institutional-grade security. Operations rely on robust blockchain infrastructure, access control mechanisms and a complete audit trail, offering issuers, investors and their advisors a level of confidence comparable to that expected on regulated markets.
• Automation of associated formalities. By centralizing information, the platform facilitates the production of documents required for the other obligations mentioned above (tax registration, updating of beneficial owners, monitoring of securities operations), reducing the administrative burden and the risk of oversight.
• Increased accessibility and transparency. Issuers and securities holders access a clear and consolidated view of their positions, without depending on a physical binder or a scattered file.

By replacing a fragile paper register with a shared, secure and compliant electronic register, tokenization does not simply modernize a formality: it strengthens the legal certainty of each share movement and streamlines the entire life cycle of the shareholding.

In summary

The share transfer register remains a central obligation for SA and SAS companies: it conditions the enforceability of share transfers and is accompanied by a set of tax and reporting formalities that should not be neglected. Long kept on paper, with the risks this entails, it can now be fully dematerialized thanks to the 2017 "Blockchain" Ordinance.

By tokenizing financial securities on EVM-compatible chains, within a framework compliant with MiCA and the AMF and with institutional-grade security, Equisafe enables issuers to transform this regulatory constraint into an operational advantage: a reliable, automated and compliant register, serving the trust between the company and its investors.