We have an old securities account at CDCP from privatisation. What should we do with it?

Voucher privatisation left hundreds of thousands of share accounts whose holders either do not know about them or have received demands for fees for years. These accounts have a special legal status and have been subject to their own rules since 2015.

What is an unassigned account?

A holder account opened at the central securities depository by 30 September 2015 for an individual or a legal entity for which the central securities depository is not required, from 1 October 2015 under Section 105(2), to open a holder account upon request is treated as an unassigned holder account.

— Section 173v(1) of Act No. 566/2001 Coll. (unofficial English translation)

This relates to the categories of person for whom the central securities depository may maintain an account. On request, it opens accounts for a central securities depository, a member, a state authority acting on behalf of the Slovak Republic and a legal entity covered by special legislation. It may open an account for another legal entity if its operating rules permit this (Section 105(2)).

An individual’s holder account is maintained by a member of the central securities depository, rather than by the depository itself (Section 105(3)). Individual accounts left at the depository since privatisation are therefore a legacy of the previous arrangements.

What this means in practice

The Act sets out three rules for unassigned accounts:

• The holder submits transfer registration instructions and instructions for other entries through a member, and only one member may be designated for each unassigned account (Section 173v(2)).
• An unassigned account ceases to exist when no securities are recorded in it (paragraph 3). It therefore closes when emptied, rather than by notice or application.
• At the holder’s request submitted to the member, both the central securities depository and the member must move the securities free of charge from this account to a holder account opened with the member (paragraph 4).

The free movement of securities matters because fees are precisely why people leave these accounts unresolved for years.

A qualification that matters

The Act contains a provision that defers the application of most of the rules above:

Until a system for the technical processing of data for the purpose of recording an unassigned account under Section 173v(1) has been created and put into operation, the second sentence of Section 173v(1) and paragraphs 2 to 4 do not apply, and the provisions governing holder accounts apply to an unassigned holder account.

— Section 173w of Act No. 566/2001 Coll. (unofficial English translation)

This means that instructions through a member, closure when the account is emptied and the entitlement to a free movement of securities apply only once that system is launched. The current position cannot be established from the Act and must be checked with the central securities depository or a member. This page therefore explains what the Act envisages, rather than what you will be told at the counter.

How to find out what is in the account

The central securities depository or member must provide the holder with an account statement without delay after making an entry or at the holder’s request. If it maintains a holder account, it must provide a statement free of charge at least once a year (Section 105(7)). A statement issued on request lists the quantity or volume of securities by type, issuer and issue (paragraph 8).

First establish what is recorded in the account. Only then does it make sense to decide whether to transfer, sell or retain the securities.

Common situations

• The issuer no longer exists. The central securities depository need not deliver a statement after a debit entry if the entry was made because the issuer’s register was cancelled on a basis other than an agreement and the issuer was deleted from the Commercial Register without a legal successor. It must publish this fact on its website without delay (Section 105(7)).
• The holder has died. The duty to provide a free annual statement does not apply until the inheritance decision becomes final. We discuss this in we have inherited securities.
• The securities are jointly owned in defined shares. They are recorded under an agreement, a final inheritance decision, a decision of another state authority or other legal facts (Section 105(9)).

How we can help

We establish what is recorded in the account and which regime applies, then prepare the appropriate filings through representation before CDCP. If the securities are to be transferred or sold, our share transfers service follows. For a deceased holder’s account, we handle inheritance of securities.