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1. Concretely, what do we mean by the term “security”?
A security is a financial title which represents a right of ownership or claim to an asset. It is qualified as “furniture” because it is easily tradable and exchangeable on the financial markets, unlike real estate.
What are the characteristics of securities?
Securities stand out for their interchangeability And their fungibility; each unit has the same rights and characteristics. This standardization allows for increased liquidity, promoting rapid transactions and exchanges.
Unlike real estate transactions, which can be complex and less negotiable, securities can be traded in ways that fast and efficient on the financial markets.
This difference highlights the importance of financial markets as a central trading place for investors. Securities make it easier for businesses to access the capital they need for growth and development.
What are the different types of securities?
Securities can take a variety of forms, such as stocks, bonds, options, exchange-traded funds (ETFs), etc.
● Actions : shares, sometimes free of charge, represent a stake in the ownership of a company. Owning shares gives you certain rights, such as the right to vote at general meetings and the right to receive a share of the company's profits in the form of dividends.
To find out more, read our article on free shares.
● Bonds : whether it's convertible bonds or not, they are debt instruments issued to raise funds. As an investor, you lend money to the issuer and receive regular interest payments in return. In practice, there are numerous differences between bonds and stocks.
● Options : options are contracts that give the buyer the right to buy (call option) or sell (put option) an underlying asset at a price agreed in advance, at a specified future date. We think in particular of BSAs or other financial instruments that are more popular with start-ups, BSPCE.
● ETF or trackers : they are publicly traded securities that track the performance of a specific financial index. ETFs (Exchange Traded Funds) allow investors to replicate this performance without having to buy each asset individually. They are traded on the stock exchange like ordinary shares.
● UCITS, as entities managing portfolios of shares and bonds, Undertakings for Collective Investment in Securities constitute a specific form of securities. They allow investors to diversify their risks by investing in a diversified portfolio managed by professionals. UCITS come in two main forms: SICAVs (Investment Companies with Variable Capital) and FCP (Mutual Investment Funds).
Other forms of securities may be mentioned, such as Stock options, the investment certificates, the Warrants or even the Contracts for difference(CFD).
Securities rights vary depending on the security or instrument. For example, shareholders have the right to vote and receive dividends, while bondholders receive interest and the return of capital.
Who can issue securities on the financial markets?
Joint stock companies (SAS), whether they are listed on the stock exchange or not, are the main entities issuing securities, alongside public authorities. There are also other types of social forms, such as public limited companies (SA), sometimes companies limited by shares (SCA).
Listed companies can issue securities on public financial markets, while unlisted companies can transfer degree securities over-the-counter or through private placements.
Public bodies can also issue securities to finance their activities. Some private entities, such as investment banks And the investment funds, can also offer securities, such as convertible bonds.
The conditions for issuing a security in France are governed by the financial law of the year and the regulations in force. This generally involves submitting a report to financial regulatory authorities, such as The Autorité des Marches Financiers (AMF). Companies listed on the stock exchange must comply with the rules and standards established by the stock exchange authorities. Finally, issuers often need to obtain shareholder approval to issue new securities.
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2. What taxation is applicable to securities?
The taxation applicable to securities differs for income from movable capital and capital gains realized in the event of the sale of securities.
How is income from movable capital taxed?
Income from movable capital is taxed when received according to a lump-sum regime including a discharge levy. This levy is composed of an income tax applied at a rate of 12.8% and social security contributions set at a rate of 17.2 per cent.
However, taxpayers also have the option of including this income in their income tax return, in which case they will be taxed according to the progressive income tax schedule, in addition to social security contributions.
What is the tax treatment of capital gains?
The tax treatment of capital gains varies according to the length of time the securities are held. Capital gains realized during the sale of shares held since less than two years are subject to the progressive income tax schedule.
On the other hand, for titles held since more than two years, capital gains benefit from an advantageous tax regime. They may be subject to the single lump-sum levy (PFU) of 30%, including income tax at the rate of 12.8% and social security contributions at the rate of 17.2%. In addition, an allowance is applied. It can reach 65% If the titles have been held since Eight years and 50% when the length of detention is longer than Two years.
Taxpayers can opt to include capital gains in their income tax return where they will be taxed according to the progressive income tax schedule.
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3. What can we learn from the dematerialization of securities in France?
Securities have long been essential instruments in financial markets, allowing investors to participate in the financing of businesses and diversify their portfolios.
In France, the dematerialization of securities, initiated by a finance law in 1982, has transformed the way in which financial securities are issued, exchanged and stored. Securities deposits with financial intermediaries have been centralized, allowing faster transactions and more efficient portfolio management. However, new challenges have emerged, especially in terms of regulatory compliance and data protection in the face of the RGPD.
Thus, the dematerialization of securities in France has opened up new opportunities for investment and financing. By allowing more efficient asset management, it still promotes financial innovation, while offering new investment opportunities to investors, in particular through UCITS.
With Axiocap, the dematerialization of securities becomes an innovative way to strengthen corporate governance andOptimize asset management.Businesses are taking advantage of this revolutionary solution and of advantages of the dematerialization of general meetings to ensure the management of their securities.
