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Advances in Politics and Economics 
ISSN 2576-1382 (Print) ISSN 2576-1390 (Online) 

Vol. 4, No. 3, 2021 
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1 
 

Original Paper 

Transferring Dematerialized Shares in Germany, Austria and in 

the United States of America 

Rosen Petkov Baltov1* 
1 Regional court, Varna, Bulgaria  
* Rosen P. Baltov, Registering Judge at the Regional Court, Varna, Bulgaria  

 

Received: May 14, 2021          Accepted: May 26, 2021        Online Published: June 4, 2021 

doi:10.22158/ape.v4n3p1             URL: http://dx.doi.org/10.22158/ape.v4n3p1 

 

Abstract 

The present article is aimed at briefly reviewing the historical development of dematerialized shares in 

Germany, Austria, and in the United States of America (the USA). A brief comparison is made between 

the dematerialized shares in the United Kingdom and those in Germany and Austria.  

Discussed is the reason why the securities certificates in Germany and Austria were removed from the 

transferring process by taking them out of circulation (immobilization), and not through abolishing 

them (dematerialization).  

Presented is the development of the most active and liquid capital market in the world—that of the 

United States Department of the Treasury. There is a brief description made of the System of the 

conventional paper certificates and the system of the dematerialized securities known as direct holding 

system, as well as of the System for immobilization and possessing through intermediaries, known as 

indirect holding system. 

In conclusion, there is a short presentation of the currently valid legal status unrelated to transferring 

dematerialized shares in the three countries. 

Keywords 

dematerialized shares, securities, paper certificates, dematerialization ,Central Securities Depository, 

direct and indirect holding 

 

1. Transferring dematerialized shares in Germany and Austria 

1.1 Historical Development 

Germany and Austria felt the need to abolish the paper form of transferring securities in the 1930s. 

Until then, the German and Austrian securities were transferred through physical provision of paper 

certificates. However, the circumstances in the 1930s prompted the reduction of the need to move 



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around the paper certificates. 

Nevertheless, the authors of the reform from the 1930s could have used a law, which was enacted in 

1910 and provided the possibility to issue and hold the government bonds as dematerialized securities, 

the reform did not make use of that model. Instead, it was carried out in line with the legal regulations, 

which had been existing by then. Prior to the reform, securities were considered tangible assets, while 

the securities owned through intermediaries, were analyzed under the Property Act for property 

deposited in custody. The authors of the reform did not change the principle of that analysis; they rather 

modified the act for depositing property in custody in order to regulate the securities held as common 

property, which is not distributed individually to a particular person. Securities continued to be 

classified as tangible assets. The analysis was left untouched, irrespective of the fact that the individual 

certificates were replaced by global certificates, but it was further extended in order to include the 

government bonds for which there were no certificates existing. 

All the three jurisdictions—of England, Germany and Austria, abolished the need to physically move 

the paper certificates in the process of transferring. The time when that happened was determined by 

circumstances beyond the law. However, the law—and in particular, the legal doctrine regulating 

securities before the reform—determined the way in which that reform was implemented. 

Prior to the dematerialization, securities were classified a intangibles sets, where after the 

dematerialization the former principles of analyze is were still applied. Securities were still classified as 

intangible assets, and the procedure for transferring, regulating the dematerialized securities, replaced 

the procedure existing before that. Dematerialization had no impact either on the securities held 

through intermediaries. The analysis prior to the dematerialization was that the intermediaries kept the 

securities in custody in favor of the investors and that analysis was applied never the less whether the 

securities were held in a materialized or dematerialized form (Note 1). 

The analysis in the German and Austrian law used to be focused on the securities of a bearer, since the 

majority of the German companies issued them. However, that was changed over the recent years. 

Irrespective of the different doctrinal approach dominant in England, on the one hand, and in Germany 

and Austria, on the other, there is one important similarity. All the three jurisdictions have found the 

way to abolish the paper form from the process of transferring securities. 

1.2 Current Status 

The majority of the securities under German and Austrian a ware issued in the form of documents of a 

bearer, where those documents are considered tangible assets. In the basis of contemporary German law 

there is the theory that the certificates for the securities are paper documents of a very special type. The 

law, which concerns a paper document, is materialized in the document and, therefore, it can be 

transferred according to the rules regulating the tangible assets. If a paper document is transferred, the 

buyer will acquire not only the ownership right over the paper document, but also the rights related to it. 

The term in the German language for the German securities is “Wertpapier” and it is used both in 

German and Austrian law. The word “Wertpapier” literally means “paper for value”, and the term 



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reflects the fact that the document related to a security epitomizes a valuable right. The term is aimed at 

reflecting also the theory, which lays the foundations of both German and Austrian securities, i.e., that 

the rights concerned by the securities certificate and the certificate itself merge and become one single 

tangible asset. As a result of that, securities, their transferring and the indirect ownership over securities 

are all subject to the rules regulating the tangible assets. 

The analysis adopted by contemporary German and Austrian law appeared somewhat later after 

securities were used for the first time. 

The securities depositories in Germany and Austria emerged as the prevailing type of service provider, 

which was of assistance to the clients wishing to own securities indirectly. The rules concerning the 

securities and their transferring—in particular, the rule protecting a buyer from counter 

claims—fostered the development of this type of service provider on the German and Austrian markets. 

The fact that the securities were governed by the rules concerning the tangible assets encouraged 

Germany and Austria to abolish the paper form from the transferring process through immobilization, 

and not through dematerialization. 

In order to facilitate the indirect holding of securities, German and Austrian law elaborated a complex 

doctrine for joint ownership and co-ownership. That particular form of analysis of the doctrine emerged 

both in Germany and in Austria because securities were classified as tangible moveable property. This 

legal analysis provided the regulatory framework where the securities market and the legal regulations 

supporting it developed. The analysis influenced the way in which the paper form was eliminated from 

the transferring process, nevertheless Germany had introduced an alternative system for transferring 

government bonds, which could have been used as a model for creating a transferring system without 

using a paper carrier (Note 2). 

1.3 Indirect Holding   

The German and Austrian legaldoctrineinrespecttosecuritiesinfluencedthetypeofserviceprovider, which 

emerged on the German and Austrian markets in order to serve investors, who wanted to own shares 

indirectly. The process, where by the paper certificates were eliminated from the transferring process, 

was formed by the legal doctrinal framework, which directly regulated the owned securities. 

The fact that the German and Austrian bearer securities were classified as tangible assets brought the 

advantage that the German and Austrian rules concerning assignment were no longer applied for 

transferring. Transferring, instead, was subjected to the rules, identical to those regulating the tangible 

assets. As result of that, the acquirer was protected against counter claims. The legal doctrine, where 

the purchaser of securities is offered protection against counter claims, had a huge impact on the 

development of the institutional framework, prevailing in Germany and Austria. 

The bona fide acquirer becomes owner upon acquiring tenancy over the securities. That rule had a 

substantial influence on the way in which investors held securities certificates in Germany and Austria. 

Unlike England, where the securities certificates did not need to be deposited in custody, because the 

owners would not lose their rights if those certificates were stolen and then transferred to a third party, 



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any investor under the German and Austrian law had to keep the securities certificates out of circulation, 

so that a third-party would not be allowed to acquire tenancy over them, and, subsequently-ownership 

over the bearer securities. 

The paper certificates should be kept in a safe place, and that need of depositing in custody facilitated 

an important development in Germany and Austria. It created a demand for depository services, and 

that demand was met by the German and Austrian banks, which developed the activity of depositing 

securities in custody for investors as a separate branch of its commercial activities. 

Instead of renting out deposit boxes or safe deposit boxes to individual investors, banks initially took 

the securities certificates and kept them in custody for the respective clients. The banks kept separate 

files for every client; the paper documents were not physically held by the investors, nevertheless, they 

were distributed for each of them. The German and Austrian depository services for securities are an 

example how a doctrine can foster the emergence of certain types of infrastructure providers. Similarly, 

just like the English law on notation facilitated the advent of registrars in England, the German and 

Austrian doctrine, protecting buyers against counter claims, favored the emergence of depositories in 

those countries (Note 3). 

The German and Austrian rules, safe guarding buyers against counter demands, issuing from unlawful 

transferring, prompted the need for investors to prevent any disappearance of their documents. That led 

to a demand for depository services on the German and Austrian markets. That demand was met by the 

German and Austrian banks, which elaborated specialized depository services. The doctrinal 

framework, regulating the paper transferring of securities, influenced the way in which the paper 

certificates were removed from the transferring in Germany and Austria. The legal doctrine, which 

provides the ground for securities in both jurisdictions, is based on the normative presumption that the 

special rules regulating securities transferring are applied because securities are tangible assets. Hence, 

thelegalexpertsdrewtheconclusionthatifsecuritieswerenotclassifiedas tangible, those specific rules could 

not be applied. Securities transferring, instead, should have been governed by the laws for assignment. 

In order to prevent that, it was possible to elaborate as pecialegime, which was to be applied for 

securities transferring, nevertheless how they were classified. Besides, it would have been possible both 

for the German and Austrian law to refer to the rules, which had existed for the government bonds, for 

which there were no paper certificates. 

That option, however, was not the preferred done. The securities certificates, instead, were eliminated 

from the transferring process by taking them out of circulation (immobilization), and not through 

abolishing them (dematerialization). The prevailing point of view was that it was essentially important 

that the legal analys is governing the paper certificates be further applied, even though in an 

environment, where paper certificates no longer fulfilled their original function for transferring the 

rights embodied in them. As are setoff that, the German and Austrian markets introduced the central 

securities depositories (Note 4). 

Unlike England, which chose transferring dematerialized securities, Germany and Austria preferred 



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their immobilization. The relationship between intermediaries and investors is followed in respect to 

depositing property in custody according to the German and Austrian law. Investors are considered 

co-owners of the indirectly held papers; moreover, they jointly possess the securities certificates 

deposited with the Central Securities Depository. That is opposite to the position adopted in the English 

law, where the relations with the investors, who hold securities indirectly, is governed by the Custody 

Act. 

The co-ownership interest in indirectly owned securities is transferred through registration in the books 

of the intermediary, who keeps the securities. That registration is classified by law as including 

transferring the tenancy over the securities certificates from the seller to the buyer. 

The buyers of indirectly owned securities are protected against counter claims issuing from unlawful 

transferring, on the basis of the same rules, which protect the buyers of directly held securities in the 

German and Austrian law. Irrespective of the fact that the investors have a co-ownership interest within 

the total amount of securities, kept at the Central Securities Depository, a bonfire buyer can rely on the 

rules protecting a buyer of a tangible as set against unlawful transferring. The situation in the English 

law is less clear. The rules regulating materialized securities were not forbidden when dematerialized 

securities were introduced in England. It is still unclear, however, whether and to what extent the rules 

protecting the buyers of materialized securities provide protection to the buyers of dematerialized 

securities. 

At the same time, none of the jurisdictions did create a completely new legal regime, which would 

facilitate securities transferring carried out without the need of moving the paper certificates. Instead of 

that, the rules existing in all the three jurisdictions governing transferring through the use of a paper 

carrier were modified in order to address transferring without the use of a paper carrier. Further more, 

the legal norms regulating transferring through the use of a paper carrier had a major impact on the 

institutional formation used in order to regulate transferring in a dematerialized form. 

The analysis in the German and Austrian law is focused on the securities of a bearer, since most of the 

German companies used to issue them. This, however, started to change over the recent years. Some 

big companies, listed on the stock exchange in Germany, have replaced the bearer stocks with register 

redone, where that change has been prompted by the globalization. There as on for that change was that 

the companies in question wanted to be able to get registered directly on the New York Stock 

Exchange-NYSE. NYSE, however, lists only registered stocks. In order to be able to issue the same 

type of stocks to the investors in the USA, as well as to the German investors, the German issuers 

decided to issue registered shares, instead of shares of a bearer both on the US and on the German stock 

markets. The German legislation supported that change by reforming the legal regulations for the 

registered shares, which have been traditionally represented in the German Companies Act 

(Aktiengesetz). 

That act requires from the German companies issuing registered shares to keep a shareholder’s registry. 

At the same time, the act related to that registry was updated, wherethechangesmadeincludedalsoa 



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change in the German legal terminology. Prior to the reform, the share registry was called “the book ofs 

hares”  (Aktienbuch). This term was abandoned in the reform process and was replaced by the term 

“registry of shares” (Aktienregister). The explanatory notes to the revised legislative act explicitly state 

that this terminology was chosen to reflect more accurately the English term for a “registered share”. 

The German settlement system helped the German companies in the transition from bearer shares to 

registered shares by introducing an optional lowing the small-scale investors to list their names in the 

share registry, nevertheless whether they own those shares through a chain of intermediaries or not. 

That development is an example of convergence (alignment). German law has changed to a ling with 

the prevailing international standard to enable the German issuers be competitive on the global market. 

It should be pointed out that there form did not change the already existing legal doctrine. The bearer 

shares were replaced by registered shares to ensure compliance with the American market practice. The 

share registry was renamed so that it should reflect the English language use. None of those changes, 

however, had an impact on the doctrinal analysis of share transferring. 

ThereformwascarriedoutinlinewiththeprevailingdoctrineintheGermanlaw about ownership and it did 

not change the legal nature of the German shares. Besides, that reform did not change the analysis of 

the transferring process. The German registered shares, as well as the German shares of a bearer, are 

also considered tangible assets. In order to betransferred via the German settlement system they should 

be indorsed. That endorsement transforms the registered shares into bearer shares, where upon their 

transferring is governed by the same rules, which regulate all the other bearer securities. The 

certificates for the registered shares are deposited with the Central Securities Depository. Just like with 

the bearer shares, the rules about the tenancy over those securities certificates determine the time when 

the buyer becomes owner of the registered shares, and irrespective of the change in the name, listing in 

the German share registry does not turn the respective holder of a share in to an owner of the shares. 

 

2. Conclusion  

Securities are classifieds tangible assets both in the German and in the Austrian legal doctrines, while 

their transferring is governed by the same rules as those for the tangible assets. This analysis is 

supported by the theory that the paper certificates traditionally issued for securities epitomize the rights 

related to the certificates. The analysis was developed towards the end of the nineteenth century and 

became an or thodoxtheory, predominant in Germany and Austria after the German provinces and 

Austria adopted the rules protecting the bonfire buyers against unlawful issuing. 

According to the German and Austrian law, a buyer should acquire tenancy over the securities 

certificate in order to become an owner of the certificate and the rights related to it. A buyer of 

securities is protected against counter claims resulting from unlawful transferring in the same way as a 

buyer of tangible moveable property; there is also a rule protecting the buyer against claims resulting 

from improper issuing. 

Both in the German and in the Austrian law, the rule protecting a buyer of securities from unlawful 



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transferring requires that the risk in such transferring should be borne by the securities owner, who 

would lose his/her rights when a benevolent buyer acquires tenancy over the securities documents 

against payment of the respective value. As a result of that, there is a need of keeping the documents in 

custody under the German and Austrian law, which facilitates the emergence of depositories in both 

jurisdictions. 

The theory underlying securities and their transferring in the German, as well as in the Austrian law, 

had a major impact on the way in which the paper certificates were abolished from securities 

transferring in both countries.  

The theory presents the regulatory principle that the rules protecting the investors from counter claims 

resulting from unlawful transferring are applied only because the securities are classified as tangible. If 

securities were classified as in tangible, investors would not have been protected again stone-permitted 

transferring. When processing the paper certificates became to cumber some, it was considered 

reasonable on the German market not to adopt an entirely new regime; instead, it was decided that the 

previous legal analysis should remain unchanged. Securities were further classified as tangible assets, 

however, paper documents, representing the securities, were immobilized. The German and Austrian 

markets developed a new system of transferring around the fundamental legal analysis. 

There is the Central Securities Depository, which keeps in custody the securities certificates for most of 

the German securities listed on the market. Clients usually own the securities through sub-custodians, 

who have accounts at the Central Securities Depository, while the relationship between the clients and 

their depositories is analyzed in the light of providing one’s property for keeping in custody. It is not 

considered that the depositories have property rights over the clients’ securities; they are only 

intermediary’s in the tenancy between their clients and the securities certificates, which are kept by the 

Central Securities Depository. The investors are considered co-owners and joint-tenants of the 

securities held at the Central Securities Depository. The owner ship over those securities is to be 

transferred by registering, which, however, under the doctrine is classified as including transferring of 

the joint tenancy from the seller to the buyer. The buyer is protected against counter claims, which may 

result from unlawful transferring or improper issuing (Note 5). 

 

3. Transferring Dematerialized Shares in the United States of America 

3.1 Historical Development 

On a global scale, dematerialized investment securities appeared much earlier and were related to the 

process of the so-called dematerialization. The necessity of their introduction was a result of piling 

heaps of paper in the stock markets in the United States of America (USA) and their difficult 

processing—a phenomenon called “paper crunch”. Dematerialized securities were officially introduced 

in the USA with the Uniform Commercial Code (UCC) back in 1977. They are regulated there as 

uncertificated securities, or those are investment securities for which there is no certificate issued to 

represent them, and their transferring is done through registration in books kept for this purpose by or 



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at the expense of a issuer. § 8-102 from UCC, definitions (15) and (18).  

For more than 30 years the largest, most active and most liquid market in the world, that of the United 

States Department of the Treasury, was in a process of on-going abolishment of securities’ physical 

certificates. There are several milestone years illustrating that process: 

In 1968 were adopted provisions authorizing the first “book-entry” procedures. The “Book-entry 

System” is the system for carrying out and registering the issuing and dealing with dematerialized 

shares; 

In 1979, all the new treasury bills were issued only in a dematerialized form; 

In 1985, the Federal National Mortgage Association started applying the “book-entry” system; 

In 1986, all the new treasury bills and bonds were issued in a dematerialized form; 

The market for the most liquid of the instruments on the cash market in the USA—the federal funds 

emerged since both borrowers and lenders were looking for ways to make use of the opportunities, 

provided by the trade with reserve funds. The trade with federal funds started in the 1920s and involved 

only several banks, members of the Federal Reserve, which were based in New York. Nowadays, that 

market includes more than 14 000 commercial banks and a wide range of non-bank financial 

institutions. The characteristics of the federal funds, as well as the mechanisms of their purchase and 

sale, reflect most accurately the needs of the players on the contemporary capital market (Note 6). 

On a global scale, those markets, which are most efficient, will obtain competitive advantage and a 

dominant position in the actual formation and distribution of the investment products. From a historical 

perspective, the USA is a leader and innovator in the field of dematerialized securities. Nevertheless, 

there are other competitors gaining momentum on the market of dematerialized financial instruments. 

The Euro has created potential for major competition within the European Economic Union, where the 

links between the separate countries and unions are formed with a head-spinning speed. Furthermore, 

some later emerging players on the capital market are making quick transition towards securities 

dematerialization. Among such countries are Australia, the Republic of South Africa and India. 

3.2 Current Status 

Transferring dematerialized shares in the USA is governed by Art. 8 of UCC, which regulates 

ownership and transferring securities and other financial assets. The provisions of Art. 9 of the UCC are 

related to securing those assets. Art. 8 and Art. 9 are part of the numerous legal norms of the US 

regulatory basis governing securities and investment assets. Article 8 settles with its content the 

transactions with securities, the relations between the issuers, investors, intermediaries and sellers and 

their buyers. Articles 8 and 9 from the current version of the UCC are adopted by all the fifty states and 

the District of Columbia. UCC-Art. 3 regulates the ownership and transferring of negotiable 

instruments (securities), for which there can be established and owned rights over securities through the 

indirect holding system under Art. 8 (Note 7).  

 

 



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3.3 Direct and Indirect Holding Systems 

The system for immobilization and possessing through intermediaries does not entirely replace the 

system of dematerialized securities, and none of those systems does entirely replace the system of 

direct holding and the provision of conventional certificates on paper. Article 8 of the UCC contains the 

legal regulations for all the three systems. The system of the conventional paper certificates and the 

system of the dematerialized securities are known as direct holding system. The system for 

immobilization and possessing through intermediaries is known as indirect holding system. 

With the direct holding system, each investor is registered as an owner of the security in the issuer’s 

registries, which are often kept by a transferring agent. This can be illustrated by Figure 1. 

 

 

 

 

 

 

Figure 1. Direct Holding System 

 

With the indirect holding system, most of the investors have no direct connection and do not 

communicate directly with the issuer, but they own their investment through intermediaries. The 

indirect holding system is not entirely independent from the direct holding system: in the case with the 

securities. The legal entity, which is at the top of the indirect holding chain, communicates with the 

issuer from the direct holding system. The relation between the two systems, as well as the 

relationships within the indirect holding system, can be illustrated by Figure 2. 

 

 

 

 

Direct holding of a Jumbocertificate  (a securities  

certificate with a high value or for a greater number  

of shares) certifying 10000 shares 

 

 

issuer 

DTC – Depository Trust Company 

issuer  

investor ррр investor investor 



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6000 shares, credited                                                             4000 

shares, credited  

into account with securitiesinto account with securities 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2. Indirect Holding System 

 

The Depository Trust Company-DTC, is the clearing organization for the majority of the publicly 

traded corporate capital securities, corporate debt securities and municipal debt securities, and its 

representative is usually Cede & Co. It was established in 1973 with the main goal to reduce the costs 

on the securities transactions, as well as to carry out their clearing and settlement by immobilizing 

securities and transferring securities holding by book entry movement (Note 8). Some of the services, 

which that institution offers are:  

- custodian services; securities clearing and settlement;  

- asset management, including services related to depositing securities and services related to dividend 

payment. 

The securities (or other financial assets) are shares from the capital of a corporation, where investor 1 

has their Ghtofcollateral for those shares, credited in to his/her securities account kept with broker 1. 

Broker 1, in turn, is in the same relationship with the DTC, which is the registered owner of the shares 

in the books of the computer corporation.  

3.4 Scope of the Two Systems  

The direct holding system is applied only for securities, while the indirect holding system has a wider 

application and comprises securities as well as other financial assets. The definition for a security, 

bank 
broker 1(with 1,000 shares) 

2,500 shares, 

credited into 

account with 

1,500 shares, 

credited into 

account with 

3,000 shares, 

credited into 

account with 

securities  

2,000 shares 

credited into 

account 

withsecurities 

broker 2 investor3    investor 1 
     

2,500 shares 

credited into 
investor 4 



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presented in § 8-102 of the UUC supported by § 8-103 of the UCC differs substantially from the 

security definition used in the federal securities acts.  

It is important to quote part of the provision of § 8-102, namely §8-102 (1)   

of the UCC, directly concerning the above discussed question: A materialized security, “means an 

obligation of an issuer or a share, participation, or other interest in an issuer or in property or an 

enterprise of an issuer: which is represented by a security certificate in bearer or registered form, or the 

transfer of which may be registered upon books maintained for that purpose by or on behalf of the 

issuer; which is one of a class or series or by its terms is divisible into a class or series of shares, 

participations, interests, or obligations; and which: is, or is of a type, dealt in or traded on securities 

exchanges or securities markets; or is a medium for investment”. 

 “Un certificated (dematerialized) security” means a share, participation or another other interesting an 

issuer or in property or an enterprise of an issuer, or an obligation of an issuer, which is not represented 

by a security certificate, where 

thetransferofwhichshallberegistereduponbooksmaintainedforthatpurposebyoronbehalfoftheissuer;  

which is one of a class or series or by its terms is divisible into a class or series of shares, participations, 

interests, or obligations; and which: is, or is of a type, dealt in or traded on securities exchanges or 

securities markets; which is one of a class or series or by its terms is divisible into a class or series of 

shares, participations, interests, or obligations. 

“A security” may be materialized or dematerialized. If it is materialized, the terms “security” and 

“materialized security” may mean either an intangible interest, or the document representing that 

interest, or both, as required by the context. The present article, and not article 3 regulates the written 

document, which is a materialized security, nevertheless, the document in question meets the 

requirements of the latter article as well. The present article does not concern money. If a security is 

detained by or delivered to an issuer or his/her transferring agent due to reasons other than registering 

of transferring, another temporary purpose, payment, replace mentor acquisition by an issuer, such as 

security shall be treated as a dematerialized security for the purposes of the present article. 

A materialized security is in a “registered from” if it nominates person, who is entitled to the security or 

to the rights it represents and its transferring may be registered upon books maintained for that purpose 

by or on behalf of the issuer, or if that is specified in the security. 

A materialized security is in a “bearer from” if it belongs to the bearer according to its terms, but not by 

reason of an additionally registered endorsement. 

 

4. Summary 

The individual share holders in the USA certify their ownership right in a business company through 

the shares acquired by them from its capital. The ordinary share capital 

lentitlestheholdertotakepartinthecompanycontrolhavingrighttoonevote for each share listed in the 

registry, as well as to an interest in the profits in the form of dividends and to participate in the 



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distribution of the net assets in case of a company dissolution upon satisfying the creditors. The 

rearealsoot her classes of share capital, such as preferential shares, 

whicharesuperiortotheordinarysharesinrespecttodividendsandthedistributionofthenetassetswith 

acompany’sdissolution.  

Byexercisingtheirrighttovote, theshareholderschoosethedirectorsofthebusinesscompanyandthusexert 

indirect control over its activities. Theyareentitledtoreceivinginformationaboutthecompany’sactivities 

by reviewing its books. 

Theshareholderscankeeptheirpercentageofvotescontrollingwhetherthecompanyshallemitanyadditionala

mountsofsharesfromitscapitalbyexercisingtheirrighttopreferentialbuyout. They are entitled to prosecute 

a claim on behalf of the company for damages incurred upon it if, at a request by them, the company 

refuses to do so (Note 9). 

 

References  

Bjerre, C., & Rocks, S. (2004). The ABCs of the UCC. Article 8. Investment securities. 

Donald, R. F., & Peter, S. R. (1987). Financial Institutions and Markets in a Changing World (3rd ed.). 

BPI, USA.  

Micheler, E. (2007). Property in Securities. A Comparative Study. Cambridge University Press. 

Ronald, A. A., Ivan, F., & David, P. T. (1987). Business Law. South-Western publishing CO. USA. 

www.dtcc.com/about/subs/dtc.php 

 

Notes 

Note 1. Micheler, E. Property Securities. A Comparative Study., Cambridge University Press, 2007, p. 

227-228 (hereinafter only Micheler, E. Property …). 

Note 2. Micheler, E. Property in Securities. A Comparative Study. Cambridge University Press, 2007, p. 

145 - 147 (hereinafter only Micheler, E. Property …). 

RegardingtherulesregulatingsecuritiesincontemporaryGermanandAustrianlaw, see p. 165 and the 

following. 

Note 3. Micheler, E. Property …, p. 182 - 183. 

Note 4. Micheler, E., Property …, p. 192. For more details about the process, which led to taking 

securities out of circulation (their immobilization) in Germany and Austria and the legal analysis of that 

process, see pp. 193 – 215. 

Note 5. Micheler, E. Property …, pp. 216 - 221. 

Note 6. Donald R. Fraser and Peter S. Rose., Financial Institutions and Markets in a Changing World,  

third edition, BPI, USA, 1987 …, p. 277. More about the federal fund market – p. 277- 284 (hereinafter 

only Donald R. Fraser and Peter S. Rose., Financial…). 

Note 7. Bjerre, C. and Rocks, S. The ABCs of the UCC. Article 8, Investment securities, 2004, p. 1-4 

(hereinafter only Bjerre, C. and Rocks, S. The ABCs …).. 



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Note 8.  www.dtcc.com/about/subs/dtc.php 

Note 9. Ronald A. Anderson, Ivan Fox and David P. Twomey., Buseness Law, South – Western 

publishing CO., USA, 1987, p. 860 – 861. For more about share capital, transferring of shares and 

shareholders’ rights and obligations, see pp. 839 – 863. 

 


