Transferring dematerialized shares in Germany, Austria and in the United States of America

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. Further, described are the reasons, which have led to the development of the depository services, on the basis of which the German and Austrian markets built a new system for transferring securities around the fundamental legal analysis, where there is a Central Securities Depository, which keeps in custody the certificates for most of the securities listed on the market.

There is a comparison made between the intermediaries and the investors in the German and Austrian law, on the one hand, and in the English law, on the other.

Discussed is the reason 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. The Depository Trust Company is specified, as well as its functions. There is a description provided of the concepts “materialized security” and “dematerialized security” pursuant to the Uniform Commercial Code of the USA.

In conclusion, there is a short presentation of the currently valid legal status quo related to transferring dematerialized shares in the three countries.