10 - Paper transfers

Summary

Consistent with the prevailing theory adopted by German and Austrian law, transfers of securities in both are jurisdictions governed by the same rules on tangibles. In this chapter the rules on the transfer of ownership rights in securities will be analysed and the rules resolving unauthorised transfers examined (section 10.2). In addition, German and Austrian law have developed rules that protect the purchaser of securities against equities arising out of defective issues and these rules will be analysed in chapter 11. It will be assumed throughout that securities are held in the form of bearer securities directly by investors. The issues that arise when securities are held through intermediaries will be examined in chapter 11.

Transfer of ownership

Modern German and Austrian law apply the same rules to transfers of bearer securities as to transfers of tangible movables. In contrast to English law, which as we know distinguishes between ownership at law and ownership in equity, German and Austrian law have one unified doctrine of ownership which applies to all tangible assets and to securities. In subsection 10.1.1, German law will be analysed, followed by an analysis of Austrian law in subsection 10.1.2.

German Law

The BGB regulates the transfer of tangibles in ss. 929–936.

According to BGB section 929, the buyer becomes the owner if two requirements are satisfied. The buyer needs to acquire possession to the tangibles and the seller and the buyer need to agree that ownership is to be transferred to the buyer.