14 - Conclusions on German and Austrian law

Summary

The focus of part II of the book was the German and the Austrian law of securities. Securities are classified as tangibles in both German and Austrian legal doctrine and their transfers are governed by the same rules as transfers of tangible assets. This analysis is supported by the theory that the paper certificates which are traditionally issued for securities embody the entitlements to which they relate. The analysis appeared in the later part of the nineteenth century and became the orthodox theory prevailing in both Germany and in Austria after the German states and Austria had adopted rules protecting the bona fide purchaser against unauthorised issues.

Under both German and Austrian law, the buyer needs to acquire possession to the securities certificate in order to become the owner of the certificate and of the entitlement to which it relates. The buyer of securities is protected against adverse claims arising out of unauthorised transfers in the same way as the buyer of tangible movables; there also exists a rule protecting the buyer against claims arising out of defective issues.

In both German and Austrian law, the rule protecting the buyer of securities against unauthorised transfers imposes the risk of such transfers upon the owner of securities who loses her entitlement when a buyer in good faith and for value acquires possession to the securities documents.