Security

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Share - Stollwerck brothers (1902)
Pfandbrief - Bavarian Mortgage and Exchange Bank (1901)

A security ( Swiss : Wertschrift ; English security ) is a document that certifies a property right in such a way that the right from the document can only be asserted against the debtor if the right holder of the document presents it to the debtor.

General

The property right can be a claim (for bonds , debentures ), a membership right (for stocks ) or a co-ownership share (for investment certificates ).

A certificate is used to make it visible and as proof of a right. Without possession of the document, the right enshrined in it cannot be asserted. Documents in written form are now obsolete and rare, and it exists only if a legal basis a securitization specifically requested. A large part of the securities documents, especially securities , has been replaced by collective safe custody of global certificates ; in the case of federal securities as a real value right in the form of a debt register entry. In the states whose law still requires documents, they are still issued, but as a rule do not leave the depository of the central securities depository , which keeps records of the shares in the portfolio and their transfer, and serve no purpose there, except through their existence Maintain formal requirements. Only in very rare cases are securities actually put into circulation as a document (e.g. in over-the- counter transactions ).

definition

While there is no legal definition of the term "security" in Germany and Austria , the Swiss Code of Obligations (OR) clearly defines in Art. 965 OR: "Security is any document with which a right is linked in such a way that it is neither asserted nor issued without the document others can be transferred. "

The compound “security” means that it is a document in which an asset, monetary value or other right is securitized.

Even today in Germany and Austria the broad definition of the term “security” established by the legal historian Heinrich Brunner in 1882 is adhered to . According to this, it is a "document about a private law, the utilization of which is conditioned by the possession of the document under private law".

Components of the definition

This definition in turn includes several meaningful terms. The term “ document” is defined under criminal law as “a script that was created to establish, modify or revoke a right or a legal relationship or to prove a fact of legal importance” ( Section 74, Paragraph 1, Item 7 of the Austrian Criminal Code ). A certificate is an embodied, generally or for the initiated understandable, human explanation of thoughts, which is suitable and intended to provide evidence in legal dealings and allows its issuer to be identified. German jurisprudence has also found it difficult to use the term “document”. The term private rights is intended to enable a distinction to be made between documents with public rights which are not represented in securities. Public deeds are drawn up by authorities within the framework of their official powers or by a notary within his business area in the prescribed form. The linguistically less elegant use of the word "ownership" is intended to make it clear that possession of the document is the prerequisite for exercising rights against the debtor. From the point of view of the debtor, the debtor is only liable with debt-discharging effect if the document is presented to him. If the debtor is not presented with the document, he can exercise his right to refuse performance. As the debtor for bearer and order papers in the same form as for recta papers ( § 808 Paragraph 2 Clause 1 and § 797 Paragraph 1 BGB , Art. 47 SchG , Art. 39 and Art. 50 WG ) only upon presentation of the document must perform, this feature unites all types of securities.

Concept of security in laws

Special laws use very different security terms, which is justified by the different regulatory objectives. Some laws deal extensively with the concept of securities. Since securities and securities trading are closely related to the banking sector, it is obvious that banking supervisory regulations in particular deal with the concept of securities.

A list of the financial instruments considered securities can be found in Section 2 (1) of the WpHG . The definition in section 1 (11) sentence 2 nos. 1–4 KWG , which was valid until July 2013, pursued regulatory and technical goals. It made use of a non-exhaustive list and made it clear that no documents have to be issued (so-called stock rights ) and that they can be traded on a market.

The Depotgesetz used in § 1 para. 1 Custody Act an exhaustive list, which require that the securities' shares , mining shares , interim shares , interest , dividend and renewal certificates , denominated in bearer form or by endorsement transferable bonds , also other securities if these justifiable are, with the exception of banknotes and paper money . Securities within the meaning of the DepotG are also registered bonds , insofar as they were issued in the name of a securities depository ”. This law is also a banking supervisory law that only applies in the relationship between the credit institutions and the BAFin / Deutsche Bundesbank . However, it is permissible if other laws (such as Section 2 (24 ) AWG ) refer to this. Then the legal definition of the DepotG also applies in the area of ​​application of the Foreign Trade Act.

Questions about accounting are in the foreground in Section 266 (2) Lt. B III HGB . Shares in affiliated companies, own shares and “other securities” are shown here. All securities that do not belong to any other item and can be sold at any time are to be shown under this last name.

Also § 7 para. 1 RechKredV uses a list that is stored on the properties negotiable and listed recurs and defines these terms in paragraphs 2 and 3 RechKredV. Accordingly, securities that the conditions are considered a marketable listing fulfill. As a publicly traded securities listed on an applicable stock exchange for trading on the regulated market are approved.

Securities can embody the following rights :

Debt claims Money claim from savings book, interest-bearing securities
Participation rights Voting rights and / or property rights, (shares)
Property rights Mortgage note (right of ownership of a piece of land)
Option rights Warrant

Delimitations

The required securitization excludes mere evidence (= proof of the existence of the right), in particular receipt , promissory note , purchase contract , as well as simple identification documents (= verification of the presenter's authorization to receive a service), in particular cloakroom tickets, luggage storage receipts or repair receipts from the definition.

No securities are:

  • Vouchers from a department store, because although they certify the right to receive goods of the stated value from the exhibitor, they cannot be declared invalid .
  • Banknotes are legal tender . A few decades ago, a banknote was often a security due to its gold backing , because it could be exchanged for a fixed amount of gold at any time (e.g. the US dollar until 1973).
  • Identity cards , passports or an identity card represent a public identification obligation, i.e. not private law .
  • Evidence such as borrower's note and receipt only serve as evidence ; the law is completely independent of its existence.
  • Simple identification documents such as cloakroom tickets or repair tickets have a legitimation function like securities, but there is no securitization of the right (document = right). These documents thus release the debtor from his performance, but do not change anything in the rights of the obligee . The depositor of the items of clothing can, for example, prove his rights in another way by precisely describing the items of clothing and their contents.

However, postage stamps , tickets , telephone cards or admission tickets have the character of securities . These are so-called "small" bearer papers within the meaning of Section 807 of the German Civil Code (BGB), the issuer of which can be exempted by making a payment to the - not named - holder, the holder is entitled to demand the performance and the possession of the document to assert the Right is required. Small bearer papers are bearer papers that only incompletely reflect the legal relationship and the issuer. Pursuant to Section 807 of the German Civil Code ( BGB), the rules on bearer bonds are partially applicable to them ( Section 793 (1) and Sections 794, 796 and 797 BGB).

What counts as a simple certificate of legitimation and what counts as a security in a specific case is primarily decided by the will of the exhibitor , and secondarily by the public opinion .

The "wide" and the "narrow" security terms

Heinrich Brunner's “broad” definition of securities is the definition that prevails today: A security is a document in which a private right is evidenced in such a way that it is necessary to hold the document in order to assert the right . This definition includes bearer , order and rectal securities .

The “narrow” term “security” restricts this general definition. According to this, only those documents should belong to the securities that are transferable according to the principles of property law . Only bearer and order papers are counted for this purpose, recta papers are not. This article is based on the “broad” concept of securities.

Purpose of securities

In the law of obligations , contracts are generally free of form . If the contracting parties nevertheless record their contractual rights and obligations in writing, this is done for reasons of easier evidence. If a loan is granted outside of the requirements of consumer law, the obligee can request the debtor to issue a promissory note . Sets of creditors after the due date of the loan debt the promissory note to the debtor before he can thus prove his claim. If he loses the promissory note, his right to repayment is by no means lost - it is only up to him to prove it in another way. The promissory note is therefore a mere document of evidence.

However, if it is agreed that the debtor pays the person who presents the deed with discharging effect, the deed has a liberation function (exemption function) in favor of the debtor regardless of who presents it. In this case, the creditor can in turn pass the document on to one of his creditors, who then presents the document to the debtor referred to here. In these circumstances, the deed is a security.

Properties of securities

Securities have common characteristics that give them the character of a security.

Marketability

In terms of the will of the law, a distinction can be made between marketable and less marketable securities. Marketability means that a security can be transferred more or less easily from one holder to the next due to its legal structure . The securitization of the right only ensures the marketability of a security. The marketable include bearer and order papers, which are more or less fungible and can be transferred by simple surrender or endorsement . Bearer securities have the highest marketability , because their transferability is even more extensive than with movable property due to the increased protection of good faith .

The recta papers are not designed to be marketable if the mere handover of the paper does not even result in a change in the law of the securitized claim: the securitized claim must be transferred by way of assignment , and the securitizing security follows a complicated legal fate. The acquiring assignee has a claim against the assignor to surrender the document ( Section 985 , Section 952 (1) sentence 2 BGB), and the old creditor is also obliged to hand over all documents related to the claim ( Section 402 BGB). These legal hurdles do not exactly make recta papers marketable. If the legislature sets particular hurdles for transferability, it particularly wants to prevent marketability. Shares in a GmbH - which, by the way, are not securities - can only be transferred in the form of a notarized assignment according to Section 15 (3) and (4) GmbHG ; The obligation under the law of obligations already requires notarial certification, especially the actual assignment as a transaction .

Tradability

Acquisition, sale, administration and custody of securities for others is a banking business requiring a license within the meaning of Section 1 KWG . Tradability, especially marketability, requires the highest degree of marketability. This is why bearer securities are the most marketable of all types of securities and are predestined for stock exchange trading. If order papers (such as registered shares) are to be tradable on the stock exchange, they must contain a blank endorsement . Registered shares are available for stock exchange purposes if the last transfer ( Section 68 (1 ) AktG ) - and only this - is expressed by a blank endorsement. Registered shares, which can only be transferred with the consent of the company ( Section 68 (2) AktG), can also be delivered if the last transfer - and again only this - was made by blank assignment or if blank transfer requests from the seller are attached to the shares . In the guidelines of the German stock exchange for the "availability of damaged, officially listed securities", the blank endorsement and the blank association are emphasized as essential characteristics of a security.

Certification of a right

Common to all securities is the securitization of a private right. While the share certifies all the rights of a shareholder in the stock corporation , the savings book entitles the creditor to withdraw the savings credit documented in it within the specified limits. The rights from an (order) warehouse receipt , for example , which entitle its authorized owner to pick up the stored goods are stored completely differently . As this short list shows, the rights arising from securities are structured completely differently. They range from voting rights at the general meeting of a stock corporation to ownership of stored goods to pecuniary property rights in savings accounts.

In the case of bearer securities, the law is so closely linked to the certificate that agreement and handover of the certificate automatically transfer the rights evidenced in it to the new holder. In the case of order and rectal papers, on the other hand, the mere handover of the document does not lead to the transfer of rights of the rights evidenced therein. Order papers require an endorsement, claims from recta papers must be transferred with assignment. In the case of the latter, the connection between property law and the document has already been loosened so that it is necessary to transfer the documented claim by assignment, while the handover of the document is classified as a necessary consequence under civil law. Nevertheless, the handover is of great importance for all types of securities, because the debtor or issuer must be given the certificate when asserting the documented claim.

Assertion of the claim

Assertion of the claim means that the respective owner of the paper can demand his claim to performance from the debtor against delivery of the document when the right enshrined in it becomes due. If it is agreed that the debtor pays the person who presents the deed with discharging effect, the deed has a liberation function (exemption function) in favor of the debtor, regardless of who presents it.

The legitimate possession of the security justifies the unqualified presumption of the material entitlement of the holder. The debtor may only raise objections to the holder that concern the validity of the exhibition, arise from the certificate or the exhibitor is entitled to directly against the holder. If the debtor was incapable of contracting at the time of issue or if he can prove that the owner has already received the performance promised in the document, then the debtor is exempt from performance. This also applies if the owner cannot present the certificate. The debtor from a security can namely demand that the document be handed over to him if he is to effect the performance. In § 796 BGB an extensive exclusion of objections is provided. The debtor may therefore only raise a few objections that impede performance against the obligee.

While in the case of bearer paper, each submission is to be regarded as materially entitled for the debtor to demand performance, the debtor has certain examination obligations for order and recta papers. In the case of order papers, the respective presenter of the document is materially entitled if there is a complete chain of endorsements that must be attributed to the issuer. According to Art. 40 Para. 3 Clause 2 WG, the debtor of an order paper is only obliged to check the external correctness of the chain of endorsements prior to performance. He therefore checks the chain of endorsements to ensure that they are complete, regardless of whether the endorsements are valid or the signatures are genuine. If the debtor pays to an unauthorized presenter of the order paper, he is released from the performance ( Section 365 (1) HGB in conjunction with Article 40 (3) WG).

Loss of security

If the document has been lost, however, the right enshrined in it is not lost. Necessary for the assertion of rights under lost securities is then a cancellation after completion array method . The exclusion judgment of the declaration of nullity replaces the lost security and gives the holder the original legal status of the security ( § 479 FamFG ). The notification procedure is provided by law for bearer and order papers, for qualified identification papers and the mortgage letter. If, however, a promissory note is lost, a public notice procedure is not provided according to § 371 BGB; the right can thus be asserted without a public notice procedure, which is why the promissory note is not one of the securities. A notification procedure for lost documents is therefore a further criterion for the property of a security.

If a security is lost (e.g. due to theft or loss ), the right can only be asserted against the debtor on the basis of an exclusion judgment ( § 479 FamFG) obtained in the public notice procedure (§ § 433 ff. FamFG) . This is the consequence of the right of the debtor that he is only obliged to perform if the document is handed over to him by the owner.

Essential functions of securities

All securities fulfill more or less common functions, which can be systematized as follows:

Indicative and evidence function

The content of the security certificate proves to anyone interested, especially the holder, that the issuer owes a service under the conditions set out in the certificate. In the event of legal disputes, this document serves in particular as evidence of the scope of services. With the document process, the legislature has created a special variant of the civil process. According to this, a claim can be asserted which is aimed at the payment of money or the delivery of reasonable items or securities if all the facts necessary to justify the claim are undisputed or can be proven by documents ( Section 592 ZPO). Securities are the only admissible evidence in documentary proceedings. From this it can be seen what a significant evidence function the securities have under procedural law.

Liberation function / legitimation function

While the liberation function ensures that the debtor is allowed to pay any presenting owner of the document with debt-discharging effect, the legitimation function establishes a legal presumption that the owner of the document is to be regarded as entitled. As an exception, the liberation function does not apply if the debtor has positive knowledge that the owner of the deed is not the true holder of the right and that this is easily verifiable. In the case of the legitimation function, it is assumed by law that the respective holder of the document is also the materially entitled person. This applies without restriction to bearer papers, only to a limited extent to order papers, but not to recta papers (exception: mortgage letter). In the case of a mortgage letter, according to Section 1155 BGB, there is a legitimacy effect in favor of the owner if an uninterrupted chain of publicly certified declarations of assignment leads back to the person actually entered in the land register. The liberation function for bearer securities was recognized early on. According to this, every holder of the deed can demand payment from the debtor when the due date, and the debtor is released from his debt by performance to the holder (paid).

Documents that have both the legitimation and the liberation function are referred to as legitimation papers ; a distinction is made between simple and qualified identification papers. Simple ones are luggage tags or cloakroom tags; in this case, the debtor may discharge the debt without submitting the document. In the case of qualified identification papers, on the other hand, the debtor must and may only perform on presentation of the document.

Presentation function

The law requires the holder of the security to present the document to the debtor when asserting the right. Legally, this is implemented in different forms, for example that the holder can demand payment from the debtor ( Section 793 (1) sentence 1 BGB for bearer bonds ) or an express requirement for submission is codified ( Section 1160 (1) BGB for mortgage letters, Art. 38 WG for Change). In order to prevent further payments by the debtor from the same document, the law requires the document to be handed over to the debtor after payment (e.g. Art. 39 (1) WG). The submission requirement for securities increases traffic safety by suppressing the debtor's right to refuse performance under Section 410 BGB.

Transport function

The securitization of actually invisible rights in a document enables them to be transferred according to property law standards, with the exception of the rectal papers. This is where the expression "embodiment" comes from, with which an invisible right is incorporated into a physical document by means of a written declaration. However, the securitization of securities is no longer one of the defining elements in terms of banking supervisory law. The document can then be transferred as a movable object by transferring ownership according to § § 929 ff. BGB with the consequence of a bona fide acquisition according to § § 932 ff. BGB, in the case of bearer papers even in the case of stolen or lost documents ( § 935 para. 2 BGB) . In addition, possession of the deed gives the impression of ownership ( Section 1006 of the German Civil Code), whereby special provisions apply to order papers ( Article 16 (1) WG, Article 19 SchG, Article 365 (1) HGB and Article 68 (1) AktG) ). In the case of rectal papers, the transport function does not apply because the assignment of the right is necessary for the transfer of the right and handing over the paper for the transfer of rights is neither necessary nor sufficient.

Components

Marketable securities, also called securities , usually consist of

  • the coat : This is the main document that certifies creditor or partner rights.
  • The sheet : This is a piece of paper divided into several identical and numbered sections. Each section is called a coupon or dividend slip. Rights from the deed can be asserted against the submission of a coupon at a paying agent , but in connection with the presentation of the jacket . This applies in particular to profit distributions or interest payments, but also conversions, subscription to new shares, etc. The coupons thus primarily certify the right to income.
  • The renewal slip (talon): In return for the renewal slip at a paying agent, the holder receives a new sheet (for example, if the coupons on the old sheet have been used up). The renewal certificate is often included as a special section in the sheet.

Labelling

In German stock exchange trading, securities in the narrower sense were previously classified using a six-digit identification number, the securities identification number or WKN ; this was replaced on April 22, 2003 by the international securities identification number (ISIN). The ISIN is a twelve-digit combination of numbers and letters, which is composed according to the following pattern: 

Ländercode 	Nationale Kennnummer (NSIN)	Prüfziffer
DE                     000575200                     0

In the national identification numbers, the previous WKN (in the example: Bayer AG , WKN 575200) is incorporated right-justified, the first digits are padded with zeros.

The country code only indicates the legal system under which the security as such, i.e. the legal right, was issued. It does not have to be in accordance with the issuer's legal system. According to German law, a share in a foreign company can be certified in the form of a global certificate and is then marked with DE as the country code (see also American Depositary Receipt ). Share certificates for the same company can also be securitized under several legal systems at the same time. You will then be given different labels and different legal bases apply to safekeeping. A part of a foreign company that is securitized in the form of a German global certificate can e.g. B. be held in collective custody , while a foreign value right in the same company can be held in a securities account .

Classifications

According to the name of the beneficiary / beneficiary (= who is entitled to benefits)

If the born or awarded order papers contain a recta endorsement (“not to order” or “non-transferable”), they are technical recta papers (see C).

If these securities are assigned a blank assignment, they are technical bearer securities .

According to documented law

According to the relationship with the underlying transaction

  • abstract WP (= securitization of a right detached from the underlying transaction)
    • Change
    • check
  • causal WP (= other)
    • Share.

According to the economic function

  • Securities ( securities of the capital market)
    • Bonds (also called debentures)
    • Shares;
  • WP of payment and credit transactions
    • check
    • Change;
  • WP of the circulation of goods ( securities )
    • bill of lading
    • Charge slip
    • Warehouse receipt.

According to the equivalent

According to justifiability

  • reasonable WP:
    • Effects;
  • unreasonable WP
    • Mortgage letter
    • Land charge letter.

According to the yield

According to the listing

For exchange traded securities, the price of a security is determined as:

  • Unit quotation for shares, investment certificates or warrants ,
  • Percent quotation for bonds,
  • Per mille listing for bonds.

Issue price

Redemption price

  • On the secondary market , the selling price is the stock exchange price at which securities can be sold.
  • In the case of investment certificates, the redemption price for the redemption of units or shares must correspond to the net asset value of the unit or share in the domestic investment company minus a discount to be determined in the investment conditions pursuant to Section 165 (2) No. 8 KAGB. The redemption price is payable minus the discount.

Protection in securities transactions

Investors in Germany can contact various arbitration boards with complaints relating to securities transactions . The decisive factor for responsibility is which bank division the bank with which the investor has concluded the securities transaction belongs. The Federal Financial Supervisory Authority handles purely regulatory complaints .

For cross-border disputes between consumers and financial service providers (such as banks or investment firms) there is the European network of arbitration boards for financial services (FIN-NET).

International

Even in Switzerland, the debtor from a security is only obliged to perform against the delivery of the document ( Art. 966, Paragraph 1 OR ). The transfer takes place by transfer of ownership, for order papers by endorsement and for registered papers by assignment ( Art. 967 OR). In Austria , the ABGB presupposes the term "security", for example in § 215 ABGB, § 217 ABGB or § 220 ABGB. The Business Enterprise Code (UGB) regulates in § 363 UGB the endorsement of order papers; Section 381 of the UGB states that the regulations governing the purchase of goods are also applicable to the purchase of securities.

The Securities Act of May 1933 is the most important part of US securities law . He understands in Sec. 2 77b para. 1 under securities ( English security ) every certificate ( English note ), shares ( English stock ), own shares ( English treasury stock ), futures contracts on securities ( English security future ), swaps based on securities such as the asset swap ( English security-based swap ), bonds ( English bond ), bonds ( English debenture ), debt certificates ( English evidence of indebtedness ), interest certificates ( English certificate of interest ), interests in a profit sharing agreement ( English participation in any profit-sharing agreement ) certificates to security Trust ( English collateral-trust certificate ), investment certificates ( English investment contract ), certificates of voting Trust ( English voting-trust certificate ), certificates of deposit ( English certificate of deposit ), oil interests ( english fractional undivided interest in oil, gas or other mineral rights ), put options ( English put ), purchasing Opti onen ( English call ), straddles ( English straddle ), options ( English option ) and other types.

See also

Web links

Wiktionary: Wertpapier  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. ↑ Henning Haarhaus, Legale Steuerparadiese: Attractive capital investments abroad , 2008, p. 107
  2. ^ Heinrich Brunner, The Securities , in: Wilhelm Endemann (Ed.), Endemann's Handbook of German Commercial, Maritime and Exchange Law, Volume II, 1882, pp. 140, 147; cited above: Michael Hippler, Accounting for bonds in the annual financial statements of insurance companies , 1998, p. 21 ff.
  3. ↑ Herbert Tröndle / Thomas Fischer: Commentary on the StGB , 50th edition 2001, § 267 marginal no. 2
  4. ↑ Diethelm Kienapfel: Documents in criminal law , 1967, p. 339 ff.
  5. ↑ Lutz Sedatis, Introduction to Securities Law , 1988, p. 169.
  6. ↑ Michael Hippler, Accounting for bonds in the annual financial statements of insurance companies , 1998, p. 27.
  7. ↑ modern collective safe custody no longer recognizes “effective” securities documents, but rather securities as credit balances in custody or clearing accounts
  8. ↑ Klaus von Wysocki : Economic Auditing - Preparation and Audit of the Annual Financial Statements according to HGB , Volume I, 2005, p. 204
  9. ↑ BGHZ 164, 286 ; ("Stamp judgment")
  10. ↑ Dieter Farny, Short Dictionary of Insurance , 1998, p. 1309.
  11. ↑ if a thief sells stolen bearer securities to a bona fide purchaser - who is not a bank - this purchaser becomes the owner via §§ 929, 932 and 935 para. 2 BGB; this is not possible with movable property.
  12. ↑ Ulrich Stache: GmbH law: What managing directors and managers need to know , 2006, p. 182.
  13. ↑ Conditions for transactions on the German stock exchanges from June 1, 2007 (PDF; 84 kB)
  14. ↑ Guidelines for the availability of damaged, officially listed securities. (PDF; 53 kB) Deutsche Börse AG, September 30, 1999, accessed on April 7, 2015 .
  15. ↑ Johannes Emil Kuntze : The doctrine of the bearer papers . 1857, p. 317 f . ( online ).
  16. ^ Adolf Baumbach / Wolfgang Hefermehl: Wertpapierrecht , 2008, margin no. 11.
  17. ^ Adolf Baumbach / Wolfgang Hefermehl: Wertpapierrecht , 2008, margin no. 80.
  18. ↑ a b Peter Derleder / Kai-Oliver Knops / Heinz G. Bamberger, Handbook on German and European Banking Law , 2003, p. 1238.
  19. ↑ BaFin website ( Memento of the original dated November 10, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Information on the right to petition at the Federal Financial Supervisory Authority (BaFin) @1@ 2Template: Webachiv / IABot / www.bafin.de
  20. ↑ FIN-NET website Information of the European Network of Arbitration Bodies for Financial Services (FIN-NET)