According to the applicable regulations, in order to transfer the ownership of shares, it is necessary to have a tangible element in the form of transfer of possession of registered shares or delivery of bearer shares. The transfer of ownership of registered shares additionally requires the conclusion of an agreement between the seller and the buyer (either on the share document itself or in a separate document), while the transfer of bearer shares may take place even without the conclusion of a formal agreement, through the mere delivery of the shares. Considering the significant legal consequences of delivering a bearer instrument, it is necessary to consider how to understand the term “delivery of shares”.
Supreme Court of Poland judgment of 3 June 2015, Case no. V CSK 566/14
The delivery of shares on the basis of the physical handing over of a share document to the buyer has been the accepted trading practice. However, it seems that in light of the judgment of the Civil Chamber of the Supreme Court of Poland of 3 June 2015, this practice must be significantly liberalised. In particular, the delivery of bearer shares effectively transferring their ownership should now be understood as any form of actual transfer of power over the shares sold, and not only their physical delivery.
In its justification, the Supreme Court pointed out that the interpretation of the provisions requiring tangible delivery of the share document for transfer of ownership of bearer shares is inconsistent with the systemic interpretation of the law. According to the civil law regulations concerning securities, the transfer of bearer securities is subject to less rigorous rules than the transfer of registered securities. The transfer of bearer securities requires only their delivery, whereas the transfer of registered securities requires delivery and additionally the transfer of rights arising from the securities.
Consequently, as the Supreme Court pointed out, the introduction of a specific regulation (lex specialis), i.e. Art. 339 of the Commercial Companies Code, has significant consequences. According to this provision, the transfer of registered shares takes place through a written statement on the share document itself or in a separate document and requires the transfer of possession of the shares, but not their delivery. On the other hand, according to the principles of civil law, the transfer of possession of shares may take place by tangible means, by delivering them, but also in all other forms permitted by the civil law (i.e. also consensually, by agreement—solo animi).
Therefore, the above provision results in a significant reduction of formal requirements necessary for the transfer of ownership of registered shares as compared to the transfer of other registered securities, which is carried out in accordance with the general principles of civil law. At the same time, the Supreme Court pointed out that since the transfer of bearer securities is subject to less formal restrictions than the transfer of registered securities, the interpretation that their actual delivery is necessary for the transfer of bearer shares would be unjustified. This would lead to a reversal of the general rule noted above and would result in less formalised transfer of registered shares under company law than the transfer of bearer shares.
Consequently, the Supreme Court held that the term “delivery” in relation to the transfer of bearer shares should be interpreted broadly, allowing for an interpretation that it means any form of transfer of de facto power over the bearer share documents. An example could be a change in the entry of the depositor of bearer shares from the seller to the buyer, while the bearer shares themselves remain physically deposited. The Supreme Court also pointed out that such an interpretation of the law is supported by the fact that other provisions of the Commercial Companies Code are addressed to the holder of bearer shares within the general meaning of civil law, and not the person who physically controls them. For example, with respect to the company, the holder of bearer shares is regarded as a shareholder.
The interpretation in this judgment may have a significant impact on trading practice through a great liberalisation of the rules on the transfer of bearer shares. At the same time, the Supreme Court decided unequivocally that the rules for transfer of all joint-stock companies’ shares, whether registered or bearer shares, differ from the general rules for transfer of registered securities and bearer securities, by moving away from the literal understanding of the term “delivery”, with a resulting liberalisation of the trading rules.
Piotr Wcisło, attorney-at-law, M&A and Corporate practice, Wardyński & Partners
