Table Of ContentCross-Border Transactions of
Intermediated Securities
.
Changmin Chun
Cross-Border Transactions
of Intermediated Securities
A Comparative Analysis in Substantive Law
and Private International Law
Dr.iur.ChangminChun,LL.M.
KoreaCapitalMarketInstitute
Seoul
RepublicofKorea(SouthKorea)
ISBN978-3-642-27852-5 ISBN978-3-642-27853-2(eBook)
DOI10.1007/978-3-642-27853-2
SpringerHeidelbergNewYorkDordrechtLondon
LibraryofCongressControlNumber:2012938962
#Springer-VerlagBerlinHeidelberg2012
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ToMyFatherandtotheMemoryofMyMother
ThelastAdambecamealife-givingSpirit
(1Cor.15:45b).1
DerletzteAdamwurdezueinem
LebengebendenGeist(1.Kor.15:45b).2
1HolyBible:RecoveryVersion(Netherlands:LivingStreamMinistry,2003).
2Wiedererlangungs-U€bersezung(GreatBritain:LivingStreamMinistry,2010).
.
Preface
Thisworkistheresultofmydoctoralresearch,acceptedasadoctoraldissertation
bytheFacultyofLawoftheUniversityofHamburginSummerSemester2011.
This book concerns a comparative analysis of intermediated securities and the
intermediated systems (also known as the indirect holding systems) of major
jurisdictions from the perspectives of substantive law and private international
law. This book maintains that the current German and Korean intermediated
systems,whichwereconstructedbaseduponthetraditionalGermanpropertylaw
model, are outdated, since tangible securities certificates (Wertpapiere) lost their
originalfunctions,andintangiblecreditbook-entries,termedasaccountsecurities
in this book, replace the functions of securities certificates in the intermediated
systems. With a view to discovering proper substantive and conflict of laws rules
fortheGermanandKoreanintermediatedsystems,torenderthemlegallycertain,
sound, efficient and interoperable, this book further analyses two important inter-
nationalinstruments,theGenevaandHagueSecuritiesConventions,thecurrentEU
regimes, and the U.S., Japanese and Swiss intermediated systems, ultimately
proposinganinternallydematerialisedsystemthatrecognisesfunctionsofintangi-
ble book-entries, which replace functions of securities certificates. This approach
to dealing with issues associated with intermediated securities may suggest ways
totackle theproblemthatlegaltheoriesandrules designedanddeveloped resting
on tangibles no longer fit legal issues arising in the Information Age and the
knowledge-basedsociety.
TherearemanypeoplewhomIwishtothankforcompletingthiswork.Ishould,
first of all, like to sincerely thank my supervisor (Doktorvater), Professor Dr. iur.
Heribert Hirte, LL.M. for his kind, considerate and erudite advice and guidance
during the entire period ofmydoctoral research;heably shepherded myresearch
andlifeinGermany.Withouthisexcellentleadingandcomments,thisworkcould
nothavebeencompleted.Mysincereappreciationfromthebottomofmyheartalso
goes to Professor Dr. iur. Harald Baum for his thoughtful and professional
comments on this work as the second examiner. He was always ready to assist
me, and to share his invaluable time. His expertise in Japanese law provided
penetratinginsightwhenIwasformulatingthepartonJapaneselaw.
vii
viii Preface
ManythanksalsogotoProfessorsDaesungKangandKwangHyunSukfortheir
sincere encouragement of my continuing study. Professor Sungung Lee provided
thoughtfuladviceontheKoreanlegaltheoriesofthelawofbillsandchecks.
IshouldliketothankAlanN.Bloch,MPH,MCS,MAforhiswonderfulproof-
readingofthisbook.Iwasamazedathiscareful,precise,anddeliberatecorrections
andcomments.Iowehimmuch.
IextendmysincereappreciationtoJaesungLee,JongchulJung,DongminPark,
Dr.HyeongkiLee,SangtaeBaek,JongwonChoi,ByungkeunGo,YongchangKim,
HyungseokSong,andKazuhiroNishimukai,allofwhomgladlyfurnishedmewith
importantmaterialsandinformationformyresearch.
Last, but not least, I would like to extend my thanks to Dr. Hyoung-Tae Kim,
presidentoftheKoreaCapitalMarketInstitute,whogladlyprovidedanaffordable
andamicableenvironmenttofinalisethisbook.IalsothankMs.AnkeSeyfriedand
other staff at Springer-Verlag GmbH for their skilful and heart-felt assistance for
publication.
Seoul,November2011 ChangminChun
Contents
GeneralIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I.OverviewoftheIntermediatedSystemandtheLegalReforms. . . . . . . 1
II.Methodology,Purpose,andScopeoftheResearch. . . . . . . . . . . . . . . 8
III.Terminology. . .. . . .. . . .. . . .. . . . .. . . .. . . .. . . .. . . . .. . . .. . 10
A.Securities,SecuritiesCertificates,IntermediatedSecurities,
andAccountSecurities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
B.OtherTerms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PARTI SubstantiveLawAnalysis
Chapter1.TheGenevaSecuritiesConvention. . . . . . . . . . . . . . . . . . . 27
I.BackgroundandPurposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
A.LegalRisksAssociatedwiththeInternationalIntermediated
System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
B.MainPurposesandDraftingApproaches. . .. . . . .. . . . .. . . . .. . . 33
C.StructureandKeyIssues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
II.ScopeoftheConvention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
A.TerritorialScope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
B.MaterialScope:IntermediatedSecurities. . . . . . . . . . . . . . . . . . . . 39
C.NormativeScope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
D.OtherRestrictiveScopeofApplication. . . . . . . . . . . . . . . . . . . . . . 62
E.TransparentSystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
III.TransferofIntermediatedSecurities. . . . . . . . . . . . . . . . . . . . . . . . . 66
A.AcquisitionandDisposition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
B.UnauthorisedDispositionsbyanIntermediary(Art.15). . . . . . . . . . 71
C.Invalidity,ReversalandConditionsofaBook-Entry(Art.16). . . . . 72
IV.InnocentAcquisition. . . . . .. . . . . . .. . . . . . .. . . . . .. . . . . . .. . . . 75
A.Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
B.ProtectionunderArticles18(1)and18(2). . . . . . . . . . . . . . . . . . . . 81
C.RelationshipwithArticle16. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 83
D.RelationshipwithPriorityRule. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ix
