The transfer of registered shares is one of the main circumstances that are affected in the register of the shareholders. By their legal nature, the registered shares are promissory securities which are being transferred with endorsement. The endorsement could be templated or by full indication of the new acquirer’s name. It is necessary in both cases to submit the transfer of shares for entry in the register of the shareholders.
The Supreme Court of Cassation (SCC) explains that the entry in the shareholders book of a registered shares is not an element of the transfer of shares. It has exclusively declaratory effect for the company since the endorsement itself originates the transferring effect for the buyer as of the moment of the transfer itself. The personal and property rights incorporated in a share arise for the buyer regardless of subsequent entry in the shareholders’ book. Therefore, The entry of shares transfer in the shareholders’ book, does not imply a premise for the origination of the buyer’s shareholder rights, including their exercise before the court in case of challenging General Meeting’s resolution. The latter rights are considered to be originated by the acquisition of the shares by the execution of the endorsement.
SCC states that the purpose of the entry in the shareholders’ book is that at a General Meeting any person who has been entered in the shareholders’ book to be considered as a shareholder and to be clear what is his amount of rights when voting. Nevertheless, upon presentation to the general meeting of interim certificate with endorsement, legitimizing a person as a purchaser of shares, the company is obliged to register the purchaser and to allow him to participate in the General Meeting as a shareholder whether the transfer was entered at the shareholders’ book.
The reference to the existence of material rights on shares obtained through endorsement before the submission of a claim is sufficient to justify the locus standi by the claimant in the proceedings for annulment of a decision of the General Meeting. Their existence may be contested during the litigation by objections on the part of the respondent company, aimed at denying the valid existence of these rights /for example nullity of endorsement/ or loss of rights prior the meeting. Proof of these objections would have the effect of rejecting the claim due to unproven ownership of right.
In the absence of a challenge by the respondent company or its failure to prove the objection, the court should take into account the transitive effect of the endorsement when it is performed before the date of meeting and to accept the claim admissible by considering it in substance.