The Research Of The Nature Of Investors’ Rights To Uncertificated Securities And Its Protection Mechanism

The securities market in our country started a little bit late in the1980s and since the establish, we have little experience in the―immobilization‖of security certificates. Rather in the early1990s,Shanghai stock exchange and Shenzhen stock exchange had directlyintroduced the uncertificated securities in their daily business, whichmeans the issuance and circulation of securities didn’t depend onnegotiable instruments. Due to this rapid change, the most marketparticipants such as the investors, security companies, didn’t actuallyknow the difference between the traditional certificated securities and theuncertificated securities. There are only a few principle rules regarding touncertificated securities in Security Law of the People Republic of Chinawhich has been revised in2005. The purpose of Securities Registrationand Settlement Measures for Administration which takes effect in2006isto improve the registration and settlement system. But as to the basicproblem of the uncertificated securities, such as the nature of the right,the entry-into-force requisition, the legal relations of the participants and the protection for the investors, there is no specific provision in theexisting laws and administration rules.Based on the comparative study of the relevant law in Germany,Japan, United States and the Unidroit Convention on Substantive Rulesfor Intermediated Securities, combined with the transparent holdingstructure in our securities market, it’s time to reconstruction the legalsystem which takes the investors security account as the starting point,takes rights themselves, shares and bonds, as the object of quasi-property,and use the theory of qusai-property to explain the rights in the newuncertificated securities system. It also needs several specific institutions,such as priority rules, innocent acquisition, losing-share rules, to protectthe investors. At last, it is recommended that special legislation on theuncertificated securities is required to offer legal certainty for all theparticipants in the market.