PROTECTION OF RIGHTS TO A SHARE IN A COMPANY’S CHARTER CAPITAL AND THE PRINCIPLE OF REGISTRATION-BASED CONFIRMATION OF RIGHTS

Abstract

This article examines the legal status, moment of acquisition, and methods of protecting rights to a share in the charter capital of a limited liability company in light of legislative amendments introduced between 2018 and 2020. It is substantiated that a wide range of intangible civil law objects do not permit physical possession, and thus the classical concept of possession cannot be applied to them. It is confirmed that the legislative amendments have firmly established the principle of registration-based confirmation of rights to shares in the charter capital of companies, whereby ownership rights arise exclusively upon state registration, rather than upon fulfillment of contractual obligations or other legal facts. At the same time, particular emphasis is placed on the notion that the doctrinal and judicial concept of “book ownership” or registration-based confirmation of rights to real estate is, in its fundamental principles, fully applicable to the protection of rights to intangible assets, including shares in the charter capital of companies. The article argues that the grounds introduced by the amendments to the Law on State Registration of Legal Entities for entering changes into the register based on court decisions should be understood as substantive legal remedies for the protection of rights to shares in the charter capital of companies. It is concluded that the appropriate, proper, and effective legal remedies available to a purchaser of a share in a company’s charter capital in the event of a breach of contractual terms are claims for the determination of the size of the charter capital and the participants’ shares, as well as claims for the recovery (restitution) of the share from the defendant’s possession. The distinction between these remedies depends on whether the charter capital amount has remained unchanged or has been altered.