1Обухова_RESUME_Civil law regulation of n..mentary securitiies holding_УАД (Гражданско-правовое регулирование учёта прав на бездокументарные ценные бумаги), страница 4

The proposed changes in the legislation do not eliminate this problem.So it is proposed for the purpose of indirect holding to draw a final clarification ofthe terms and definitions of the person entitled upon a security (who is nowreferred to as the ‘owner’, ‘the person exercising the rights upon securities’, etc.)and entitled to security (nominee holder and etc.).                                                            29Instruction of the Bank of Russia of 15 June 2015 N 3680-U On the requirements for theprocedure and form of providing the information about owners of securities and other personsexercising rights upon securities, as well as the number of securities held by such persons by theforeign organizations acting in the interests of other persons (Registered with the Ministry ofJustice of Russia on 27 July 201, N 38193).14  7.

It is established that the level of legal certainty in the cross-border nondocumentary securities holding is insufficient.The Russian branch legislation refers holding and transfer procedures to the lawof the (foreign) intermediary. The discrepancy of the conceptual understanding of anon-documentary security, the effects of accounting and holding as a result maydiffer. In particular, a foreign nominal holder and ultimate purchaser may in certaincases have a different title to a non-documentary security of the Russian issuer, asopposed to those whose applicable law is Russian.

The introduction of generalregulation in Russian Civil Code is proposed. The general effect of public lawmethods (extraterritoriality) is considered as a very positive. It is presumed suchmethods can give rise to much more transparent holding of securities and can beconnected with private law status of legitimated person.Reliability and approbation of the results of the dissertation.The research was conducted at the Department of Civil and Business Law of theNational Research University "Higher School of Economics". Separate provisionsof the research and conclusions found in the main propositions and conclusions tobe defended are reflected in the following articles (published in journalsrecommended by the Higher Attestation Commission of the Ministry of Educationand Science of the Russian Federation): E.V. Obukhova.

Indirect holding of nondocumentary securities. Conflict of laws / Zakon. 2016, N8. P. 62-71; E.V.Obukhova. Jurisdiction risks in securities transactions / Zakon. 2017, N7. P. 146160; E.V. Obukhova. Specific characteristics of entitlement to indirectly heldsecurities / Zakon.

2018, N2. P. 163-175.The reliability of the research results is ensured by the use of normative andlegal acts of the Russian Federation, acts of law enforcement and domestic civildoctrine, as well as relevant sources of law of foreign countries.15  Approbation of the research results took place in discussions when givingseminars at the Higher School of Economics (bachelor programs of the Faculty ofLaw), in reports on conferences.The structure of the research is predetermined by its subject, purpose andtasks and consists of an introduction (the general characteristic of the work); fourchapters with eleven paragraphs; conclusion and references.BRIEF SUMMARY OF THE RESEARCHThe Introduction reflects the above mentioned relevance and novelty of theresearch topic, as well as statement of the subject and subject, research tasks andmethodology of the research are determined.

Also the theoretical and practicalsignificance of the dissertation research is disclosed, approbation of the researchresults is evidenced.In the first chapter 'Non-documentary securities as an object of holding'research for the purpose of comprehensive study and disclosure of the optimal setof general and private methods for regulating the book-entry of securities, anexcursion to the theory of non-documentary securities as a subject of regulation isundertaken. Appeal to historical and foreign experience is necessary since thediversity of non-documentary securities holding models (which is observed both inthe regulatory practice of Russia and foreign countries) is, among other things,consistent with the definition of the concept of a non-documentary security asobjects of law. A proper understanding of the legal nature of a non-documentarysecurity often allows to explain the application of certain models and forms ofaccounting30.                                                            30The architecture of market regulation is largely determined by economic and political factors(for example, the tendency to the model with central counterparty as depository or the modelexcluding direct holding is determined by economic reasons, as well as the political will) that arebeyond the scope of this study.16  In the first paragraph 'Characteristics of certificated and non-documentarysecurities' the following ideas are observed: features of certified securities whichessentially influenced the legal model of non-documentary securities holding;applicability of certain features (such as documentary form and necessity ofpresentation) of certified securities for non-documentary securities holding.

Theevolution of holding of property rights (the shift of the scientific paradigm from the'reification' of rights to the non-documentary securities holding) and a review ofthe related discussions on the nature of the object of law is considered. Analysis ofthe potential applicability of documentary form and the necessity of presentation asgeneral properties of securities shows that for non-documentary securities suchproperties are missing. The cases of existence (even by legal fiction) ofdocumentary form elements in non-documentary securities as objects of rights arefound in the foreign and former domestic regulation.In the second paragraph ‘Non-documentary securities holding and entitlementupon the security’ the specifics of entitlement to and upon non-documentarysecurities are examined. The mentioned specificity is considered further as atheoretical ground for the differentiation of titles to uncertificated securities.

Incomparison with the classic securities (in documentary form), the approval of titleupon a non-documentary security (legitimation) has undergone an essentialchange. The issuer's register may have an additional ‘legitimating’ role for theregistered securities in documentary form. For non-documentary book-entrysecurities the register has a main constitutive value.This ‘shift to registers’ in connection with non-documentary form causescertain practical and theoretical problems for entitlement to non-documentarysecurities especially when the intermediary is registered in the issuer's register.

Thebroad terminology, sometimes overlapping and contradicting norms of the Russianlegislation leads to the arbitrary extension of the status of entitled persons (ultimatepurchasers of securities), which are not recordered in the issuer's register.                                                                                                                                                                                                17  The main legal risks of indirect holding are: the absence of the ultimatepurchaser’s name in the register (in certain cases); a disproportion in the remediesfor the clients and intermediaries.In the third paragraph ‘Legal regulation of non-documentary securitiesholding from the view of property law: limits and consequences of application’ thelegal consequences of the property law mechanisms to the regulation of nondocumentary securities are discussed.

The foreign and former domestic practice ofregulation using the means of property law predetermines the necessity of analysisof the ‘property (material) elements of non-documentary object’ that may influencethe bookkeeping process. Non-documentary securities are independent objects oflaw (sui generis) but in some jurisdictions those are regulated along with propertyregime of securities in documentary form. The title to securities to some extentpredetermines the holding model and the distribution of title upon a nondocumentary security.The approaches to non-documentary securities regulation discussed in the thirdparagraph are structured as follows: trust model with the recognition of theultimate purchaser as beneficiary; the joint ownership of a pool of securities;security entitlement as a right against a counterparty under a securities accountagreement; other options by mixture of ‘property, obligations and other types ofrights’.

The employment of each of the models entails the respective distribution ofrights to and upon a security as an object. It is worth noting that with partial orcomplete disappearance of the ‘material property element’ in non-documentarysecurities the idea of localization of security has undergone a significant change(especially in case of cross-border holding).The second paragraph ‘Immobilization’ is devoted to the respective holdingmodel retaining the maximum preservation of a ‘property element’ using a globalcertificate or other security in documentary form subsequently shifting to nondocumentary securities.

Immobilization, being a form of transition to uncertificated18  securities, also changes the entitlement - the entitled holder is usually determinedby means of a record on the depo account.In the third paragraph ‘Dematerialization’ it is established that the respectivemodel allows refrain from the defining the security as object of rights and shift thequestion to the relations between the intermediary and the client.