Original scientific paper
Legal position of a pledgee of a share as embodiment of membership in a limited liability company
Petar Miladin
; Pomorski fakultet Sveučilišta u Zagrebu, Zagreb, Hrvatska
Abstract
Because of the different legal dogmatic of every society, a pledgee of a share as embodiment of membership in a limited liability company and a pledgee of stocks in public limited company enjoy different legal positions. A pledgee of a share in a limited liability company must take into account that a limited liability company, as opposed to a public limited company, is largely characterised by the legal solutions typical for partnerships. This paper discusses whether a pledgee of a share can be protected from the decisions rendered by a limited liability company directly infringing and even annulling his or her right to pledge a share. The author holds that a pledge of a share, depending on the circumstances of each particular case, enjoys the legal protection provided for in Article 335 of the Act on Ownership and Other Substantive Rights (OA). Some very detailed rules are established on whether a pledgee of a share may constitute the third person referred to in Article 408, para 3, sentence 1 of the Companies Act (CA) and whether, accordingly, the institute of loan replacing the share capital is applied to him/her replacing the capital, or if the rules on the entry and safeguarding of the initial capital are applied as referred to in Article 406 of the CA. An argument is made for the institute of loan replacing the share capital to be applied to the pledgee. The initial capital may be replaced by a loan only if, in such a way, the pledgee’s position is improved so as to come the closest to the legal position of a member of the company to whom the provisions of Article 406 of the CA are primarily applied. There are also some preconditions on the basis of which Article 408, para 3, sentence 1 of the CA is applied to a pledgee of a share as embodiment of membership in a limited liability company business.
Keywords
share as embodiment of membership in a limited liability company; stock in public limited company; pledge; loan replacing the share capital
Hrčak ID:
20426
URI
Publication date:
18.1.2008.
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