1. Uncertificated (Dematerialised) Securities Dr Marcin Spyra

2. Uncertificated securities Uncertificated Security means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer: a the transfer of which may be registered upon books maintained for that purpose by depositary institution or securities intermediary.

3. National Depository for Securities An issuer of securities, before applying for the admission of financial instruments other than securities to trading on a regulated market or befor applying the admission of the public offering shall conclude with the National Depository for Securities an agreement on the registration of the securities in the depository for securities. In the case of State Treasury papers the securities may be also registered by the Polish National Bank

4. Securities Intermediaries The purchase of the uncertificated securitiy requires the books entry on a securities account. An investor in order to purchase uncertificated securities must enter into a broker agreement with a securities intermediary (a broker-dealer or a bank)

5. Book Entries The National Depository for Securities shall register securities in: 1) deposit accounts, in the case of which the identification of the holder of the securities account in which such securities have been registered is not possible; 2) securities accounts, 3) omnibus accounts.

6. Omnibus Accounts Omnibus account is a securities account kept by a financial intermediary (investment firm) to debit on it securities belonging to other person than account- holder. Omnibus account may be held by, investment firm, depositary institution whether Polish or foreign.

7. Depository System KDPW Central Depository Institution Investment Firm A Investment Firm A Investment Firm B Investor A Investor B Sec. transfer 200

8. Transfer of Uncertificated Securities Under an agreement on the transfer of dematerialised securities, such securities shall be transferred upon making a relevant entry in the securities account. In the event the record date as at which the holders of rights to benefits from dematerialised securities are determined falls on or after the date on which the transaction should be cleared at a depository for securities, and the securities continue to be registered in the transferor’s account, the benefits shall inure to the benefit of the transferee and shall accrue upon registering securities in the securities account of the transferee.

9. Obligatory dematerialisation Securities which are: 1) offered in a public offering or 2) admitted to trading on a regulated market, or 3) introduced to an multilateral trading facility, or 4) issued by the State Treasury or the National Bank of Poland – shall exist in uncertificated form as of the date of their registration under the agreement on the registration of the securities in the securities depository (dematerialisation).

10. Facultative dematerialisation Securities may exist in uncertificated form if permitted under separate regulations concerning the issue of such securities. This is the case by: Bonds, Mortgage Bonds, Bank Securities,

11. Facultative dematerialisation Securities which are: 1) offered in a public offering but are not to be admitted to trading on a regulated market, or 2) introduced only to an multilateral trading facility – do not have to undergo dematerialisation, if so determined by the issuer.

12. An issuer’s obligation to deliver securities shall be satisfied upon the receipt of such securities by the participant keeping a securities account for the entitled person, and an issuer’s obligation to make a cash payment shall be satisfied upon the transfer of the cash to the bank account indicated by such a participant.

13. Dematerialised securities. There was 20.000 shares of the company X registered on the accounts of customers of a investment firm. C1 was entitled to 10.000 shares, K2 and K3 to 5000 shares. An investment firm employee mistakenly entered into the system an order to sale 8000 shares of X. The order was allegedly made by K1. In fact none of the clients made an order to sale shares. What are the proprietary consequences of such an operation?