Abstract
LL.M. (Commercial Law)
In order to promote sound corporate conduct, it is essential that shareholders actively
participate in the governance of the company. The primary mechanism to achieve this lies in
the shareholder’s right to vote at meetings. However, an analysis of the nature of shares, and
the history surrounding the introduction and development of uncertificated shares in
particular, reveals a structure that often interposes multiple nominees between the issuing
company and the underlying investor. Such a structure has the potential to dispossess the
underlying investor of his rights, which may have concomitant negative effects on the
corporate governance of the company. A comparative study of the legal framework for
uncertificated shares in the United States, the United Kingdom and South Africa reveals
varying degrees of protection for the underlying investor. Unfortunately, none of these
countries has resolved the problem completely, and it is suggested that a move to a direct,
transparent holding model, where the underlying investor, rather than an intermediary, is
recorded in a company’s share register, is a better solution.