The Need For The Convention
The Convention is largely a response to the move in recent times in most nations from a purely direct holding system to a mixed direct and indirect holding system. The reforms, though largely beneficial, have created an alarming level of uncertainty as to the question of "what law applies" in cross-border securities transactions. The development of a global agreed-upon method of determining the legal regime governing any such transactions lagged behind market practice, leaving financial markets with significant legal risk.
The problem stems from the fact that intermediaries exist between an investor and the company which issues a particular security.
Historically, many jurisdictions attempted to apply the traditional, but now arguably outdated, lex rei sitae test to securities held with intermediaries, by "looking through" the tiers of intermediaries to the laws of one or more of: the jurisdiction of incorporation of the issuer, the location of the issuer's register, or the location of the actual security certificate (the so-called "look-through approach").
Read more about this topic: Hague Securities Convention
Famous quotes containing the words the and/or convention:
“He thought that, because the community represents millions of people, therefore it must be millions of times more important than the individual, forgetting that the community is an abstraction from the many, and is not the many themselves.”
—D.H. (David Herbert)
“Mankind owes to the child the best it has to give.”
—United Nations Convention on the Rights of the Child, 1989.