Dear Matthew,

 

I entirely agree with Simon.  The confusion may come from the fact that people sometimes speak of ‘title’ to shares, thus importing the whole law of adverse possession in relation to tangibles.  However, this makes no sense at all.  The word ‘title’ (from ‘entitlement’) is necessary where you have physical things.  It is needed to express the relationship between persons and physical things.  And because such titles can be acquired by the taking of possession of physical things, there may be more than one title-holder and so a need for a law of relativity of title.

 

None of this makes sense with intangibles, which, by definition, have no physical presence in the world.  Unlike land and tables and chairs, the shares themselves give entitlements, viz, an entitlement to vote, an entitlement to receive dividends if a dividend is declared, and an entitlement to receive rights in the winding up of the company.  Thus, speaking of a ‘title’ to shares is the same as saying an entitlement to an entitlement to dividends, to vote, to share in the winding-up, an obvious nonsense. 

 

I’d be interested to read the cases on ‘adverse possession’ of copyright.  Can you let me know what they are?

 

Best wishes,

 

Bill

 

 

Hi Matt,

 

I have always understood AP to be a combination of two distinct rules:

 

1. The squatter acquires a relative title to the land by taking possession, and this happens immediately (i.e. not after 10/12 years);
2. If sufficient time passes, then the ‘paper owner’s’ title is destroyed, leaving the squatter’s title as the ‘best’ title.

 

I’m not sure how this could be translated to shares. In your example you would have to say that the person who mistakenly believed that they had the A shares had acquired a ‘relative title’ to them when they took possession of the shares. Can you have relative titles to shares? I’m not aware of any case that says you can, but I may be wrong.

 

Best

Simon

 

 

 

Dear Colleagues:

 

I hope you don’t mind this request for a bit of research help.

 

I`m in the midst of a piece on adverse possession, and one area that I`m beginning to explore is the question of whether one can have adverse possession of intangibles --- specifically the right to vote as a shareholder.

 

I`ve stumbled across a situation where a shareholder turned in shares of stock to the company in accordance with a reorganisation.  She was to get “A” shares, which has a right to vote.  Instead, the company issued her a certificate that said she had “B” shares, which were non-voting.   Another party had been given a certificate showing more A shares than he was entitled.  There was some confusion as to how shares were to be allocated. 

 

So, for more than 20 years, she showed up at shareholder meetings and did not vote.  She was repeatedly told she was a “B Shareholder”.  She accepted that.  As a result, someone else essentially voted her shares.

 

I know there is some controversy over whether copyright can be subject to adverse possession, but my question is whether a shareholder’s voting rights can be as well.  I take the position that

 

1. She is an A shareholder regardless of the certificate issued to her, as ownership of shares is different than ownership of a certificate. 
2. Assuming that is the case, then it seems the question is whether she can be divested of the rights of ownership simply because she did not exercise them.
3. I am skeptical of a waiver argument, if waiver is defined as the relinquishment of a known right.  She relied on the company, which had a duty to give her accurate information and it failed.  How can she waive a right which she is constantly told she does not have?
4. So, I think the claim has to be that somehow the voting rights can adversely possessed. 
5. If that is true, then the issue must be one of notice and hostility.  Is there a hostile use when the owner is being told that she does not, in fact, have ownership?

 

Oh, and by the way, the guy voting her shares was the president of the company.

 

Any ideas or suggestions would be greatly appreciated.

 

Best

Matt Harrington