SC: Share ownership dispute has no place in proceedings to redeem (reestablish) shares

The subject of the dispute was the redemption (reestablishment) of 29 Class A shares with a nominal value of CZK 1 million and three Class B shares with a value of CZK 100,000. The applicant claimed that she was the owner of the shares and that they had been lost. However, another person objected to this, claiming that they were the owner of the shares, as the shares had never been validly transferred to the applicant. In addition, they claimed that the shares had not been lost and that some of them were being held by family members.

The court of first instance rejected the motion to reestablish the shares, but the appellate court reversed this decision and declared the shares reestablished, because, in its opinion, it was not clear where the shares were currently located. In determining the ownership of the shares, the appellate court relied on a previous court decision in another case, in which the court stated in its reasoning that the applicant was the owner of the shares. An extraordinary appeal was then lodged with the Supreme Court (SC) against the appellate court's decision.

The SC dealt with a key question: in the proceedings to redeem (reestablish) documents, can the court examine who the owner of the documents is? The answer is clear – it cannot. According to the Act on Special Court Proceedings, only a person with a legitimate interest, usually the owner of the document, may file a motion to reestablish the documents. However, if someone objects that they are the owner, a dispute over ownership arises. Such a dispute must be resolved exclusively in separate proceedings under the Civil Procedure Code, not within the procedure to redeem (reestablish) documents.

Once it becomes apparent that the ownership of the shares is disputed, the court must dismiss the motion. The appellate court therefore erred when it began to prove who the owner of the shares was and even relied on a previous decision in another case in which the appellant was not a party to the proceedings.

The decision has practical implications for shareholders and their legal representatives. If certificated shares (shares in paper form) disappear and their owner can be clearly proved, their redemption (reestablishment) in court can be sought without further complications. However, if another person enters the dispute claiming ownership, the direct path to reestablish the shares is closed. The party wishing to assert its rights must first succeed in standard contentious proceedings, for example, by filing an action to determine ownership. Only then is there room to redeem (reestablish) the shares.

This judicial decision thus confirms the principle that special proceedings to redeem (reestablish) documents in court must not replace complex ownership disputes. It provides legal certainty that the ownership of shares will be decided upon by means of a full-scope inquiry in contentious proceedings, not just as a secondary issue in the procedure to redeem (reestablish) a lost document.