- Consolidated Laws - Uniform Commercial Code
PART 3
TRANSFER OF CERTIFICATED
AND UNCERTIFICATED SECURITIES
Section 8--301. Delivery.
(a) Delivery of a certificated security to a purchaser occurs when:
(1) the purchaser acquires possession of the security
certificate;
(2) another person, other than a securities intermediary, either
acquires possession of the security certificate on behalf of
the purchaser or, having previously acquired possession of
the certificate, acknowledges that it holds for the
purchaser; or
(3) a securities intermediary acting on behalf of the purchaser
acquires possession of the security certificate, only if the
certificate is in registered form and is (i) registered in
the name of the purchaser, (ii) payable to the order of the
purchaser, or (iii) specially indorsed to the purchaser by an
effective indorsement and has not been indorsed to the
securities intermediary or in blank.
(b) Delivery of an uncertificated security to a purchaser occurs when:
(1) the issuer registers the purchaser as the registered owner,
upon original issue or registration of transfer; or
(2) another person, other than a securities intermediary, either
becomes the registered owner of the uncertificated security
on behalf of the purchaser or, having previously become the
registered owner, acknowledges that it holds for the
purchaser.
Section 8--302. Rights of Purchaser.
(a) Except as otherwise provided in subsections (b) and (c), a
purchaser of a certificated or uncertificated security acquires all
rights in the security that the transferor had or had power to transfer.
(b) A purchaser of a limited interest acquires rights only to the
extent of the interest purchased.
(c) A purchaser of a certificated security who as a previous holder
had notice of an adverse claim does not improve its position by taking
from a protected purchaser.
Section 8--303. Protected Purchaser.
(a) "Protected purchaser" means a purchaser of a certificated or
uncertificated security, or of an interest therein, who:
(1) gives value;
(2) does not have notice of any adverse claim to the security;
and
(3) obtains control of the certificated or uncertificated
security.
(b) In addition to acquiring the rights of a purchaser, a protected
purchaser also acquires its interest in the security free of any adverse
claim.
Section 8--304. Indorsement.
(a) An indorsement may be in blank or special. An indorsement in
blank includes an indorsement to bearer. A special indorsement specifies
to whom a security is to be transferred or who has power to transfer it.
A holder may convert a blank indorsement to a special indorsement.
(b) An indorsement purporting to be only of part of a security
certificate representing units intended by the issuer to be separately
transferable is effective to the extent of the indorsement.
(c) An indorsement, whether special or in blank, does not constitute a
transfer until delivery of the certificate on which it appears or, if
the indorsement is on a separate document, until delivery of both the
document and the certificate.
(d) If a security certificate in registered form has been delivered to
a purchaser without a necessary indorsement, the purchaser may become a
protected purchaser only when the indorsement is supplied. However,
against a transferor, a transfer is complete upon delivery and the
purchaser has a specifically enforceable right to have any necessary
indorsement supplied.
(e) An indorsement of a security certificate in bearer form may give
notice of an adverse claim to the certificate, but it does not otherwise
affect a right to registration that the holder possesses.
(f) Unless otherwise agreed, a person making an indorsement assumes
only the obligations provided in Section 8--108 and not an obligation
that the security will be honored by the issuer.
Section 8--305. Instruction.
(a) If an instruction has been originated by an appropriate person but
is incomplete in any other respect, any person may complete it as
authorized and the issuer may rely on it as completed, even though it
has been completed incorrectly.
(b) Unless otherwise agreed, a person initiating an instruction
assumes only the obligations imposed by Section 8--108 and not an
obligation that the security will be honored by the issuer.
Section 8--306. Effect of Guaranteeing Signature, Indorsement, or
Instruction.
(a) A person who guarantees a signature of an indorser of a security
certificate warrants that at the time of signing:
(1) the signature was genuine;
(2) the signer was an appropriate person to indorse, or if the
signature is by an agent, the agent had actual authority to
act on behalf of the appropriate person; and
(3) the signer had legal capacity to sign.
(b) A person who guarantees a signature of the originator of an
instruction warrants that at the time of signing:
(1) the signature was genuine;
(2) the signer was an appropriate person to originate the
instruction, or if the signature is by an agent, the agent
had actual authority to act on behalf of the appropriate
person, if the person specified in the instruction as the
registered owner was, in fact, the registered owner, as to
which fact the signature guarantor does not make a warranty;
and
(3) the signer had legal capacity to sign.
(c) A person who specially guarantees the signature of an originator
of an instruction makes the warranties of a signature guarantor under
subsection (b) and also warrants that at the time the instruction is
presented to the issuer:
(1) the person specified in the instruction as the registered
owner of the uncertificated security will be the registered
owner; and
(2) the transfer of the uncertificated security requested in the
instruction will be registered by the issuer free from all
liens, security interests, restrictions, and claims other
than those specified in the instruction.
(d) A guarantor under subsections (a) and (b) or a special guarantor
under subsection (c) does not otherwise warrant the rightfulness of the
transfer.
(e) A person who guarantees an indorsement of a security certificate
makes the warranties of a signature guarantor under subsection (a) and
also warrants the rightfulness of the transfer in all respects.
(f) A person who guarantees an instruction requesting the transfer of
an uncertificated security makes the warranties of a special signature
guarantor under subsection (c) and also warrants the rightfulness of the
transfer in all respects.
(g) An issuer may not require a special guaranty of signature, a
guaranty of indorsement, or a guaranty of instruction as a condition to
registration of transfer.
(h) The warranties under this section are made to a person taking or
dealing with the security in reliance on the guaranty, and the guarantor
is liable to the person for loss resulting from their breach. An
indorser or originator of an instruction whose signature, indorsement,
or instruction has been guaranteed is liable to a guarantor for any loss
suffered by the guarantor as a result of breach of the warranties of the
guarantor.
Section 8--307. Purchaser`s Right to Requisites for Registration of
Transfer.
Unless otherwise agreed, the transferor of a security on due demand
shall supply the purchaser with proof of authority to transfer or with
any other requisite necessary to obtain registration of the transfer of
the security, but if the transfer is not for value, a transferor need
not comply unless the purchaser pays the necessary expenses. If the
transferor fails within a reasonable time to comply with the demand, the
purchaser may reject or rescind the transfer.
