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Current through October 23, 2012
(a) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if:
(1) Under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name;
(2) The indorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;
(3) Reasonable assurance is given that the indorsement or instruction is genuine and authorized (§ 28:8-402);
(4) Any applicable law relating to the collection of taxes has been complied with;
(5) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with § 28:8-204;
(6) A demand that the issuer not register transfer has not become effective under § 28:8-403, or the issuer has complied with § 28:8-403(b) but no legal process or indemnity bond is obtained as provided in § 28:8-403(d); and
(7) The transfer is in fact rightful or is to a protected purchaser.
(b) If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person's principal for loss resulting from unreasonable delay in registration or failure or refusal to register the transfer.
(Dec. 30, 1963, 77 Stat. 742, Pub. L. 88-243, § 1; Mar. 16, 1993, D.C. Law 9-196, § 4, 39 DCR 9165; Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
1. This section states the duty of the issuer to register transfers. A duty exists only if certain preconditions exist. If any of the preconditions do not exist, there is no duty to register transfer. If an indorsement on a security certificate is a forgery, there is no duty. If an instruction to transfer an uncertificated security is not originated by an appropriate person, there is no duty. If there has not been compliance with applicable tax laws, there is no duty. If a security certificate is properly indorsed but nevertheless the transfer is in fact wrongful, there is no duty unless the transfer is to a protected purchaser (and the other preconditions exist).
This section does not constitute a mandate that the issuer must establish that all preconditions are met before the issuer registers a transfer. The issuer may waive the reasonable assurances specified in paragraph (a)(3). If it has confidence in the responsibility of the persons requesting transfer, it may ignore questions of compliance with tax laws. Although an issuer has no duty if the transfer is wrongful, the issuer has no duty to inquire into adverse claims, see Section 8-404.
2. By subsection (b) the person entitled to registration may not only compel it but may hold the issuer liable in damages for unreasonable delay.
3. Section 8-201(c) provides that with respect to registration of transfer, "issuer" means the person on whose behalf transfer books are maintained. Transfer agents, registrars or the like within the scope of their respective functions have rights and duties under this Part similar to those of the issuer. See Section 8-407.
Definitional Cross References
"Appropriate person". Section 8-107.
"Certificated security". Section 8-102(a)(4).
"Genuine". Section 1-201(18).
"Indorsement". Section 8-102(a)(11).
"Instruction". Section 8-102(a)(12).
"Issuer". Section 8-201.
"Protected purchaser". Section 8-303.
"Registered form". Section 8-102(a)(13).
"Uncertificated security". Section 8-102(a)(18).
Prior Codifications
1981 Ed., § 28:8-401.
1973 Ed., § 28:8-401.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
Law 11-240, the "Uniform Commercial Code Investment Securities Revision Act of 1996," was introduced in Council and assigned Bill No. 11-576, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on November 7, 1996, and December 3, 1996, respectively. Signed by the Mayor on December 24, 1996, it was assigned Act No. 11-500 and transmitted to both Houses of Congress for its review. D.C. Law 11-240 became effective on April 9, 1997.
