(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.
(a) An issuer may require the following assurance that each necessary indorsement or each instruction is genuine and authorized:
(1) In all cases, a guaranty of the signature of the person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;
(2) If the indorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;
(3) If the indorsement is made or the instruction is originated by a fiduciary pursuant to § 28:8-107(a)(4) or (a)(5), appropriate evidence of appointment or incumbency;
(4) If there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and
(5) If the indorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.
(b) An issuer may elect to require reasonable assurance beyond that specified in this section.
(c) For the purposes of this section, the term:
(1) "Guaranty of the signature" means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.
(2) "Appropriate evidence of appointment or incumbency" means:
(A) In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within 60 days before the date of presentation for transfer; or
(B) In any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considers appropriate.
(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. An issuer is absolutely liable for wrongful registration of transfer if the indorsement or instruction is ineffective. See Section 8-404. Accordingly, an issuer is entitled to require such assurance as is reasonable under the circumstances that all necessary indorsements are effective, and thus to minimize its risk. This section establishes the requirements the issuer may make in terms of documentation which, except in the rarest of instances, should be easily furnished. Subsection (b) provides that an issuer may require additional assurances if that requirement is reasonable under the circumstances, but if the issuer demands more than reasonable assurance that the instruction or the necessary indorsements are genuine and authorized, the presenter may refuse the demand and sue for improper refusal to register. Section 8-401(b).
2. Under subsection (a)(1), the issuer may require in all cases a guaranty of signature. See Section 8-306. When an instruction is presented the issuer always may require reasonable assurance as to the identity of the originator. Subsection (c) allows the issuer to require that the person making these guaranties be one reasonably believed to be responsible, and the issuer may adopt standards of responsibility which are not manifestly unreasonable. Regulations under the federal securities laws, however, place limits on the requirements transfer agents may impose concerning the responsibility of eligible signature guarantors. See 17 CFR 240.17Ad-15.
3. This section, by paragraphs (2) through (5) of subsection (a), permits the issuer to seek confirmation that the indorsement or instruction is genuine and authorized. The permitted methods act as a double check on matters which are within the warranties of the signature guarantor. See Section 8-306. Thus, an agent may be required to submit a power of attorney, a corporation to submit a certified resolution evidencing the authority of its signing officer to sign, an executor or administrator to submit the usual "short-form certificate," etc. But failure of a fiduciary to obtain court approval of the transfer or to comply with other requirements does not make the fiduciary's signature ineffective. Section 8-107(c). Hence court orders and other controlling instruments are omitted from subsection (a).
Subsection (a)(3) authorizes the issuer to require "appropriate evidence" of appointment or incumbency, and subsection (c) indicates what evidence will be "appropriate". In the case of a fiduciary appointed or qualified by a court that evidence will be a court certificate dated within sixty days before the date of presentation, subsection (c)(2)(i). Where the fiduciary is not appointed or qualified by a court, as in the case of a successor trustee, subsection (c)(2)(ii) applies. In that case, the issuer may require a copy of a trust instrument or other document showing the appointment, or it may require the certificate of a responsible person. In the absence of such a document or certificate, it may require other appropriate evidence. If the security is registered in the name of the fiduciary as such, the person's signature is effective even though the person is no longer serving in that capacity, see Section 8-107(d), hence no evidence of incumbency is needed.
4. Circumstances may indicate that a necessary signature was unauthorized or was not that of an appropriate person. Such circumstances would be ignored at risk of absolute liability. To minimize that risk the issuer may properly exercise the option given by subsection (b) to require assurance beyond that specified in subsection (a). On the other hand, the facts at hand may reflect only on the rightfulness of the transfer. Such facts do not create a duty of inquiry, because the issuer is not liable to an adverse claimant unless the claimant obtains legal process. See Section 8-404.
Definitional Cross References
"Appropriate person". Section 8-107.
"Genuine". Section 1-201(18).
"Indorsement". Section 8-102(a)(11).
"Instruction". Section 8-102(a)(12).
"Issuer". Section 8-201.
Prior Codifications
1981 Ed., § 28:8-402.
1973 Ed., § 28:8-402.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
(a) A person who is an appropriate person to make an indorsement or originate an instruction may demand that the issuer not register transfer of a security by communicating to the issuer a notification that identifies the registered owner and the issue of which the security is a part and provides an address for communications directed to the person making the demand. The demand is effective only if it is received by the issuer at a time and in a manner affording the issuer reasonable opportunity to act on it.
(b) 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 after a demand that the issuer not register transfer has become effective, the issuer shall promptly communicate to (i) the person who initiated the demand at the address provided in the demand, and (ii) the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating that:
(1) The certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;
(2) A demand that the issuer not register transfer had previously been received; and
(3) The issuer will withhold registration of transfer for a period of time stated in the notification in order to provide the person who initiated the demand an opportunity to obtain legal process or an indemnity bond.
(c) The period described in subsection (b)(3) of this section may not exceed 30 days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.
(d) An issuer is not liable to a person who initiated a demand that the issuer not register transfer for any loss the person suffers as a result of registration of a transfer pursuant to an effective indorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer's communication, either:
(1) Obtain an appropriate restraining order, injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or
(2) File with the issuer an indemnity bond, sufficient in the issuer's judgment to protect the issuer and any transfer agent, registrar, or other agent of the issuer involved from any loss it or they may suffer by refusing to register the transfer.
(e) This section does not relieve an issuer from liability for registering transfer pursuant to an indorsement or instruction that was not effective.
(Dec. 30, 1963, 77 Stat. 743, 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. The general rule under this Article is that if there has been an effective indorsement or instruction, a person who contends that registration of the transfer would be wrongful should not be able to interfere with the registration process merely by sending notice of the assertion to the issuer. Rather, the claimant must obtain legal process. See Section 8-404. Section 8-403 is an exception to this general rule. It permits the registered owner--but not third parties--to demand that the issuer not register a transfer.
2. This section is intended to alleviate the problems faced by registered owners of certificated securities who lose or misplace their certificates. A registered owner who realizes that a certificate may have been lost or stolen should promptly report that fact to the issuer, lest the owner be precluded from asserting a claim for wrongful registration. See Section 8-406. The usual practice of issuers and transfer agents is that when a certificate is reported as lost, the owner is notified that a replacement can be obtained if the owner provides an indemnity bond. See Section 8-405. If the registered owner does not plan to transfer the securities, the owner might choose not to obtain a replacement, particularly if the owner suspects that the certificate has merely been misplaced.
Under this section, the owner's notification that the certificate has been lost would constitute a demand that the issuer not register transfer. No indemnity bond or legal process is necessary. If the original certificate is presented for registration of transfer, the issuer is required to notify the registered owner of that fact, and defer registration of transfer for a stated period. In order to prevent undue delay in the process of registration, the stated period may not exceed thirty days. This gives the registered owner an opportunity to either obtain legal process or post an indemnity bond and thereby prevent the issuer from registering transfer.
3. Subsection (e) makes clear that this section does not relieve an issuer from liability for registering a transfer pursuant to an ineffective indorsement. An issuer's liability for wrongful registration in such cases does not depend on the presence or absence of notice that the indorsement was ineffective. Registered owners who are confident that they neither indorsed the certificates, nor did anything that would preclude them from denying the effectiveness of another's indorsement, see Sections 8-107(b) and 8-406, might prefer to pursue their rights against the issuer for wrongful registration rather than take advantage of the opportunity to post a bond or seek a restraining order when notified by the issuer under this section that their lost certificates have been presented for registration in apparently good order.
Definitional Cross References
"Appropriate person". Section 8-107.
"Certificated security". Section 8-102(a)(4).
"Communicate". Section 8-102(a)(6).
"Effective". Section 8-107.
"Indorsement". Section 8-102(a)(11).
"Instruction". Section 8-102(a)(12).
"Issuer". Section 8-201.
"Registered form". Section 8-102(a)(13).
"Uncertificated security". Section 8-102(a)(18).
Prior Codifications
1981 Ed., § 28:8-403.
1973 Ed., § 28:8-403.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
(a) Except as otherwise provided in § 28:8-406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered:
(1) Pursuant to an ineffective indorsement or instruction;
(2) After a demand that the issuer not register transfer became effective under § 28:8-403(a) and the issuer did not comply with § 28:8-403(b);
(3) After the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
(4) By an issuer acting in collusion with the wrongdoer.
(b) An issuer that is liable for wrongful registration of transfer under subsection (a) of this section on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer's liability to provide the person with a like security is governed by § 28:8-210.
(c) Except as otherwise provided in subsection (a) of this section or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective indorsement or instruction.
(Dec. 30, 1963, 77 Stat. 739, Pub. L. 88-243, § 1; Mar. 16, 1993, D.C. Law 9-196, § 4, 39 DCR 9165; renumbered and amended, Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
1. Subsection (a)(1) provides that an issuer is liable if it registers transfer pursuant to an indorsement or instruction that was not effective. For example, an issuer that registers transfer on a forged indorsement is liable to the registered owner. The fact that the issuer had no reason to suspect that the indorsement was forged or that the issuer obtained the ordinary assurances under Section 8-402 does not relieve the issuer from liability. The reason that issuers obtain signature guaranties and other assurances is that they are liable for wrongful registration.
Subsection (b) specifies the remedy for wrongful registration. Pre-Code cases established the registered owner's right to receive a new security where the issuer had wrongfully registered a transfer, but some cases also allowed the registered owner to elect between an equitable action to compel issue of a new security and an action for damages. Cf. Casper v. Kalt-Zimmers Mfg. Co., 159 Wis. 517, 149 N.W. 754 (1914). Article 8 does not allow such election. The true owner of a certificated security is required to take a new security except where an overissue would result and a similar security is not reasonably available for purchase. See Section 8-210. The true owner of an uncertificated security is entitled and required to take restoration of the records to their proper state, with a similar exception for overissue.
2. Read together, subsections (c) and (a) have the effect of providing that an issuer has no duties to an adverse claimant unless the claimant serves legal process on the issuer to enjoin registration. Issuers, or their transfer agents, perform a record-keeping function for the direct holding system that is analogous to the functions performed by clearing corporations and securities intermediaries in the indirect holding system. This section applies to the record-keepers for the direct holding system the same standard that Section 8-115 applies to the record-keepers for the indirect holding system. Thus, issuers are not liable to adverse claimants merely on the basis of notice. As in the case of the analogous rules for the indirect holding system, the policy of this section is to protect the right of investors to have their securities transfers processed without the disruption or delay that might result if the record-keepers risked liability to third parties. It would be undesirable to apply different standards to the direct and indirect holding systems, since doing so might operate as a disincentive to the development of a book-entry direct holding system.
3. This section changes prior law under which an issuer could be held liable, even though it registered transfer on an effective indorsement or instruction, if the issuer had in some fashion been notified that the transfer might be wrongful against a third party, and the issuer did not appropriately discharge its duty to inquire into the adverse claim. See Section 8-403 (1978).
The rule of former Section 8-403 was anomalous inasmuch as Section 8-207 provides that the issuer is entitled to "treat the registered owner as the person exclusively entitled to vote, receive notifications, and otherwise exercise all the rights and powers of an owner." Under Section 8-207, the fact that a third person notifies the issuer of a claim does not preclude the issuer from treating the registered owner as the person entitled to the security. See Kerrigan v. American Orthodontics Corp., 960 F.2d 43 (7th Cir. 1992). The change made in the present version of Section 8-404 ensures that the rights of registered owners and the duties of issuers with respect to registration of transfer will be protected against third-party interference in the same fashion as other rights of registered ownership.
Definitional Cross References
"Certificated security". Section 8-102(a)(4).
"Effective". Section 8-107.
"Indorsement". Section 8-102(a)(11).
"Instruction". Section 8-102(a)(12).
"Issuer". Section 8-201.
"Security". Section 8-102(a)(15).
"Uncertificated security". Section 8-102(a)(18).
Prior Codifications
1981 Ed., § 28:8-404.
1973 Ed., § 28:8-404.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
(a) If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificate if the owner:
(1) So requests before the issuer has notice that the certificate has been acquired by a protected purchaser;
(2) Files with the issuer a sufficient indemnity bond; and
(3) Satisfies other reasonable requirements imposed by the issuer.
(b) If, after the issue of a new security certificate, a protected purchaser of the original certificate presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer's liability is governed by § 28:8-210. In addition to any rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or any person taking under that person, except a protected purchaser.
(Dec. 30, 1963, 77 Stat. 744, 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
Prior Codifications
1981 Ed., § 28:8-405.
1973 Ed., § 28:8-405.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
If a security certificate has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under § 28:8- 404 or a claim to a new security certificate under § 28:8-405.
(Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
An owner who fails to notify the issuer within a reasonable time after the owner knows or has reason to know of the loss or theft of a security certificate is estopped from asserting the ineffectiveness of a forged or unauthorized indorsement and the wrongfulness of the registration of the transfer. If the lost certificate was indorsed by the owner, then the registration of the transfer was not wrongful under Section 8-404, unless the owner made an effective demand that the issuer not register transfer under Section 8-403.
Definitional Cross References
"Issuer". Section 8-201.
"Notify". Section 1-201(25).
"Security certificate". Section 8-102(a)(16).
Prior Codifications
1981 Ed., § 28:8-406.
1973 Ed., § 28:8-406.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
A person acting as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions.
(Dec. 30, 1963, 77 Stat. 744, Pub. L. 88-243, § 1; Mar. 16, 1993, D.C. Law 9-196, § 4, 39 DCR 9165; renumbered and amended, Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
1. Transfer agents, registrars, and the like are here expressly held liable both to the issuer and to the owner for wrongful refusal to register a transfer as well as for wrongful registration of a transfer in any case within the scope of their respective functions where the issuer would itself be liable. Those cases which have regarded these parties solely as agents of the issuer and have therefore refused to recognize their liability to the owner for mere non-feasance, i.e., refusal to register a transfer, are rejected. Hulse v. Consolidated Quicksilver Mining Corp., 65 Idaho 768, 154 P.2d 149 (1944); Nicholson v. Morgan, 119 Misc. 309, 196 N.Y.Supp. 147 (1922); Lewis v. Hargadine-McKittrick Dry Goods Co., 305 Mo. 396, 274 S.W. 1041 (1924).
2. The practice frequently followed by authenticating trustees of issuing certificates of indebtedness rather than authenticating duplicate certificates where securities have been lost or stolen became obsolete in view of the provisions of Section 8-405, which makes express provision for the issue of substitute securities. It is not a breach of trust or lack of due diligence for trustees to authenticate new securities. Cf. Switzerland General Ins. Co. v. N.Y.C. & H.R.R. Co., 152 App.Div. 70, 136 N.Y.S. 726 (1912).
Definitional Cross References
"Certificated security". Section 8-102(a)(4).
"Issuer". Section 8-201.
"Security". Section 8-102(a)(15).
"Security certificate". Section 8-102(a)(16).
"Uncertificated security". Section 8-102(a)(18).
Prior Codifications
1981 Ed., § 28:8-407.
1973 Ed., § 28:8-406.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
For legislative history of D.C. Law 11-240, see Historical and Statutory Notes following § 28:8-401.
(a) Within 2 business days after the transfer of an uncertificated security has been registered, the issuer shall send to the new registered owner and, if the security has been transferred subject to a registered pledge, to the registered pledgee a written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The number of shares or units transferred;
(3) The name and address and any taxpayer identification number of the new registered owner and, if the security has been transferred subject to a registered pledge, the name and address and any taxpayer identification number of the registered pledgee;
(4) A notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under § 28:8-403(d)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions, or adverse claims; and
(5) The date the transfer was registered.
(b) Within 2 business days after the pledge of an uncertificated security has been registered, the issuer shall send to the registered owner and the registered pledgee a written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The number of shares or units pledged;
(3) The name and address and any taxpayer identification number of the registered owner and the registered pledgee;
(4) A notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under § 28:8-403(d)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions, or adverse claims; and
(5) The date the pledge was registered.
(c) Within 2 business days after the release from pledge of an uncertificated security has been registered, the issuer shall send to the registered owner and the pledgee whose interest was released a written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The number of shares or units released from pledge;
(3) The name and address and any taxpayer identification number of the registered owner and the pledgee whose interest was released;
(4) A notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under § 28:8-403(d)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions, or adverse claims; and
(5) The date the release was registered.
(d) An "initial transaction statement" is the statement sent to:
(1) The new registered owner and, if applicable, to the registered pledgee pursuant to subsection (a) of this section;
(2) The registered pledgee pursuant to subsection (b) of this section; or
(3) The registered owner pursuant to subsection (c) of this section.
(e) Each initial transaction statement shall be signed by or on behalf of the issuer and must be identified as "Initial Transaction Statement".
(f) Within 2 business days after the transfer of an uncertificated security has been registered, the issuer shall send to the former registered owner and the former registered pledgee, if any, a written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The number of shares or units transferred;
(3) The name and address and any taxpayer identification number of the former registered owner and of any former registered pledgee; and
(4) The date the transfer was registered.
(g) At periodic intervals no less frequent than annually and at any time upon the reasonable written request of the registered owner, the issuer shall send to the registered owner of each uncertificated security a dated written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The name and address and any taxpayer identification number of the registered owner;
(3) The number of shares or units of the uncertificated security registered in the name of the registered owner on the date of the statement;
(4) The name and address and any taxpayer identification number of the registered pledgee and the number of shares or units subject to the pledge; and
(5) A notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under § 28:8-403(d)) to which the uncertificated security is or may be subject or a statement that there are none of those liens, restrictions, or adverse claims.
(h) At periodic intervals no less frequent than annually and at any time upon the reasonable written request of the registered pledgee, the issuer shall send to the registered pledgee of each uncertificated security a dated written statement containing:
(1) A description of the issue of which the uncertificated security is a part;
(2) The name and address and any taxpayer identification number of the registered owner;
(3) The name and address any taxpayer identification number of the registered pledgee;
(4) The number of shares or units subject to the pledge; and
(5) A notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under § 28:8-403(d)) to which the uncertificated security is or may be subject or a statement that there are none of those liens, restrictions, or adverse claims.
(i) If the issuer sends the statements described in subsections (g) and (h) of this section at periodic intervals no less frequent than quarterly, the issuer is not obligated to send additional statements upon request unless the owner or pledgee requesting them pays to the issuer the reasonable cost of furnishing them.
(j) Each statement sent pursuant to this section must bear a conspicuous legend reading substantially as follows: "This statement is merely a record of the rights of the addressee as of the time of its issuance. Delivery of this statement, of itself, confers no rights on the recipient. This statement is neither a negotiable instrument nor a security."
(Mar. 16, 1993, D.C. Law 9-196, § 4, 39 DCR 9165.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 28:8-408.
Legislative History of Laws
For legislative history of D.C. Law 9-196, see Historical and Statutory Notes following § 28:8-101.
