§ 4-8-108 — Warranties in direct holding

Colorado § 4-8-108

• Jurisdiction: Colorado
• Title 04: Uniform
• Art.: Investment Securities

Text

(a) A person who transfers a
certificated security to a purchaser for value warrants to the purchaser, and an
indorser, if the transfer is by indorsement, warrants to any subsequent purchaser,
that:

(1) The certificate is genuine and has not been materially altered;

(2) The transferor or indorser does not know of any fact that might impair the
validity of the security;

(3) There is no adverse claim to the security;

(4) The transfer does not violate any restriction on transfer;

(5) If the transfer is by indorsement, the indorsement is made by an
appropriate person, or if the indorsement is by an agent, the agent has actual
authority to act on behalf of the appropriate person; and

(6) The transfer is otherwise effective and rightful.

(b) A person who originates an instruction for registration of transfer of an
uncertificated security to a purchaser for value warrants to the purchaser that:

(1) The instruction is made by an appropriate person, or if the instruction is by
an agent, the agent has actual authority to act on behalf of the appropriate person;

(2) The security is valid;

(3) There is no adverse claim to the security; and

(4) At the time the instruction is presented to the issuer:

(i) The purchaser will be entitled to the registration of transfer;

(ii) The transfer will be registered by the issuer free from all liens, security
interests, restrictions, and claims other than those specified in the instruction;

(iii) The transfer will not violate any restriction on transfer; and

(iv) The requested transfer will otherwise be effective and rightful.

(c) A person who transfers an uncertificated security to a purchaser for value
and does not originate an instruction in connection with the transfer warrants that:

(1) The uncertificated security is valid;

(2) There is no adverse claim to the security;

(3) The transfer does not violate any restriction on transfer; and

(4) The transfer is otherwise effective and rightful.

(d) A person who indorses a security certificate warrants to the issuer that:

(1) There is no adverse claim to the security; and

(2) The indorsement is effective.

(e) A person who originates an instruction for registration of transfer of an
uncertificated security warrants to the issuer that:

(1) The instruction is effective; and

(2) At the time the instruction is presented to the issuer the purchaser will be
entitled to the registration of transfer.

(f) A person who presents a certificated security for registration of transfer
or for payment or exchange warrants to the issuer that the person is entitled to the
registration, payment, or exchange, but a purchaser for value and without notice of
adverse claims to whom transfer is registered warrants only that the person has no
knowledge of any unauthorized signature in a necessary indorsement.

(g) If a person acts as agent of another in delivering a certificated security to
a purchaser, the identity of the principal was known to the person to whom the
certificate was delivered, and the certificate delivered by the agent was received by
the agent from the principal or received by the agent from another person at the
direction of the principal, the person delivering the security certificate warrants
only that the delivering person has authority to act for the principal and does not
know of any adverse claim to the certificated security.

(h) A secured party who redelivers a security certificate received, or after
payment and on order of the debtor delivers the security certificate to another
person, makes only the warranties of an agent under subsection (g) of this section.

(i) Except as otherwise provided in subsection (g) of this section, a broker
acting for a customer makes to the issuer and a purchaser the warranties provided
in subsections (a) through (f) of this section. A broker that delivers a security
certificate to its customer, or causes its customer to be registered as the owner of
an uncertificated security, makes to the customer the warranties provided in
subsection (a) or (b) of this section, and has the rights and privileges of a purchaser
under this section. The warranties of and in favor of the broker acting as an agent
are in addition to applicable warranties given by and in favor of the customer.

Legislative History

Source: L. 96: Entire article R&RE, p. 210, � 2, effective July 1.