§ 4-8-403 — Demand that issuer not register transfer

Colorado § 4-8-403

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

Text

(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
thirty 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.

Legislative History

Source: L. 96: Entire article R&RE, p. 224, � 2, effective July 1.