§ 26-1-8.1-403 — Demand that transfer not be registered; notice; contents; liability

Indiana § 26-1-8.1-403

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 8.1: Investment Securities

Text

(a) A person who is an appropriate person
to make an endorsement 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) may not exceed thirty
(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 under an effective endorsement 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 under an endorsement or instruction that was not
effective.

Legislative History

As added by P.L.247-1995, SEC.10.