§ 34.1-8-403 — Demand that issuer not register transfer

(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 (1) the person who initiated the
demand at the address provided in the demand and (2) the person
who presented the security for registration of transfer or
initiated the instruction requesting registration of transfer a
notification stating that:
(i) The certificated security has been presented for
registration of transfer or the instruction for registration of
transfer of the uncertificated security has been received;
(ii) A demand that the issuer not register transfer
had previously been received; and
(iii) 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 paragraph (b)(iii) of this
section 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
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:
(i) Obtain an appropriate restraining order,
injunction, or other process from a court of competent
jurisdiction enjoining the issuer from registering the transfer;
or
(ii) 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.