Sec. 42a-8-403. Demand that issuer not register transfer.
Sec. 42a-8-403. Demand that issuer not register transfer. (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 a transfer
has become effective, the issuer shall promptly communicate to the person who initiated
the demand at the address provided in the demand and 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 subdivision (3) of subsection (b) 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 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
pursuant to an endorsement or instruction that was not effective.
(1959, P.A. 133, S. 8-403; 1961, P.A. 116, S. 9; P.A. 79-435, S. 39; P.A. 97-182, S. 36; P.A. 98-93, S. 8, 15.)
History: 1961 act inserted receipting requirement of Subsec. (2); P.A. 79-435 specified applicability of previous provisions to "certificated" securities and added Subsecs. (4) to (7) re uncertificated securities; P.A. 97-182 substantially revised
section including replacing provisions re the duty of the issuer as to adverse claims with provisions authorizing certain
persons to demand that the issuer not register transfer; P.A. 98-93 amended Subsec. (b) to make a technical change, effective
July 1, 1998.