400.8-403. Demand that issuer not register transfer.
Demand that issuer not register transfer.
400.8-403. (a) A person who is an appropriate person to make anindorsement or originate an instruction may demand that the issuer notregister transfer of a security by communicating to the issuer anotification that identifies the registered owner and the issue of whichthe security is a part and provides an address for communications directedto the person making the demand. The demand is effective only if it isreceived by the issuer at a time and in a manner affording the issuerreasonable opportunity to act on it.
(b) If a certificated security in registered form is presented to anissuer with a request to register transfer or an instruction is presentedto an issuer with a request to register transfer of an uncertificatedsecurity after a demand that the issuer not register transfer has becomeeffective, the issuer shall promptly communicate to:
(i) The person who initiated the demand at the address provided inthe demand; and
(ii) The person who presented the security for registration oftransfer or initiated the instruction requesting registration of transfer anotification stating that:
(1) The certificated security has been presented for registration oftransfer or the instruction for registration of transfer of theuncertificated security has been received;
(2) A demand that the issuer not register transfer had previouslybeen received; and
(3) The issuer will withhold registration of transfer for a period oftime stated in the notification in order to provide the person whoinitiated the demand an opportunity to obtain legal process or an indemnitybond.
(c) The period described in subsection (b)(3) may not exceed thirtydays after the date of communication of the notification. A shorter periodmay be specified by the issuer if it is not manifestly unreasonable.
(d) An issuer is not liable to a person who initiated a demand thatthe issuer not register transfer for any loss the person suffers as aresult of registration of a transfer pursuant to an effective indorsementor instruction if the person who initiated the demand does not, within thetime stated in the issuer's communication, either:
(1) Obtain an appropriate restraining order, injunction or otherprocess from a court of competent jurisdiction enjoining the issuer fromregistering the transfer; or
(2) File with the issuer an indemnity bond, sufficient in theissuer's judgment to protect the issuer and any transfer agent, registraror other agent of the issuer involved from any loss it or they may sufferby refusing to register the transfer.
(e) This section does not relieve an issuer from liability forregistering transfer pursuant to an indorsement or instruction that was noteffective.
(L. 1963 p. 503 § 8-403, A.L. 1992 S.B. 448, A.L. 1997 S.B. 6)