§ 25-8-107. Whether indorsement, instruction, or entitlement order is effective.
§25‑8‑107. Whether indorsement, instruction, or entitlement orderis effective.
(a) "Appropriateperson" means:
(1) With respect to anindorsement, the person specified by a security certificate or by an effectivespecial indorsement to be entitled to the security;
(2) With respect to aninstruction, the registered owner of an uncertificated security;
(3) With respect to anentitlement order, the entitlement holder;
(4) If the persondesignated in subdivision (1), (2), or (3) of this subsection is deceased, thedesignated person's successor taking under other law or the designated person'spersonal representative acting for the estate of the decedent; or
(5) If the persondesignated in subdivision (1), (2), or (3) of this subsection lacks capacity,the designated person's guardian, conservator, or other similar representativewho has power under other law to transfer the security or financial asset.
(b) An indorsement,instruction, or entitlement order is effective if:
(1) It is made by theappropriate person;
(2) It is made by aperson who has power under the law of agency to transfer the security orfinancial asset on behalf of the appropriate person, including, in the case ofan instruction or entitlement order, a person who has control under G.S. 25‑8‑106(c)(2)or (d)(2); or
(3) The appropriateperson has ratified it or is otherwise precluded from asserting itsineffectiveness.
(c) An indorsement,instruction, or entitlement order made by a representative is effective evenif:
(1) The representativehas failed to comply with a controlling instrument or with the law of the statehaving jurisdiction of the representative relationship, including any lawrequiring the representative to obtain court approval of the transaction; or
(2) The representative'saction in making the indorsement, instruction, or entitlement order or usingthe proceeds of the transaction is otherwise a breach of duty.
(d) If a security isregistered in the name of or specially indorsed to a person described as arepresentative, or if a securities account is maintained in the name of aperson described as a representative, an indorsement, instruction, orentitlement order made by the person is effective even though the person is nolonger serving in the described capacity.
(e) Effectiveness of anindorsement, instruction, or entitlement order is determined as of the date theindorsement, instruction, or entitlement order is made, and an indorsement,instruction, or entitlement order does not become ineffective by reason of anylater change of circumstances. (1965, c. 700, s. 1; 1989, c.588, s. 1; 1997‑181, s. 1.)