8.8A-403 - A-403. Demand that issuer not register transfer.
§ 8.8A-403. Demand that issuer not register transfer.
(a) A person who is an appropriate person to make an endorsement or originatean instruction may demand that the issuer not register transfer of a securityby communicating to the issuer a notification that identifies the registeredowner and the issue of which the security is a part and provides an addressfor communications directed to the person making the demand. The demand iseffective only if it is received by the issuer at a time and in a manneraffording the issuer reasonable opportunity to act on it.
(b) If a certificated security in registered form is presented to an issuerwith a request to register transfer or an instruction is presented to anissuer with a request to register transfer of an uncertificated securityafter a demand that the issuer not register transfer has become effective,the issuer shall promptly communicate to (i) the person who initiated thedemand at the address provided in the demand and (ii) the person whopresented the security for registration of transfer or initiated theinstruction requesting registration of transfer a notification stating that:
(1) the certificated security has been presented for registration of transferor instruction for registration of transfer of the uncertificated securityhas been received;
(2) a demand that the issuer not register transfer had previously beenreceived; and
(3) the issuer will withhold registration of transfer for a period of timestated in the notification in order to provide the person who initiated thedemand an opportunity to obtain legal process or an indemnity bond.
(c) The period described in subsection (b) (3) may not exceed thirty daysafter the date of communication of the notification. A shorter period may bespecified by the issuer if it is not manifestly unreasonable.
(d) An issuer is not liable to a person who initiated a demand that theissuer not register transfer for any loss the person suffers as a result ofregistration of a transfer pursuant to an effective endorsement orinstruction if the person who initiated the demand does not, within the timestated in the issuer's communication, either:
(1) obtain an appropriate restraining order, injunction, or other processfrom a court of competent jurisdiction enjoining the issuer from registeringthe transfer; or
(2) file with the issuer an indemnity bond, sufficient in the issuer'sjudgment to protect the issuer and any transfer agent, registrar, or otheragent of the issuer involved from any loss it or they may suffer by refusingto register the transfer.
(e) This section does not relieve an issuer from liability for registeringtransfer pursuant to an endorsement or instruction that was not effective.
(1996, c. 216.)