Maine Revised Statutes Title 11 Sec. 8-1202 – Issuer’s responsibility and defenses; notice of defect or defense
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(1). Even against a purchaser for value and without notice, the terms of a certificated security include terms stated on the certificate and terms made part of the security by reference on the certificate to another instrument, indenture or document or to a constitution, statute, ordinance, rule, regulation, order or the like, to the extent the terms referred to do not conflict with terms stated on the certificate. A reference under this subsection does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even if the certificate expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in any instrument, indenture or document or in a constitution, statute, ordinance, rule, regulation, order or the like, pursuant to which the security is issued.
[PL 1997, c. 429, Pt. B, §2 (NEW).]
Terms Used In Maine Revised Statutes Title 11 Sec. 8-1202
- Certificated security: means a security that is represented by a certificate. See Maine Revised Statutes Title 11 Sec. 8-1102
- Contract: A legal written agreement that becomes binding when signed.
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- Entitlement holder: means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. See Maine Revised Statutes Title 11 Sec. 8-1102
- Securities intermediary: means : (i) A clearing corporation; or(ii) A person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. See Maine Revised Statutes Title 11 Sec. 8-1102
- Security: except as otherwise provided in section 8?1103, means an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer:
(i) That is represented by a security certificate in bearer or registered form or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;(ii) That is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests or obligations; and(iii) That:(A) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or(B) Is a medium for investment and by its terms expressly provides that it is a security governed by this Article. See Maine Revised Statutes Title 11 Sec. 8-1102- Security entitlement: means the rights and property interest of an entitlement holder with respect to a financial asset specified in Part 5. See Maine Revised Statutes Title 11 Sec. 8-1102
- Statute: A law passed by a legislature.
- Uncertificated security: means a security that is not represented by a certificate. See Maine Revised Statutes Title 11 Sec. 8-1102
(2). The following rules apply if an issuer asserts that a security is not valid.(a). A security other than one issued by a government or governmental subdivision, agency or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue. [PL 1997, c. 429, Pt. B, §2 (NEW).](b). Paragraph (a) applies to an issuer that is a government or governmental subdivision, agency or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security. [PL 1997, c. 429, Pt. B, §2 (NEW).][PL 1997, c. 429, Pt. B, §2 (NEW).]
(3). Except as otherwise provided in Section 8?1205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.[PL 1997, c. 429, Pt. B, §2 (NEW).]
(4). All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense.[PL 1997, c. 429, Pt. B, §2 (NEW).]
(5). This section does not affect the right of a party to cancel a contract for a security “when, as and if issued” or “when distributed” in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement pursuant to which the security is to be issued or distributed.[PL 1997, c. 429, Pt. B, §2 (NEW).]
(6). If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert any defense that the issuer could not assert if the entitlement holder held the security directly.[PL 1997, c. 429, Pt. B, §2 (NEW).]
SECTION HISTORYPL 1997, c. 429, §B2 (NEW). - Security: except as otherwise provided in section 8?1103, means an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer: