A person who is an appropriate person to make an indorsement 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.
Terms Used In Utah Code 70A-8-403
Certificated security: means a security that is represented by a certificate. See Utah Code 70A-8-101
Communicate: means to:
(i)
send a signed writing; or
(ii)
transmit information by any mechanism agreed upon by the persons transmitting and receiving the information. See Utah Code 70A-8-101
Indorsement: means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it. See Utah Code 70A-8-101
Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
Instruction: means a notification communicated to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed. See Utah Code 70A-8-101
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
Process: means a writ or summons issued in the course of a judicial proceeding. See Utah Code 68-3-12.5
Security: except as otherwise provided in Section 70A-8-102, 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 that:
(i)
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)
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)
(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 chapter. See Utah Code 70A-8-101
Uncertificated security: means a security that is not represented by a certificate. See Utah Code 70A-8-101
(2)
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 transfer has become effective, the issuer shall promptly communicate to:
(a)
the person who initiated the demand at the address provided in the demand; and
(b)
the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating that:
(i)
the certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;
(ii)
a demand that the issuer not register transfer had previously been received; and
(iii)
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.
(3)
The period described in Subsection (2)(b)(iii) may not exceed 30 days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.
(4)
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 indorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer’s communication, either:
(a)
obtain an appropriate restraining order, injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or
(b)
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.
(5)
This section does not relieve an issuer from liability for registering transfer pursuant to an indorsement or instruction that was not effective.
Repealed and Re-enacted by Chapter 204, 1996 General Session
