(a) A purchaser has control of a certificated security in bearer form if the certificated security is delivered to the purchaser.
(b) A purchaser has control of a certificated security in registered form if the certificated security is delivered to the purchaser, and:
(1) The certificate is indorsed to the purchaser or in blank by an effective indorsement; or
(2) The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.
(c) A purchaser has control of an uncertificated security if:
(1) The uncertificated security is delivered to the purchaser; or
(2) The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.
(d) A purchaser has control of a security entitlement if:
(1) The purchaser becomes the entitlement holder;
(2) The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or
(3) Another person, other than the transferor to the purchaser of an interest in the security entitlement:
(A) Has control of the security entitlement and acknowledges that it has control on behalf of the purchaser; or
(B) Obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.
(e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.
(f) A purchaser who has satisfied the requirements of subsection (c) or (d) of this section has control even if the registered owner in the case of subsection (c) of this section or the entitlement holder in the case of subsection (d) of this section retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.
(g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) of this section without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.
(h) A person that has control under this section is not required to acknowledge that it has control on behalf of a purchaser.
(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees or law other than this article 8 or article 9 of this title 4 otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person.
Source: L. 96: Entire article R&RE, p. 208, � 2, effective July 1. L. 2001: (d) and (f) amended, p. 1442, � 31, effective July 1. L. 2023: (d)(3) amended and (h) and (i) added, (SB 23-090), ch. 136, p. 538, � 39, effective August 7.
Editor's note: This section is similar to former � 4-8-311 as it existed prior to 1996.
4-8-107. Whether indorsement, instruction, or entitlement order is effective. (a) Appropriate person means:
(1) With respect to an indorsement, the person specified by a security certificate or by an effective special indorsement to be entitled to the security;
(2) With respect to an instruction, the registered owner of an uncertificated security;
(3) With respect to an entitlement order, the entitlement holder;
(4) If the person designated in paragraph (1), (2), or (3) of this subsection (a) is deceased, the designated person's successor taking under other law or the designated person's personal representative acting for the estate of the decedent; or
(5) If the person designated in paragraph (1), (2), or (3) of this subsection (a) lacks capacity, the designated person's guardian, conservator, or other similar representative who 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 the appropriate person;
(2) It is made by a person who has power under the law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under section 4-8-106 (c)(2) or (d)(2); or
(3) The appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness.
(c) An indorsement, instruction, or entitlement order made by a representative is effective even if:
(1) The representative has failed to comply with a controlling instrument or with the law of the State having jurisdiction of the representative relationship, including any law requiring the representative to obtain court approval of the transaction; or
(2) The representative's action in making the indorsement, instruction, or entitlement order or using the proceeds of the transaction is otherwise a breach of duty.
(d) If a security is registered in the name of or specially indorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an indorsement, instruction, or entitlement order made by the person is effective even though the person is no longer serving in the described capacity.
(e) Effectiveness of an indorsement, instruction, or entitlement order is determined as of the date the indorsement, instruction, or entitlement order is made, and an indorsement, instruction, or entitlement order does not become ineffective by reason of any later change of circumstances.
Source: L. 96: Entire article R&RE, p. 209, � 2, effective July 1.
Editor's note: This section is similar to former � 4-8-308 as it existed prior to 1996.