Chapter 1308 | Investment Securities

Section 1308.01 | Definitions - UCC 8-102.

• Effective: June 29, 2011
• Latest Legislation: House Bill 9 - 129th General Assembly

(A) In this chapter:

(1) "Adverse claim" means a claim that a claimant has a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset.

(2) "Bearer form," as applied to a certificated security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an indorsement.

(3) "Broker" means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity.

(4) "Certificated security" means a security that is represented by a certificate.

(5) "Clearing corporation" means:

(a) A person that is registered as a "clearing agency" under the federal securities laws;

(b) A federal reserve bank; or

(c) Any other person that provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority.

(6) "Communicate" means to:

(a) Send a signed writing; or

(b) Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.

(7) "Entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of division (B)(2) or (3) of section 1308.51 of the Revised Code, that person is the entitlement holder.

(8) "Entitlement order" means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement.

(9) "Financial asset," except as otherwise provided in section 1308.02 of the Revised Code, means:

(a) A security;

(b) An obligation of a person or a share, participation, or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or

(c) Any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this chapter.

As context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement.

(10) "Good faith" has the same meaning as in section 1301.201 of the Revised Code.

(11) "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.

(12) "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.

(13) "Registered form," as applied to a certificated security, means a form in which:

(a) The security certificate specifies a person entitled to the security; and

(b) A transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states.

(14) "Securities intermediary" means:

(a) A clearing corporation; or

(b) 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.

(15) "Security," except as otherwise provided in section 1308.02 of the Revised Code, 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:

(a) Which 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;

(b) Which 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

(c) Which:

(i) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or

(ii) Is a medium for investment and by its terms expressly provides that it is a security governed by this chapter.

(16) "Security certificate" means a certificate representing a security.

(17) "Security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset specified in sections 1308.51 to 1308.61 of the Revised Code.

(18) "Uncertificated security" means a security that is not represented by a certificate.

(B) Other definitions applying to this chapter and the sections in which they appear are:

(1) "Appropriate person," as defined in section 1308.23 of the Revised Code.

(2) "Control," as defined in section 1308.24 of the Revised Code.

(3) "Delivery," as defined in section 1308.27 of the Revised Code.

(4) "Investment company security," as defined in section 1308.02 of the Revised Code.

(5) "Issuer," as defined in section 1308.08 of the Revised Code.

(6) "Overissue," as defined in section 1308.03 of the Revised Code.

(7) "Protected purchaser," as defined in section 1308.17 of the Revised Code.

(8) "Securities account," as defined in section 1308.51 of the Revised Code.

(C) In addition, Chapter 1301. of the Revised Code contains general definitions and principles of construction and interpretation applicable throughout this chapter.

(D) The characterization of a person, business, or transaction for purposes of this chapter does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule.

Section 1308.02 | Rules for determining whether certain obligations and interests are securities or financial assets - UCC 8-103.

• Effective: June 29, 2011
• Latest Legislation: House Bill 9 - 129th General Assembly

(A) A share or similar equity interest issued by a corporation, business trust, joint stock company, or similar entity is a security.

(B) An "investment company security" is a security. "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face-amount certificate issued by a face-amount certificate company that is so registered. Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

(C) An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this chapter, or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account.

(D) A writing that is a security certificate is governed by this chapter and not by Chapter 1303. of the Revised Code, even though it also meets the requirements of that chapter. However, a negotiable instrument governed by Chapter 1303. of the Revised Code is a financial asset if it is held in a securities account.

(E) An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset.

(F) A commodity contract, as defined in division (A)(15) of section 1309.102 of the Revised Code, is not a security or a financial asset.

(G) A document of title is not a financial asset unless division (A)(9)(c) of section 1308.01 of the Revised Code applies.

Section 1308.03 | Overissue defined - effect - UCC 8-210.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) Except as otherwise provided in divisions (A)(1) and (2) of this section, the provisions of this chapter which validate a security or compel its issue or reissue do not apply to the extent that validation, issue, or reissue would result in overissue.

(1) If an identical security which does not constitute an overissue is reasonably available for purchase, the person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds.

(2) If a security is not so available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person's demand.

(B) "Overissue" means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue.

Section 1308.04 | Evidentiary rules concerning certificate securities - UCC 8-114.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

The following rules apply in an action on a certificated security against the issuer:

(A) Unless specifically denied in the pleadings, each signature on a security certificate or in a necessary indorsement is admitted;

(B) If the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized;

(C) If signatures on a security certificate are admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security;

(D) If it is shown that a defense or defect exists, the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted.

Section 1308.05 | Applicability - choice of law - UCC 8-110.

• Effective: July 1, 2001
• Latest Legislation: Senate Bill 74 - 124th General Assembly

(A) The local law of the issuer's jurisdiction, as specified in division (D) of this section, governs:

(1) The validity of a security;

(2) The rights and duties of the issuer with respect to registration of transfer;

(3) The effectiveness of registration of transfer by the issuer;

(4) Whether the issuer owes any duties to an adverse claimant to a security; and

(5) Whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.

(B) The local law of the securities intermediary's jurisdiction, as specified in division (E) of this section, governs:

(1) Acquisition of a security entitlement from the securities intermediary;

(2) The rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

(3) Whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and

(4) Whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.

(C) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.

(D) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in divisions (A)(2) to (5) of this section.

(E) The following rules determine a "securities intermediary's jurisdiction" for purposes of this section:

(1) If an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of Chapter 1308. or 1309. of the Revised Code, that jurisdiction is the securities intermediary's jurisdiction.

(2) If division (E)(1) of this section does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.

(3) If divisions (E)(1) and (2) of this section do not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.

(4) If divisions (E)(1), (2), and (3) of this section do not apply, the securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located.

(5) If divisions (E)(1), (2), (3), and (4) of this section do not apply, the securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.

(F) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.

Section 1308.06 | Clearing corporation rules - UCC 8-111.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

A rule adopted by a clearing corporation governing rights and obligations among the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with this chapter and affects another party who does not consent to the rule.

Section 1308.07 | Statute of frauds inapplicable - UCC 8-113.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one year of its making.

Section 1308.08 | Issuer - UCC 8-201.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) With respect to obligations on or defenses to a security, "issuer" includes a person who:

(1) Places or authorizes the placing of its name on a security certificate, otherwise than as authenticating trustee, registrar, transfer agent, or the like, to evidence a share, participation, or other interest in its property or in an enterprise, or to evidence its duty to perform an obligation represented by the certificate;

(2) Creates shares, participations, or other interests in its property or in an enterprise, or undertakes obligations, that are uncertificated securities;

(3) Directly or indirectly creates fractional interests in its rights or property, if the fractional interests are represented by security certificates; or

(4) Becomes responsible for, or in place of, any other person described as an issuer in this section.

(B) With respect to obligations on or defenses to a security, a guarantor is an issuer to the extent of its guaranty, whether or not its obligation is noted on a security certificate.

(C) With respect to registration of transfer, "issuer" means a person on whose behalf transfer books are maintained.

Section 1308.09 | Issuer's responsibility and defenses - notice of defect or defense - UCC 8-202.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) 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 the terms stated on the certificate. A reference under division (A) of this section 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.

(B) The following rules apply if an issuer asserts that a security is not valid:

(1) 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.

(2) The provisions of division (B)(1) of this section apply 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.

(C) Except as otherwise provided in section 1308.12 of the Revised Code, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.

(D) 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.

(E) 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.

(F) 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.

Section 1308.10 | Staleness as notice of defect or defense - UCC 8-203.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer if the act or event:

(A) Requires the payment of money, the delivery of a certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

(B) Is not covered by division (A) of this section and the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which performance became due.

Section 1308.11 | Effect of issuer's restriction on transfer - UCC 8-204 - issuer's lien - UCC 8-209.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without actual knowledge of it unless:

(1) The security is certificated and the restriction is noted conspicuously on the security certificate; or

(2) The security is uncertificated and the registered owner has been notified of the restriction.

(B) A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate.

Section 1308.12 | Effect of unauthorized signature on security certificate - UCC 8-205.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by:

(A) An authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or

(B) An employee of the issuer, or of any of the persons listed in division (A) of this section, entrusted with responsible handling of the security certificate.

Section 1308.13 | Completion or alteration of security certificate - UCC 8-206.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect:

(1) Any person may complete it by filling in the blanks as authorized; and

(2) Even if the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

(B) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms.

Section 1308.14 | Rights and duties of issuer with respect to registered owners - UCC 8-207.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) Before due presentment for registration of transfer of a certificated security in registered form or of an instruction requesting registration of transfer of an uncertificated security, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, receive notifications, and otherwise exercise all the rights and powers of an owner.

(B) This chapter does not affect the liability of the registered owner of a security for calls, assessments, or the like.

Section 1308.15 | Effect of signature of authenticating trustee, registrar, or transfer agent - UCC 8-208.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person signing a security certificate as authenticating trustee, registrar, transfer agent, or the like, warrants to a purchaser for value of the certificated security, if the purchaser is without notice of the particular defect, that:

(1) The certificate is genuine;

(2) The person's own participation in the issue of the security is within the person's capacity and within the scope of the authority received by the person from the issuer; and

(3) The person has reasonable grounds to believe the certificated security is in the form and within the amount the issuer is authorized to issue.

(B) Unless otherwise agreed, a person signing under division (A) of this section does not assume responsibility for the validity of the security in other respects.

Section 1308.16 | Rights of purchaser - UCC 8-302.

• Effective: July 1, 2001
• Latest Legislation: Senate Bill 74 - 124th General Assembly

(A) Except as otherwise provided in divisions (B) and (C) of this section, a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.

(B) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

(C) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

Section 1308.17 | Protected purchaser - UCC 8-303.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A "protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest therein, who:

(1) Gives value;

(2) Does not have notice of any adverse claim to the security; and

(3) Obtains control of the certificated or uncertificated security.

(B) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.

Section 1308.18 | Acquisition of security or financial asset or interest therein - UCC 8-104.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person acquires a security or an interest therein, under this chapter, if:

(1) The person is a purchaser to whom a security is delivered pursuant to section 1308.27 of the Revised Code; or

(2) The person acquires a security entitlement to the security pursuant to section 1308.51 of the Revised Code.

(B) A person acquires a financial asset, other than a security, or an interest therein, under this chapter, if the person acquires a security entitlement to the financial asset.

(C) A person who acquires a security entitlement to a security or other financial asset has the rights specified in sections 1308.51 to 1308.61 of the Revised Code, but is a purchaser of any security, security entitlement, or other financial asset held by the securities intermediary only to the extent provided in section 1308.53 of the Revised Code.

(D) Unless the context shows that a different meaning is intended, a person who is required by other law, regulation, rule, or agreement to transfer, deliver, present, surrender, exchange, or otherwise put in the possession of another person a security or financial asset satisfies that requirement by causing the other person to acquire an interest in the security or financial asset pursuant to division (A) or (B) of this section.

Section 1308.19 | Notice of adverse claim - UCC 8-105.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person has notice of an adverse claim if:

(1) The person knows of the adverse claim;

(2) The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or

(3) The person has a duty, imposed by statute or rule, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim.

(B) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim.

(C) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than:

(1) One year after a date set for presentment or surrender for redemption or exchange; or

(2) Six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date.

(D) A purchaser of a certificated security has notice of an adverse claim if the security certificate:

(1) Whether in bearer or registered form, has been indorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or

(2) Is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement.

(E) Filing of a financing statement under Chapter 1309. of the Revised Code is not notice of an adverse claim to a financial asset.

Section 1308.20 | Warranties in direct holding - UCC 8-108.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person who transfers a certificated security to a purchaser for value warrants to the purchaser, and an indorser, if the transfer is by indorsement, warrants to any subsequent purchaser, that:

(1) The certificate is genuine and has not been materially altered;

(2) The transferor or indorser does not know of any fact that might impair the validity of the security;

(3) There is no adverse claim to the security;

(4) The transfer does not violate any restriction on transfer;

(5) If the transfer is by indorsement, the indorsement is made by an appropriate person, or if the indorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and

(6) The transfer is otherwise effective and rightful.

(B) A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that:

(1) The instruction is made by an appropriate person, or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person;

(2) The security is valid;

(3) There is no adverse claim to the security; and

(4) At the time the instruction is presented to the issuer:

(a) The purchaser will be entitled to the registration of transfer;

(b) The transfer will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction;

(c) The transfer will not violate any restriction on transfer; and

(d) The requested transfer will otherwise be effective and rightful.

(C) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants that:

(1) The uncertificated security is valid;

(2) There is no adverse claim to the security;

(3) The transfer does not violate any restriction on transfer; and

(4) The transfer is otherwise effective and rightful.

(D) A person who indorses a security certificate warrants to the issuer that:

(1) There is no adverse claim to the security; and

(2) The indorsement is effective.

(E) A person who originates an instruction for registration of transfer of an uncertificated security warrants to the issuer that:

(1) The instruction is effective; and

(2) At the time the instruction is presented to the issuer the purchaser will be entitled to the registration of transfer.

(F) A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment, or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants only that the person has no knowledge of any unauthorized signature in a necessary indorsement.

(G) If a person acts as agent of another in delivering a certificated security to a purchaser, the identity of the principal was known to the person to whom the certificate was delivered, and the certificate delivered by the agent was received by the agent from the principal or received by the agent from another person at the direction of the principal, the person delivering the security certificate warrants only that the delivering person has authority to act for the principal and does not know of any adverse claim to the certificated security.

(H) A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent under division (G) of this section.

(I) Except as otherwise provided in division (G) of this section, a broker acting for a customer makes to the issuer and a purchaser the warranties provided in divisions (A) to (F) of this section. A broker that delivers a security certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security, makes to the customer the warranties provided in division (A) or (B) of this section, and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of the customer.

Section 1308.21 | Warranties in indirect holding - UCC 8-109.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that:

(1) The entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and

(2) There is no adverse claim to the security entitlement.

(B) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in division (A) or (B) of section 1308.20 of the Revised Code.

(C) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in division (A) or (B) of section 1308.20 of the Revised Code.

Section 1308.22 | Indorsement - UCC 8-304.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) An indorsement may be in blank or special. An indorsement in blank includes an indorsement to bearer. A special indorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank indorsement to a special indorsement.

(B) An indorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the indorsement.

(C) An indorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the indorsement is on a separate document, until delivery of both the document and the certificate.

(D) If a security certificate in registered form has been delivered to a purchaser without a necessary indorsement, the purchaser may become a protected purchaser only when the indorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary indorsement supplied.

(E) An indorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses.

(F) Unless otherwise agreed, a person making an indorsement assumes only the obligations provided in section 1308.20 of the Revised Code and not an obligation that the security will be honored by the issuer.

Section 1308.23 | Whether indorsement, instruction, or entitlement order is effective - UCC 8-107.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(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 division (A)(1), (2), or (3) of this section 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 division (A)(1), (2), or (3) of this section 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 division (C)(2) or (D)(2) of section 1308.24 of the Revised Code; 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.

Section 1308.24 | Control - UCC 8-106.

• Effective: July 1, 2001
• Latest Legislation: Senate Bill 74 - 124th General Assembly

(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; or

(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 has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges having control 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 division (C) or (D) of this section has control even if the registered owner in the case of division (C) of this section or the entitlement holder in the case of division (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 division (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.

Section 1308.25 | Instruction - UCC 8-305.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly.

(B) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by section 1308.20 of the Revised Code and not an obligation that the security will be honored by the issuer.

Section 1308.26 | Effect of guaranteeing signature, indorsement, or instruction - UCC 8-306.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing:

(1) The signature was genuine;

(2) The signer was an appropriate person to indorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(3) The signer had legal capacity to sign.

(B) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing:

(1) The signature was genuine;

(2) The signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and

(3) The signer had legal capacity to sign.

(C) A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under division (B) of this section and also warrants that at the time the instruction is presented to the issuer:

(1) The person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

(2) The transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.

(D) A guarantor under divisions (A) and (B) of this section or a special guarantor under division (C) of this section does not otherwise warrant the rightfulness of the transfer.

(E) A person who guarantees an indorsement of a security certificate makes the warranties of a signature guarantor under division (A) of this section and also warrants the rightfulness of the transfer in all respects.

(F) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under division (C) of this section and also warrants the rightfulness of the transfer in all respects.

(G) An issuer may not require a special guaranty of signature, a guaranty of indorsement, or a guaranty of instruction as a condition to registration of transfer.

(H) The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An indorser or originator of an instruction whose signature, indorsement, or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor.

Section 1308.27 | Delivery - UCC 8-301.

• Effective: July 1, 2001
• Latest Legislation: Senate Bill 74 - 124th General Assembly

(A) Delivery of a certificated security to a purchaser occurs when:

(1) The purchaser acquires possession of the security certificate;

(2) Another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or

(3) A securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and is (a) registered in the name of the purchaser, (b) payable to the order of the purchaser, or (c) specially indorsed to the purchaser by an effective indorsement and has not been indorsed to the securities intermediary or in blank.

(B) Delivery of an uncertificated security to a purchaser occurs when:

(1) The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

(2) Another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.

Section 1308.29 | Fulfilling duty to transfer.

• Effective: September 20, 1984
• Latest Legislation: Senate Bill 283 - 115th General Assembly

(A) Unless otherwise agreed, if a sale of a security is made on an exchange or otherwise through brokers:

(1) The selling customer fulfills his duty to transfer at the time he:

(a) Places a certificated security in the possession of the selling broker or of a person designated by the broker;

(b) Causes an uncertificated security to be registered in the name of the selling broker or a person designated by the broker;

(c) If requested, causes an acknowledgment to be made to the selling broker that a certificated or uncertificated security is held for the broker; or

(d) Places in the possession of the selling broker or of a person designated by the broker a transfer instruction for an uncertificated security, providing the issuer does not refuse to register the requested transfer if the instruction is presented to the issuer for registration within thirty days thereafter; and

(2) The selling broker, including a correspondent broker acting for a selling customer, fulfills his duty to transfer at the time he:

(a) Places a certificated security in the possession of the buying broker or a person designated by the buying broker;

(b) Causes an uncertificated security to be registered in the name of the buying broker or a person designated by the buying broker;

(c) Places in the possession of the buying broker or of a person designated by the buying broker a transfer instruction for an uncertificated security, providing the issuer does not refuse to register the requested transfer if the instruction is presented to the issuer for registration within thirty days thereafter; or

(d) Effects clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

(B) Except as provided in this section and unless otherwise agreed, a transferor's duty to transfer a security under a contract of purchase is not fulfilled until he:

(1) Places a certificated security in form to be negotiated by the purchaser in the possession of the purchaser or of a person designated the purchaser;

(2) Causes an uncertificated security to be registered in the name of the purchaser or a person designated by the purchaser; or

(3) If the purchaser requests, causes an acknowledgment to be made to the purchaser that a certificated or uncertificated security is held for the purchaser.

(C) Unless made on an exchange, a sale to a broker purchasing for his own account is within division (B) of this section and not within division (A) of this section.

Section 1308.30 | Wrongful transfer of security.

• Effective: September 20, 1984
• Latest Legislation: Senate Bill 283 - 115th General Assembly

(A) Any person against whom the transfer of a security is wrongful for any reason, including his incapacity, as against anyone except a bona fide purchaser, may:

(1) Reclaim possession of the certificated security wrongfully transferred;

(2) Obtain possession of any new certificated security representing all or part of the same rights;

(3) Compel the origination of an instruction to transfer to him or a person designated by him an uncertificated security constituting all or part of the same rights; or

(4) Have damages.

(B) If the transfer is wrongful because of an unauthorized indorsement of a certificated security, the owner may also reclaim or obtain possession of the security or a new certificated security even from a bona fide purchaser if the ineffectiveness of the purported indorsement can be asserted against him under the provisions of section 1308.26 of the Revised Code on unauthorized indorsements.

(C) The right to obtain or reclaim possession of a certificated security or to compel the origination of a transfer instruction may be specifically enforced and the transfer of a certificated or uncertificated security enjoined and a certificated security impounded pending the litigation.

Section 1308.31 | Purchaser's right to requisites for registration of transfer - UCC 8-307.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the purchaser may reject or rescind the transfer.

Section 1308.32 | Creditor's legal process - UCC 8-112.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in division (D) of this section. However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer.

(B) The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in division (D) of this section.

(C) The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor's securities account is maintained, except as otherwise provided in division (D) of this section.

(D) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party, or in an uncertificated security registered in the name of a secured party, or a security entitlement maintained in the name of a secured party, may be reached by a creditor by legal process upon the secured party.

(E) A creditor whose debtor is the owner of a certificated security, uncertificated security, or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security, or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process.

Section 1308.33 | Securities intermediary and others not liable to adverse claimant - UCC 8-115 - securities intermediary as purchaser for value - UCC 8-116.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A securities intermediary that has transferred a financial asset pursuant to an effective entitlement order, or a broker or other agent or bailee that has dealt with a financial asset at the direction of its customer or principal, is not liable to a person having an adverse claim to the financial asset, unless the securities intermediary, or broker or other agent or bailee:

(1) Took the action after it had been served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or

(2) Acted in collusion with the wrongdoer in violating the rights of the adverse claimant; or

(3) In the case of a security certificate that has been stolen, acted with notice of the adverse claim.

(B) A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favor of an entitlement holder is a purchaser for value of the financial asset. A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favor of an entitlement holder.

Section 1308.37 | Duty of issuer to register transfer - UCC 8-401.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) If a certificated security in registered form is presented to the issuer with a request to register transfer or an instruction is presented to the issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if:

(1) Under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name;

(2) The indorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

(3) Reasonable assurance is given that the indorsement or instruction is genuine and authorized, as provided in section 1308.38 of the Revised Code;

(4) Any applicable law relating to the collection of taxes has been complied with;

(5) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with section 1308.11 of the Revised Code;

(6) A demand that the issuer not register transfer has not become effective under section 1308.39 of the Revised Code, or the issuer has complied with division (B) of that section but no legal process or indemnity bond is obtained as provided in division (D) of that section; and

(7) The transfer is in fact rightful or is to a protected purchaser.

(B) If an issuer is under a duty to register a transfer of a security, the issuer is also liable to the person presenting a certificated security or an instruction for registration or the person's principal for loss resulting from unreasonable delay in registration or from failure or refusal to register the transfer.

Section 1308.38 | Assurance that indorsement or instruction is effective - UCC 8-402.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) An issuer may require the following assurance that each necessary indorsement or each instruction is genuine and authorized:

(1) In all cases, a guaranty of the signature of the person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;

(2) If the indorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;

(3) If the indorsement is made or the instruction is originated by a fiduciary pursuant to division (A)(4) or (5) of section 1308.23 of the Revised Code, appropriate evidence of appointment, or incumbency;

(4) If there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

(5) If the indorsement is made or the instruction is originated by a person not covered by another provision of division (A) of this section, assurance appropriate to the case corresponding as nearly as may be to such provisions.

(B) An issuer may elect to require reasonable assurance beyond that specified in this section.

(C) In this section:

(1) "Guaranty of the signature" means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. The issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.

(2) "Appropriate evidence of appointment or incumbency" means:

(a) In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of that court or an officer thereof and dated within sixty days before the date of presentation for transfer; or

(b) In any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by the issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considered appropriate.

Section 1308.39 | Demand that issuer not register transfer - UCC 8-403.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) 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.

(B) 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 the person who initiated the demand at the address provided in the demand and the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating that:

(1) The certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;

(2) A demand that the issuer not register transfer had previously been received; and

(3) 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.

(C) The period described in division (B)(3) of this section may not exceed thirty days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.

(D) 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:

(1) Obtain an appropriate restraining order, injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or

(2) 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.

(E) This section does not relieve an issuer from liability for registering transfer pursuant to an indorsement or instruction that was not effective.

Section 1308.40 | Wrongful registration - UCC 8-404.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) Except as otherwise provided in section 1308.41 of the Revised Code. An issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered:

(1) Pursuant to an ineffective indorsement or instruction;

(2) After a demand that the issuer not register transfer became effective under division (A) of section 1308.39 of the Revised Code and the issuer did not comply with division (B) of that section;

(3) After the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or

(4) By an issuer acting in collusion with the wrongdoer.

(B) An issuer that is liable for wrongful registration of transfer under division (A) of this section on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer's liability to provide the person with a like security is governed by section 1308.03 of the Revised Code.

(C) Except as otherwise provided in division (A) of this section or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective indorsement or instruction.

Section 1308.41 | Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate - UCC 8-406 - replacement of lost, destroyed, or wrongfully taken security certificate - UCC 8-405.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) If a security certificate has been lost, apparently destroyed, or wrongfully taken and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under section 1308.40 of the Revised Code or any claim to a new security under this section.

(B) If the owner of a certificated security, whether in registered or bearer form, claims that the security has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificate if the owner:

(1) So requests before the issuer has notice that the security has been acquired by a protected purchaser;

(2) Files with the issuer a sufficient indemnity bond; and

(3) Satisfies other reasonable requirements imposed by the issuer.

(C) If, after the issue of a new security certificate, a protected purchaser of the original security presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer's liability is governed by section 1308.03 of the Revised Code. In addition to any rights on the indemnity bond, the issuer may recover the new certificate from the person to whom it was issued or any person taking under that person, except a protected purchaser.

Section 1308.42 | Authenticating trustee, transfer agent, and registrar - UCC 8-407.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

A person acting as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates, has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions.

Section 1308.51 | Securities account - acquisition of security entitlement from securities intermediary - UCC 8-501.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.

(B) Except as otherwise provided in divisions (D) and (E) of this section, a person acquires a security entitlement if a securities intermediary:

(1) Indicates by book entry that a financial asset has been credited to the person's securities account;

(2) Receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person's securities account; or

(3) Becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account.

(C) If a condition of division (B) of this section has been met, a person has a security entitlement even though the securities intermediary does not itself hold the financial asset.

(D) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially indorsed to the other person, and has not been indorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset.

(E) Issuance of a security is not establishment of a security entitlement.

Section 1308.52 | Assertion of adverse claim against entitlement holder - UCC 8-502.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who acquires a security entitlement under section 1308.51 of the Revised Code for value and without notice of the adverse claim.

Section 1308.53 | Property interest of entitlement holder in financial asset held by securities intermediary - UCC 8-503.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of the securities intermediary, except as otherwise provided in section 1308.61 of the Revised Code.

(B) An entitlement holder's property interest with respect to a particular financial asset under division (A) of this section is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to the time the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in that financial asset.

(C) An entitlement holder's property interest with respect to a particular financial asset under division (A) of this section may be enforced against the securities intermediary only by exercise of the entitlement holder's rights under sections 1308.55 to 1308.58 of the Revised Code.

(D) An entitlement holder's property interest with respect to a particular financial asset under division (A) of this section may be enforced against a purchaser of the financial asset or interest therein only if:

(1) Insolvency proceedings have been initiated by or against the securities intermediary;

(2) The securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset;

(3) The securities intermediary violated its obligations under section 1308.54 of the Revised Code by transferring the financial asset or interest therein to the purchaser; and

(4) The purchaser is not protected under division (E) of this section. The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the purchaser.

(E) An action based on the entitlement holder's property interest with respect to a particular financial asset under division (A) of this section, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with the securities intermediary in violating the securities intermediary's obligations under section 1308.54 of the Revised Code.

Section 1308.54 | Duty of securities intermediary to maintain financial asset - UCC 8-504.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities intermediaries.

(B) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain pursuant to division (A) of this section.

(C) A securities intermediary satisfies the duty in division (A) of this section if:

(1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

(2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.

(D) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements.

Section 1308.55 | Duty of securities intermediary with respect to payments and distributions - UCC 8-505.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if:

(1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

(2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.

(B) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary.

Section 1308.56 | Duty of securities intermediary to exercise rights as directed by entitlement holder - UCC 8-506.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder. A securities intermediary satisfies the duty if:

(A) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

(B) In the absence of agreement, the securities intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

Section 1308.57 | Duty of securities intermediary to comply with entitlement holder - UCC 8-507.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and the securities intermediary has had reasonable opportunity to comply with the entitlement order. A securities intermediary satisfies the duty if:

(1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

(2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.

(B) If a securities intermediary transfers a financial asset pursuant to an ineffective entitlement order, the securities intermediary shall reestablish a security entitlement in favor of the person entitled to it, and pay or credit any payments or distributions that the person did not receive as a result of the wrongful transfer. If the securities intermediary does not reestablish a security entitlement, the securities intermediary is liable to the entitlement holder for damages.

Section 1308.58 | Duty of securities intermediary to change entitlement holder's position to other form of security holding - UCC 8-508.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies the duty if:

(A) The securities intermediary acts as agreed upon by the entitlement holder and the securities intermediary; or

(B) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

Section 1308.59 | Specification of duties of securities intermediary by other statute or regulation manner of performance of duties of securities intermediary and exercise of rights of entitlement holder - UCC 8-509.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) If the substance of a duty imposed upon a securities intermediary by sections 1308.54 to 1308.58 of the Revised Code is the subject of other statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty.

(B) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall exercise its rights in a commercially reasonable manner.

(C) The obligation of a securities intermediary to perform the duties imposed by sections 1308.54 to 1308.58 of the Revised Code is subject to:

(1) Rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise; and

(2) Rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.

(D) Sections 1308.54 to 1308.58 of the Revised Code do not require a securities intermediary to take any action that is prohibited by other statute, regulation, or rule.

Section 1308.60 | Rights of purchaser of security entitlement from entitlement holder - UCC 8-510.

• Effective: July 1, 2001
• Latest Legislation: Senate Bill 74 - 124th General Assembly

(A) In a case not covered by the priority rules in Chapter 1309. of the Revised Code or the rules stated in division (C) of this section, an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who purchases a security entitlement, or an interest in a security entitlement, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control.

(B) If an adverse claim could not have been asserted against an entitlement holder under section 1308.52 of the Revised Code, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest in a security entitlement, from the entitlement holder.

(C) In a case not covered by the priority rules in Chapter 1309. of the Revised Code, a purchaser for value of a security entitlement, or an interest in a security entitlement, who obtains control has priority over a purchaser of a security entitlement, or an interest in a security entitlement, who does not obtain control. Except as otherwise provided in division (D) of this section, purchasers who have control rank according to priority in time of:

(1) The purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under division (D)(1) of section 1308.24 of the Revised Code;

(2) The securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under division (D)(2) of section 1308.24 of the Revised Code; or

(3) If the purchaser obtained control through another person under division (D)(3) of section 1308.24 of the Revised Code, the time on which priority would be based under division (C) of this section if the other person were the secured party.

(D) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

Section 1308.61 | Priority among security interests and entitlement holders - UCC 8-511.

• Effective: January 1, 1998
• Latest Legislation: House Bill 170 - 122nd General Assembly

(A) Except as otherwise provided in divisions (B) and (C) of this section, if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.

(B) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary's entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset.

(C) If a clearing corporation does not have sufficient financial assets to satisfy both its obligations to entitlement holders who have security entitlements with respect to a financial asset and its obligation to a creditor of the clearing corporation who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders.