1997 WISCONSIN ACT 297
An Act to repeal 112.06;
to renumber 409.105 (3) (a); to amend 71.02 (2) (e), 112.07 (1), 199.12 (4) (d), 401.105 (2) (d), 401.206 (2), 405.114 (2) (intro.), 409.105 (1) (h), 409.105 (1) (i), 409.106, 409.203 (1) (intro.), 409.203 (1) (a), 409.301 (1) (d), 409.302 (1) (b), 409.302 (1) (f), 409.302 (1) (g), 409.303 (1), 409.304 (1), 409.304 (4), 409.304 (5) (intro.), 409.304 (5) (b), 409.305, 409.306 (1), 409.309, 409.312 (1), 409.312 (7), 551.33 (6) and 766.01 (9) (c); to repeal and recreate chapter 408, 409.103 (6), 409.302 (1) (h) and 409.306 (3); and to create 409.105 (2) (an), 409.105 (2) (ap), 409.105 (2) (aq), 409.105 (2) (cb), 409.105 (2) (gm), 409.105 (3) (ac), 409.105 (3) (ag), 409.105 (3) (as), 409.105 (3) (bh), 409.105 (3) (bp), 409.105 (3) (bt), 409.105 (3) (f), 409.105 (3) (g), 409.105 (3) (h), 409.105 (3) (i), 409.105 (3) (j), 409.115, 409.116 and 409.302 (1) (i) of the statutes; relating to: revising the investment securities chapter of the uniform commercial code.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
297,1
Section 1
. 71.02 (2) (e) of the statutes is amended to read:
71.02 (2) (e) Retention of professional services of brokers, as defined in s. 408.303 408.102 (1) (c), and of attorneys and accountants located in this state.
297,2
Section 2
. 112.06 of the statutes is repealed.
297,3
Section 3
. 112.07 (1) of the statutes is amended to read:
112.07 (1) Notwithstanding any other provision of the statutes, any fiduciary, as defined in s. 112.01 (1) (b), who is holding securities in a fiduciary capacity, any bank or trust company holding securities as a custodian or managing agent, and any bank or trust company holding securities as custodian for a fiduciary may deposit or arrange for the deposit of such securities in a clearing corporation as defined in s. 408.102 (1) (c) (e). When the securities are so deposited, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other such securities deposited in that clearing corporation by any person regardless of the ownership of the securities, and certificates of small denomination may be merged into one or more certificates of larger denomination. The records of the fiduciary and the records of the bank or trust company acting as custodian, as managing agent or as custodian for a fiduciary shall at all times show the name of the party for whose account the securities are so deposited. Ownership of, and other interests in, the securities may be transferred by bookkeeping entry on the books of the clearing corporation without physical delivery of certificates representing the securities. A bank or trust company which deposits securities pursuant to this section shall be subject to such rules and regulations as, in the case of state chartered institutions, the division of banking and, in the case of national banking associations, the comptroller of the currency may from time to time issue. A bank or trust company acting as custodian for a fiduciary shall, on demand by the fiduciary, certify in writing to the fiduciary the securities deposited by the bank or trust company in a clearing corporation pursuant to this section for the account of the fiduciary. A fiduciary shall, on demand by any party to a judicial proceeding for the settlement of the fiduciary's account or on demand by the attorney for such a party, certify in writing to the party the securities deposited by the fiduciary in the clearing corporation for its account as such fiduciary.
297,4
Section 4
. 199.12 (4) (d) of the statutes is amended to read:
199.12 (4) (d) The name of any corporation in which the candidate holds a security, as defined under s. 112.06 (1) (f), the current market value of which is $3,000 or more and the dollar value of such security. In this paragraph, “security" includes any share of stock, bond, debenture, note or other security issued by a corporation which is registered as to ownership on the books of the corporation.
297,5
Section 5
. 401.105 (2) (d) of the statutes is amended to read:
401.105 (2) (d) Section 408.106
408.110 on applicability of ch. 408.
297,6
Section 6
. 401.206 (2) of the statutes is amended to read:
401.206 (2) Subsection (1) does not apply to contracts for the sale of goods (s. 402.201) nor of securities (s. 408.319 408.113) nor to security agreements (s. 409.203).
297,7
Section 7
. 405.114 (2) (intro.) of the statutes is amended to read:
405.114 (2) (intro.) Unless otherwise agreed when documents appear on their face to comply with the terms of a credit but a required document does not in fact conform to the warranties made on negotiation or transfer of a document of title (s. 407.507) or of a certificated security (s. 408.306 408.108) or is forged or fraudulent or there is fraud in the transaction:
297,8
Section 8
. Chapter 408 of the statutes is repealed and recreated to read:
CHAPTER 408
Uniform commercial code —
Investment securities
subchapter I
GENERAL MATTERS
408.101 Short title. This chapter may be cited as uniform commercial code — investment securities.
408.102 Definitions. (1) In this chapter:
(a) “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.
(b) “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 endorsement.
(c) “Broker" means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity.
(d) “Certificated security" means a security that is represented by a certificate.
(e) “Clearing corporation" means:
1. A person that is registered as a “clearing agency" under the federal securities laws;
2. A federal reserve bank; or
3. 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.
(f) “Communicate" means to:
1. Send a signed writing; or
2. Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.
(fm) “Endorsement" 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.
(g) “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 s. 408.501 (2) (b) or (c), that person is the entitlement holder.
(h) “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.
(i) 1. “Financial asset", except as otherwise provided in s. 408.103, 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.
2. As context requires, “financial asset" 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.
(j) “Good faith", for purposes of the obligation of good faith in the performance or enforcement of contracts or duties within this chapter, means honesty in fact and the observance of reasonable commercial standards of fair dealing.
(L) “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.
(m) “Registered form", as applied to a certificated security, means a form in which:
1. The security certificate specifies a person entitled to the security; and
2. 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.
(n) “Securities intermediary" means:
1. A clearing corporation; or
2. 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.
(o) “Security", except as otherwise provided in s. 408.103, 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:
1. 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;
2. 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
3. Which:
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.
(p) “Security certificate" means a certificate representing a security.
(q) “Security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset specified in subch. V.
(r) “Uncertificated security" means a security that is not represented by a certificate.
(2) Other definitions applying to this chapter and the sections in which they appear are:
(a) “Appropriate person" — s. 408.107 (1).
(b) “Control" — s. 408.106.
(c) “Delivery" — s. 408.301.
(d) “Investment company security" — s. 408.103 (2).
(e) “Issuer" — s. 408.201.
(f) “Overissue" — s. 408.210 (1).
(g) “Protected purchaser" — s. 408.303 (1).
(h) “Securities account" — s. 408.501 (1).
(3) In addition, ch. 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
(4) 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.
408.103 Rules for determining whether certain obligations and interests are securities or financial assets. (1) A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.
(2) An “investment company security" is a security. In this chapter, “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.
(3) 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.
