Chapter 408

408.301(1)(c) (c) 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:

408.301(1)(c)1. 1. Registered in the name of the purchaser;

408.301(1)(c)2. 2. Payable to the order of the purchaser; or

408.301(1)(c)3. 3. Specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank.

408.301(2) (2) Delivery of an uncertificated security to a purchaser occurs when:

408.301(2)(a) (a) The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

408.301(2)(b) (b) 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.

408.301 History History: 1997 a. 297; 2001 a. 10.

408.302 408.302 Rights of purchaser.

408.302(1) (1) Except as otherwise provided in subs. (2) and (3), a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.

408.302(2) (2) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

408.302(3) (3) 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.

408.302 History History: 1997 a. 297; 2001 a. 10.

408.303 408.303 Protected purchaser.

408.303(1) (1) In this chapter, “protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who:

408.303(1)(a) (a) Gives value;

408.303(1)(b) (b) Does not have notice of any adverse claim to the security; and

408.303(1)(c) (c) Obtains control of the certificated or uncertificated security.

408.303(2) (2) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.

408.303 History History: 1997 a. 297.

408.304 408.304 Endorsement.

408.304(1) (1) An endorsement may be in blank or special. An endorsement in blank includes an endorsement to bearer. A special endorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank endorsement to a special endorsement.

408.304(2) (2) An endorsement purporting to be only an endorsement of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

408.304(3) (3) An endorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the endorsement is on a separate document, until delivery of both the document and the certificate.

408.304(4) (4) If a security certificate in registered form has been delivered to a purchaser without a necessary endorsement, the purchaser may become a protected purchaser only when the endorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

408.304(5) (5) An endorsement 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.

408.304(6) (6) Unless otherwise agreed, a person making an endorsement assumes only the obligations provided in s. 408.108 and not an obligation that the security will be honored by the issuer.

408.304 History History: 1997 a. 297.

408.305 408.305 Instruction.

408.305(1) (1) 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.

408.305(2) (2) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by s. 408.108 and not an obligation that the security will be honored by the issuer.

408.305 History History: 1997 a. 297.

408.306 408.306 Effect of guaranteeing signature, endorsement or instruction.

408.306(1) (1) A person who guarantees a signature of an endorser of a security certificate warrants that at the time of signing:

408.306(1)(a) (a) The signature was genuine;

408.306(1)(b) (b) The signer was an appropriate person to endorse, or, if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

408.306(1)(c) (c) The signer had legal capacity to sign.

408.306(2) (2) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing:

408.306(2)(a) (a) The signature was genuine;

408.306(2)(b) (b) 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

408.306(2)(c) (c) The signer had legal capacity to sign.

408.306(3) (3) A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under sub. (2) and also warrants that at the time the instruction is presented to the issuer:

408.306(3)(a) (a) The person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

408.306(3)(b) (b) 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.

408.306(4) (4) A guarantor under subs. (1) and (2) or a special guarantor under sub. (3) does not otherwise warrant the rightfulness of the transfer.

408.306(5) (5) A person who guarantees an endorsement of a security certificate makes the warranties of a signature guarantor under sub. (1) and also warrants the rightfulness of the transfer in all respects.

408.306(6) (6) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under sub. (3) and also warrants the rightfulness of the transfer in all respects.

408.306(7) (7) An issuer may not require a special guaranty of signature, a guaranty of endorsement or a guaranty of instruction as a condition to registration of transfer.

408.306(8) (8) 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 endorser or originator of an instruction whose signature, endorsement 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.

408.306 History History: 1997 a. 297.

408.307 408.307 Purchaser’s right to requisites for registration of transfer. 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 transfer 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.

408.307 History History: 1997 a. 297.

subch. IV of ch. 408 SUBCHAPTER IV

REGISTRATION

408.401 408.401 Duty of issuer to register transfer.

408.401(1) (1) 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, the issuer shall register the transfer as requested if:

408.401(1)(a) (a) Under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name;

408.401(1)(b) (b) The endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

408.401(1)(c) (c) Reasonable assurance is given that the endorsement or instruction is genuine and authorized under s. 408.402;

408.401(1)(d) (d) Any applicable law relating to the collection of taxes has been complied with;

408.401(1)(e) (e) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with s. 408.204;

408.401(1)(f) (f) A demand that the issuer not register transfer has not become effective under s. 408.403, or the issuer has complied with s. 408.403 (2) but no legal process or indemnity bond is obtained as provided in s. 408.403 (4); and

408.401(1)(g) (g) The transfer is in fact rightful or is to a protected purchaser.

408.401(2) (2) If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person’s principal for loss resulting from unreasonable delay in registration or failure or refusal to register the transfer.

408.401 History History: 1997 a. 297.

408.402 408.402 Assurance that endorsement or instruction is effective.

408.402(1) (1) In this section:

408.402(1)(a) (a) “Guaranty of the signature” means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.

408.402(1)(b) (b) “Appropriate evidence of appointment or incumbency” means:

408.402(1)(b)1. 1. In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within 60 days before the date of presentation for transfer; or

408.402(1)(b)2. 2. 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 an issuer to be responsible or, in the absence of that document or certificate, other evidence that the issuer reasonably considers appropriate.

408.402(1m) (1m) An issuer may require the following assurance that each necessary endorsement or each instruction is genuine and authorized:

408.402(1m)(a) (a) In all cases, a guaranty of the signature of the person making an endorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;

408.402(1m)(b) (b) If the endorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;

408.402(1m)(c) (c) If the endorsement is made or the instruction is originated by a fiduciary pursuant to s. 408.107 (1) (d) or (e), appropriate evidence of appointment or incumbency;

408.402(1m)(d) (d) If there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

408.402(1m)(e) (e) If the endorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.

408.402(2) (2) An issuer may elect to require reasonable assurance beyond that specified in this section.

408.402 History History: 1997 a. 297.

408.403 408.403 Demand that issuer not register transfer.

408.403(1) (1) A person who is an appropriate person to make an endorsement 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.

408.403(2) (2) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security after a demand that the issuer not register transfer has become effective, the issuer shall promptly communicate to the person who initiated the demand at the address provided in the demand and to the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer, a notification stating that:

408.403(2)(a) (a) The certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;

408.403(2)(b) (b) A demand that the issuer not register transfer had previously been received; and

408.403(2)(c) (c) 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.

408.403(3) (3) The period described in sub. (2) (c) may not exceed 30 days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.

408.403(4) (4) An issuer is not liable to a person who initiated a demand that the issuer not register transfer for any loss the person suffers as a result of registration of a transfer pursuant to an effective endorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer’s communication, either:

408.403(4)(a) (a) Obtain an appropriate restraining order, injunction or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or

408.403(4)(b) (b) File with the issuer an indemnity bond, sufficient in the issuer’s judgment to protect the issuer and any transfer agent, registrar or other agent of the issuer involved from any loss it or they may suffer by refusing to register the transfer.