2018 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 8 - Investment Securities
Section 55-8-401 - Duty of issuer to register transfer.

(a) 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:

(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 (Section 55-8-402 NMSA 1978);

(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 55-8-204 NMSA 1978;

(6) a demand that the issuer not register transfer has not become effective under Section 55-8-403 NMSA 1978, or the issuer has complied with Section 55-8-403(b) NMSA 1978 but no legal process or indemnity bond is obtained as provided in Section 55-8-403(d) NMSA 1978; 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 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.

History: 1978 Comp., § 55-8-401, enacted by Laws 1996, ch. 47, § 38.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. This section states the duty of the issuer to register transfers. A duty exists only if certain preconditions exist. If any of the preconditions do not exist, there is no duty to register transfer. If an indorsement on a security certificate is a forgery, there is no duty. If an instruction to transfer an uncertificated security is not originated by an appropriate person, there is no duty. If there has not been compliance with applicable tax laws, there is no duty. If a security certificate is properly indorsed but nevertheless the transfer is in fact wrongful, there is no duty unless the transfer is to a protected purchaser (and the other preconditions exist).

This section does not constitute a mandate that the issuer must establish that all preconditions are met before the issuer registers a transfer. The issuer may waive the reasonable assurances specified in paragraph (a)(3). If it has confidence in the responsibility of the persons requesting transfer, it may ignore questions of compliance with tax laws. Although an issuer has no duty if the transfer is wrongful, the issuer has no duty to inquire into adverse claims, see Section 8-404 [55-8-404 NMSA 1978].

2. By subsection (b) the person entitled to registration may not only compel it but may hold the issuer liable in damages for unreasonable delay.

3. Section 8-201(c) [55-8-201 1978] provides that with respect to registration of transfer, "issuer" means the person on whose behalf transfer books are maintained. Transfer agents, registrars or the like within the scope of their respective functions have rights and duties under this Part similar to those of the issuer. See Section 8-407 [55-8-407 1978].

"Appropriate person" Section 8-107 [55-8-107 NMSA 1978]

"Certificated security" Section 8-102(a)(4) [55-8-102 NMSA 1978]

"Genuine" Section 1-201(18) [55-1-201 NMSA 1978]

"Indorsement" Section 8-102(a)(11)

"Instruction" Section 8-102(a)(12)

"Issuer" Section 8-201 [55-8-201 NMSA 1978]

"Protected purchaser" Section 8-303 [55-8-303 NMSA 1978]

"Registered form" Section 8-102(a)(13)

"Uncertificated security" Section 8-102(a)(18)

Repeals and reenactments. — Laws 1996, ch. 47, § 38, repealed former 55-8-401 NMSA 1978, as amended by Laws 1987, ch. 248, § 39, and enacted a new section, effective May 15, 1996.

Purchaser. — Securities clearing firm which credited shares to a securities firm before it actually received the shares performed more than a purely intermediary function and was a purchaser under former Section 55-8-401 NMSA 1978. Broadcort Capital Corp. v. Summa Med. Corp., 972 F.2d 1183 (10th Cir. 1992).

Action for conversion allowed. — An action for conversion is not foreclosed where a plaintiff also sues under former Section 55-8-401 NMSA 1978. Broadcort Capital Corp. v. Summa Med. Corp., 972 F.2d 1183 (10th Cir. 1992).

Standing. — Securities clearing firm had standing under former Section 55-8-401 NMSA 1978 as a principal of the company forwarding the stock certificate for registration of transfer, because the firm remained responsible to its customers for delivering the shares of stock since its account was debited for these shares. Broadcort Capital Corp. v. Summa Med. Corp., 972 F.2d 1183 (10th Cir. 1992).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Commercial Code § 110 et seq.

Transfer on corporate books as requisite of gift of stock, 38 A.L.R. 1366.

Failure to enter transfer of stock on books of corporation as affecting liability of transferor, 45 A.L.R. 137, 104 A.L.R. 638.

Corporation's refusal to issue, convert or transfer stock as conversion, 54 A.L.R. 1157.

Right of corporation to refuse to register transfer of stock because of stockholder's indebtedness to it, where transfer is by operation of law, 65 A.L.R. 220.

Necessity of delivery of stock certificate to complete valid gift of stock, 99 A.L.R. 1077, 23 A.L.R. 1171.

Assumption of payment or guarantee of corporation's indebtedness as condition of transfer of its stock, 103 A.L.R. 1417.

Right of pledgee of corporate stock to transfer of stock on books of company, 116 A.L.R. 571.

Corporation's knowledge or suspicion of conflicting rights, 139 A.L.R. 273, 75 A.L.R.2d 746.

Rights, duties and liability of corporation in connection with stock of infants or incompetents, 3 A.L.R.2d 881.

Rights, duties and liability in connection with transfer of stock of decedent, 7 A.L.R.2d 1240.

Remedy for refusal of corporation or its agent to register or effectuate transfer of stock, 22 A.L.R.2d 12.

Transfer on corporate books as sufficient for gift of stock, 6 A.L.R.4th 250.

Lis pendens in suit to compel stock transfer, 48 A.L.R.4th 731.

11 C.J.S. Bonds § 15; 18 C.J.S. Corporations § 272; 81A C.J.S. States § 186.