§ 8.8A-202. Issuer's responsibility and defenses; notice of defect or defense.
(a) Even against a purchaser for value and without notice, the terms of acertificated security include terms stated on the certificate and terms madepart 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 notconflict with terms stated on the certificate. A reference under thissubsection does not of itself charge a purchaser for value with notice of adefect going to the validity of the security, even if the certificateexpressly states that a person accepting it admits notice. The terms of anuncertificated security include those stated in any instrument, indenture, ordocument 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 notvalid:
(1) A security other than one issued by a government or governmentalsubdivision, agency, or instrumentality, even though issued with a defectgoing to its validity, is valid in the hands of a purchaser for value andwithout notice of the particular defect unless the defect involves aviolation of a constitutional provision. In that case, the security is validin the hands of a purchaser for value and without notice of the defect, otherthan one who takes by original issue.
(2) Paragraph (1) applies to an issuer that is a government or governmentalsubdivision, agency, or instrumentality only if there has been substantialcompliance with the legal requirements governing the issue or the issuer hasreceived a substantial consideration for the issue as a whole or for theparticular security and a stated purpose of the issue is one for which theissuer has power to borrow money or issue the security.
(c) Except as otherwise provided in § 8.8A-205, lack of genuineness of acertificated security is a complete defense, even against a purchaser forvalue and without notice.
(d) All other defenses of the issuer of a security, including nondelivery andconditional delivery of a certificated security, are ineffective against apurchaser for value who has taken the certificated security without notice ofthe particular defense.
(e) This section does not affect the right of a party to cancel a contractfor a security "when, as and if issued" or "when distributed" in theevent of a material change in the character of the security that is thesubject of the contract or in the plan or arrangement pursuant to which thesecurity is to be issued or distributed.
(f) If a security is held by a securities intermediary against whom anentitlement holder has a security entitlement with respect to the security,the issuer may not assert any defense that the issuer could not assert if theentitlement holder held the security directly.
§ 8.8A-202. Issuer's responsibility and defenses; notice of defect or defense.
(a) Even against a purchaser for value and without notice, the terms of acertificated security include terms stated on the certificate and terms madepart 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 notconflict with terms stated on the certificate. A reference under thissubsection does not of itself charge a purchaser for value with notice of adefect going to the validity of the security, even if the certificateexpressly states that a person accepting it admits notice. The terms of anuncertificated security include those stated in any instrument, indenture, ordocument 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 notvalid:
(1) A security other than one issued by a government or governmentalsubdivision, agency, or instrumentality, even though issued with a defectgoing to its validity, is valid in the hands of a purchaser for value andwithout notice of the particular defect unless the defect involves aviolation of a constitutional provision. In that case, the security is validin the hands of a purchaser for value and without notice of the defect, otherthan one who takes by original issue.
(2) Paragraph (1) applies to an issuer that is a government or governmentalsubdivision, agency, or instrumentality only if there has been substantialcompliance with the legal requirements governing the issue or the issuer hasreceived a substantial consideration for the issue as a whole or for theparticular security and a stated purpose of the issue is one for which theissuer has power to borrow money or issue the security.
(c) Except as otherwise provided in § 8.8A-205, lack of genuineness of acertificated security is a complete defense, even against a purchaser forvalue and without notice.
(d) All other defenses of the issuer of a security, including nondelivery andconditional delivery of a certificated security, are ineffective against apurchaser for value who has taken the certificated security without notice ofthe particular defense.
(e) This section does not affect the right of a party to cancel a contractfor a security "when, as and if issued" or "when distributed" in theevent of a material change in the character of the security that is thesubject of the contract or in the plan or arrangement pursuant to which thesecurity is to be issued or distributed.
(f) If a security is held by a securities intermediary against whom anentitlement holder has a security entitlement with respect to the security,the issuer may not assert any defense that the issuer could not assert if theentitlement holder held the security directly.
§ 8.8A-202. Issuer's responsibility and defenses; notice of defect or defense.
(a) Even against a purchaser for value and without notice, the terms of acertificated security include terms stated on the certificate and terms madepart 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 notconflict with terms stated on the certificate. A reference under thissubsection does not of itself charge a purchaser for value with notice of adefect going to the validity of the security, even if the certificateexpressly states that a person accepting it admits notice. The terms of anuncertificated security include those stated in any instrument, indenture, ordocument 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 notvalid:
(1) A security other than one issued by a government or governmentalsubdivision, agency, or instrumentality, even though issued with a defectgoing to its validity, is valid in the hands of a purchaser for value andwithout notice of the particular defect unless the defect involves aviolation of a constitutional provision. In that case, the security is validin the hands of a purchaser for value and without notice of the defect, otherthan one who takes by original issue.
(2) Paragraph (1) applies to an issuer that is a government or governmentalsubdivision, agency, or instrumentality only if there has been substantialcompliance with the legal requirements governing the issue or the issuer hasreceived a substantial consideration for the issue as a whole or for theparticular security and a stated purpose of the issue is one for which theissuer has power to borrow money or issue the security.
(c) Except as otherwise provided in § 8.8A-205, lack of genuineness of acertificated security is a complete defense, even against a purchaser forvalue and without notice.
(d) All other defenses of the issuer of a security, including nondelivery andconditional delivery of a certificated security, are ineffective against apurchaser for value who has taken the certificated security without notice ofthe particular defense.
(e) This section does not affect the right of a party to cancel a contractfor a security "when, as and if issued" or "when distributed" in theevent of a material change in the character of the security that is thesubject of the contract or in the plan or arrangement pursuant to which thesecurity is to be issued or distributed.
(f) If a security is held by a securities intermediary against whom anentitlement holder has a security entitlement with respect to the security,the issuer may not assert any defense that the issuer could not assert if theentitlement holder held the security directly.
