SB 300: "An Act relating to the Uniform Commercial Code, primarily to investment securities; amending Rule 8(d), Alaska Rules of Civil Procedure; and providing for an effective date."
00SENATE BILL NO. 300 01 "An Act relating to the Uniform Commercial Code, primarily to investment 02 securities; amending Rule 8(d), Alaska Rules of Civil Procedure; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 45.01.105(b) is amended to read: 06 (b) Where one of the following provisions of the code specifies the applicable 07 law, that provision governs and a contrary agreement is effective only to the extent 08 permitted by the law, including the conflict of laws rules, so specified: 09 (1) AS 45.02.402 (rights of creditors against sold goods); 10 (2) AS 45.04.102 (applicability of the chapter on bank deposits and 11 collections); 12 (3) AS 45.08.110 [AS 45.08.106] (applicability of the chapter on 13 investment securities); 14 (4) AS 45.09.103 (perfection provisions of the chapter on secured
01 transactions); 02 (5) AS 45.12.105 and 45.12.106 (applicability of the chapter on leases); 03 (6) AS 45.14 (funds transfers). 04 * Sec. 2. AS 45.01.206(b) is amended to read: 05 (b) Subsection (a) of this section does not apply to contracts for the sale of 06 goods (AS 45.02.201) or securities (AS 45.08.113) [(AS 45.08.319)], or to security 07 agreements (AS 45.09.203). 08 * Sec. 3. AS 45.04.104(a)(6) is amended to read: 09 (6) "documentary draft" means a draft to be presented for acceptance 10 or payment if specified documents, certificated securities under AS 45.08.102, [OR] 11 instructions for uncertificated securities under AS 45.08.102 [AS 45.08.308], or other 12 certificates, statements, or the like are to be received by the drawee or other payor 13 before acceptance or payment of the draft; 14 * Sec. 4. AS 45.05.114(b) is amended to read: 15 (b) Unless otherwise agreed, if documents appear on their face to comply with 16 the terms of a credit but a required document does not in fact conform to the 17 warranties made on negotiation or transfer of a document of title (AS 45.07.507) or 18 of a certificated security (AS 45.08.108) [(AS 45.08.306)] or is forged or fraudulent 19 or there is fraud in the transaction [;] 20 (1) the issuer must honor the draft or demand for payment if honor is 21 demanded by a negotiating bank or other holder of the draft or demand that [WHICH] 22 has taken the draft or demand under the credit and under circumstances that [WHICH] 23 would make it a holder in due course (AS 45.03.302) and in an appropriate case would 24 make it a person to whom a document of title has been duly negotiated (AS 45.07.502) 25 or a bona fide purchaser of a certificated security (AS 45.08.302); and 26 (2) in all other cases as against its customer, an issuer acting in good 27 faith may honor the draft or demand for payment despite notification from the 28 customer of fraud, forgery, or other defect not apparent on the face of the documents, 29 but a court of appropriate jurisdiction may enjoin this honor. 30 * Sec. 5. AS 45.08.102 is repealed and reenacted to read: 31 Sec. 45.08.102. DEFINITIONS. (a) In this chapter,
01 (1) "adverse claim" means a claim that a claimant has a property 02 interest in a financial asset and that it is a violation of the rights of the claimant for 03 another person to hold, transfer, or deal with the financial asset; 04 (2) "bearer form," as applied to a certificated security, means a form 05 in which the security is payable to the bearer of the security certificate according to 06 its terms but not by reason of an endorsement; 07 (3) "broker" means a person defined as a broker or dealer under the 08 federal securities laws, but without excluding a bank acting in that capacity; 09 (4) "certificated security" means a security that is represented by a 10 certificate; 11 (5) "clearing corporation" means 12 (A) a person who is registered as a "clearing agency" under the 13 federal securities laws; 14 (B) a federal reserve bank; or 15 (C) any other person who provides clearance or settlement 16 services with respect to financial assets that would require it to register as a 17 clearing agency under the federal securities laws but for an exclusion or 18 exemption from the registration requirement, if its activities as a clearing 19 corporation, including promulgation of rules, are subject to regulation by a 20 federal or state governmental authority; 21 (6) "communicate" means to 22 (A) send a signed writing; or 23 (B) transmit information by any mechanism agreed upon by the 24 persons transmitting and receiving the information; 25 (7) "endorsement" means a signature that alone or accompanied by 26 other words is made on a security certificate in registered form or on a separate 27 document for the purpose of assigning, transferring, or redeeming the security or 28 granting a power to assign, transfer, or redeem it; 29 (8) "entitlement holder" means a person identified in the records of a 30 securities intermediary as the person having a security entitlement against the securities 31 intermediary; if a person acquires a security entitlement by virtue of
01 AS 45.08.501(a)(2) or (3), that person is the entitlement holder; 02 (9) "entitlement order" means a notification communicated to a 03 securities intermediary directing transfer or redemption of a financial asset to which 04 the entitlement holder has a security entitlement; 05 (10) "financial asset," except as otherwise provided in AS 45.08.103, 06 means 07 (A) a security; 08 (B) an obligation of a person or a share, participation, or other 09 interest in a person or in property or an enterprise of a person, that is, or is of 10 a type, dealt in or traded on financial markets, or that is recognized in any area 11 in which it is issued or dealt in as a medium for investment; or 12 (C) any property that is held by a securities intermediary for 13 another person in a securities account if the securities intermediary has 14 expressly agreed with the other person that the property is to be treated as a 15 financial asset under this chapter; as context requires, the term means either the 16 interest itself or the means by which a person's claim to it is evidenced, 17 including a certificated or uncertificated security, a security certificate, or a 18 security entitlement; 19 (11) "good faith," for purposes of the obligation of good faith in the 20 performance or enforcement of contracts or duties within this chapter, means honesty 21 in fact and the observance of reasonable commercial standards of fair dealing; 22 (12) "instruction" means a notification communicated to the issuer of 23 an uncertificated security that directs that the transfer of the security be registered or 24 that the security be redeemed; 25 (13) "registered form," as applied to a certificated security, means a 26 form in which 27 (A) the security certificate specifies a person entitled to the 28 security; and 29 (B) a transfer of the security may be registered upon books 30 maintained for that purpose by or on behalf of the issuer, or the security 31 certificate states that a transfer of the security may be registered upon books
01 maintained for that purpose by or on behalf of the issuer; 02 (14) "securities intermediary" means 03 (A) a clearing corporation; or 04 (B) a person, including a bank or broker, that in the ordinary 05 course of its business maintains securities accounts for others and is acting in 06 that capacity; 07 (15) "security," except as otherwise provided in AS 45.08.103, means 08 an obligation of an issuer or a share, participation, or other interest in an issuer or in 09 property or an enterprise of an issuer, if the obligation, share, participation, or interest 10 (A) is represented by a security certificate in bearer or 11 registered form, or if the transfer of the obligation, share, participation, or 12 interest may be registered upon books maintained for that purpose by or on 13 behalf of the issuer; 14 (B) is one of a class or series or by its terms is divisible into 15 a class or series of shares, participations, obligations, or interests; and 16 (C) is, or is of a type, dealt in or traded on securities exchanges 17 or securities markets, or is a medium for investment and the terms of the 18 obligation, share, participation, or interest expressly provide that the obligation, 19 share, participation, or interest is a security governed by this chapter; 20 (16) "security certificate" means a certificate representing a security; 21 (17) "security entitlement" means the rights and property interest of an 22 entitlement holder with respect to a financial asset specified in AS 45.08.501 - 23 45.08.511; 24 (18) "uncertificated security" means a security that is not represented 25 by a certificate. 26 (b) Other definitions applying to this chapter and the sections in which they 27 appear are 28 (1) "appropriate person" (AS 45.08.107); 29 (2) "control" (AS 45.08.106); 30 (3) "delivery" (AS 45.08.301); 31 (4) "investment company security" (AS 45.08.103);
01 (5) "issuer" (AS 45.08.201); 02 (6) "overissue" (AS 45.08.210); 03 (7) "protected purchaser" (AS 45.08.303); 04 (8) "securities account" (AS 45.08.501). 05 (c) In addition, AS 45.01 contains general definitions and principles of 06 construction and interpretation applicable throughout this chapter. 07 (d) The characterization of a person, business, or transaction for purposes of 08 this chapter does not determine the characterization of the person, business, or 09 transaction for purposes of another law, regulation, or rule. 10 * Sec. 6. AS 45.08.103 is repealed and reenacted to read: 11 Sec. 45.08.103. RULES FOR DETERMINING WHETHER CERTAIN 12 OBLIGATIONS AND INTERESTS ARE SECURITIES OR FINANCIAL ASSETS. 13 (a) A share or similar equity interest issued by a corporation, business trust, joint 14 stock company, or similar entity is a security. 15 (b) An investment company security is a security. In this section, "investment 16 company security" means a share or similar equity interest issued by an entity that is 17 registered as an investment company under federal investment company laws, an 18 interest in a unit investment trust that is registered as an investment company under 19 federal investment company laws, or a face-amount certificate issued by a face-amount 20 certificate company that is registered as an investment company under federal 21 investment company laws. Investment company security does not include an insurance 22 policy or endowment policy or annuity contract issued by an insurance company. 23 (c) An interest in a partnership or limited liability company is not a security 24 unless it is dealt in or traded on securities exchanges or in securities markets, its terms 25 expressly provide that it is a security governed by this chapter, or it is an investment 26 company security. However, an interest in a partnership or limited liability company 27 is a financial asset if it is held in a securities account. 28 (d) A writing that is a security certificate is governed by this chapter and not 29 by AS 45.03, even though it also meets the requirements of AS 45.03. However, a 30 negotiable instrument governed by AS 45.03 is a financial asset if it is held in a 31 securities account.
01 (e) An option or similar obligation issued by a clearing corporation to its 02 participants is not a security but is a financial asset. 03 (f) A commodity contract, as defined in AS 45.09.115, is not a security or a 04 financial asset. 05 * Sec. 7. AS 45.08.104 is repealed and reenacted to read: 06 Sec. 45.08.104. ACQUISITION OF SECURITY OR FINANCIAL ASSET OR 07 INTEREST IN SECURITY OR FINANCIAL ASSET. (a) A person acquires a 08 security or an interest in a security under this chapter if the person 09 (1) is a purchaser to whom a security is delivered under AS 45.08.301; 10 or 11 (2) acquires a security entitlement to the security under AS 45.08.501. 12 (b) A person acquires a financial asset other than a security or an interest in 13 a financial asset other than a security, under this chapter if the person acquires a 14 security entitlement to the financial asset. 15 (c) A person who acquires a security entitlement to a security or other 16 financial asset has the rights specified in AS 45.08.501 - 45.08.511, but is a purchaser 17 of a security, security entitlement, or other financial asset held by the securities 18 intermediary only to the extent provided in AS 45.08.503. 19 (d) Unless the context shows that a different meaning is intended, a person 20 who is required by other law, regulation, rule, or agreement to transfer, deliver, 21 present, surrender, exchange, or otherwise put in the possession of another person a 22 security or financial asset satisfies that requirement by causing the other person to 23 acquire an interest in the security or financial asset under (a) or (b) of this section. 24 * Sec. 8. AS 45.08.105 is repealed and reenacted to read: 25 Sec. 45.08.105. NOTICE OF ADVERSE CLAIM. (a) A person has notice 26 of an adverse claim if 27 (1) the person knows of the adverse claim; 28 (2) the person is aware of facts sufficient to indicate that there is a 29 significant probability that the adverse claim exists and deliberately avoids information 30 that would establish the existence of the adverse claim; or 31 (3) the person has a duty, imposed by statute or regulation, to
01 investigate whether an adverse claim exists, and the investigation required would 02 establish the existence of the adverse claim. 03 (b) Having knowledge that a financial asset or interest in a financial asset is 04 or has been transferred by a representative does not impose a duty of inquiry into the 05 rightfulness of a transaction and is not notice of an adverse claim. However, a person 06 who knows that a representative has transferred a financial asset or interest in a 07 financial asset in a transaction that is, or whose proceeds are being used, for the 08 individual benefit of the representative or otherwise in breach of duty has notice of an 09 adverse claim. 10 (c) An act or event that creates a right to immediate performance of the 11 principal obligation represented by a security certificate or sets a date on or after which 12 the certificate is to be presented or surrendered for redemption or exchange does not 13 itself constitute notice of an adverse claim except in the case of a transfer more than 14 (1) one year after a date set for presentment or surrender for 15 redemption or exchange; or 16 (2) six months after a date set for payment of money against 17 presentation or surrender of the certificate, if money was available for payment on that 18 date. 19 (d) A purchaser of a certificated security has notice of an adverse claim if the 20 security certificate 21 (1) whether in bearer or registered form, has been endorsed "for 22 collection" or "for surrender" or for some other purpose not involving transfer; or 23 (2) is in bearer form and has on it an unambiguous statement that it is 24 the property of a person other than the transferor, but the mere writing of a name on 25 the certificate does not constitute this statement. 26 (e) Filing of a financing statement under AS 45.09 is not notice of an adverse 27 claim to a financial asset. 28 * Sec. 9. AS 45.08.106 is repealed and reenacted to read: 29 Sec. 45.08.106. CONTROL. (a) A purchaser has control of a certificated 30 security in bearer form if the certificated security is delivered to the purchaser. 31 (b) A purchaser has control of a certificated security in registered form if the
01 certificated security is delivered to the purchaser, and the certificate is 02 (1) endorsed to the purchaser or in blank by an effective endorsement; 03 or 04 (2) registered in the name of the purchaser, upon original issue or 05 registration of transfer by the issuer. 06 (c) A purchaser has control of an uncertificated security if 07 (1) the uncertificated security is delivered to the purchaser; or 08 (2) the issuer has agreed that the issuer will comply with instructions 09 originated by the purchaser without further consent by the registered owner. 10 (d) A purchaser has control of a security entitlement if 11 (1) the purchaser becomes the entitlement holder; or 12 (2) the securities intermediary has agreed that the securities 13 intermediary will comply with entitlement orders originated by the purchaser without 14 further consent by the entitlement holder. 15 (e) If an interest in a security entitlement is granted by the entitlement holder 16 to the entitlement holder's own securities intermediary, the securities intermediary has 17 control. 18 (f) A purchaser who has satisfied the requirements of (c)(2) or (d)(2) of this 19 section has control even if the registered owner in the case of (c)(2) of this section or 20 the entitlement holder in the case of (d)(2) of this section retains the right to make 21 substitutions for the uncertificated security or security entitlement, to originate 22 instructions or entitlement orders to the issuer or securities intermediary, or otherwise 23 to deal with the uncertificated security or security entitlement. 24 (g) An issuer or a securities intermediary may not enter into an agreement 25 described in (c)(2) or (d)(2) of this section without the consent of the registered owner 26 or entitlement holder, but an issuer or a securities intermediary is not required to enter 27 into an agreement even though the registered owner or entitlement holder directs the 28 issuer or securities intermediary to enter into the agreement. An issuer or securities 29 intermediary that has entered into an agreement is not required to confirm the existence 30 of the agreement to another party unless requested to do so by the registered owner or 31 entitlement holder. In this subsection, "agreement" means an agreement described in
01 (c)(2) or (d)(2) of this section. 02 * Sec. 10. AS 45.08.107 is repealed and reenacted to read: 03 Sec. 45.08.107. WHETHER ENDORSEMENT, INSTRUCTION, OR 04 ENTITLEMENT ORDER IS EFFECTIVE. (a) An endorsement, instruction, or 05 entitlement order is effective if 06 (1) it is made by the appropriate person; 07 (2) it is made by a person who has power under the law of agency to 08 transfer the security or financial asset on behalf of the appropriate person, including, 09 in the case of an instruction or entitlement order, a person who has control under 10 AS 45.08.106(c)(2) or (d)(2); or 11 (3) the appropriate person has ratified it or is otherwise precluded from 12 asserting its ineffectiveness. 13 (b) An endorsement, instruction, or entitlement order made by a representative 14 is effective even if 15 (1) the representative has failed to comply with a controlling instrument 16 or with the law of the state having jurisdiction of the representative relationship, 17 including a law requiring the representative to obtain court approval of the transaction; 18 or 19 (2) the representative's action in making the endorsement, instruction, 20 or entitlement order or using the proceeds of the transaction is otherwise a breach of 21 duty. 22 (c) If a security is registered in the name of or specially endorsed to a person 23 described as a representative, or if a securities account is maintained in the name of 24 a person described as a representative, an endorsement, instruction, or entitlement order 25 made by the person is effective even though the person no longer serves in the 26 described capacity. 27 (d) Effectiveness of an endorsement, instruction, or entitlement order is 28 determined as of the date the endorsement, instruction, or entitlement order is made, 29 and an endorsement, instruction, or entitlement order does not become ineffective by 30 reason of any later change of circumstances. 31 (e) In this chapter, "appropriate person" means
01 (1) with respect to an endorsement, the person specified by a security 02 certificate or by an effective special endorsement to be entitled to the security; 03 (2) with respect to an instruction, the registered owner of an 04 uncertificated security; 05 (3) with respect to an entitlement order, the entitlement holder; 06 (4) if the person designated in (1), (2), or (3) of this subsection is 07 deceased, the designated person's successor taking under other law or the designated 08 person's personal representative acting for the estate of the decedent; or 09 (5) if the person designated in (1), (2), or (3) of this subsection lacks 10 capacity, the designated person's guardian, conservator, or other similar representative 11 who has power under other law to transfer the security or financial asset. 12 * Sec. 11. AS 45.08.108 is repealed and reenacted to read: 13 Sec. 45.08.108. WARRANTIES IN DIRECT HOLDING. (a) A person who 14 transfers a certificated security to a purchaser for value warrants to the purchaser, and 15 an endorser, if the transfer is by endorsement, warrants to any subsequent purchaser, 16 that 17 (1) the certificate is genuine and has not been materially altered; 18 (2) the transferor or endorser does not know of a fact that might impair 19 the validity of the security; 20 (3) there is no adverse claim to the security; 21 (4) the transfer does not violate any restriction on transfer; 22 (5) if the transfer is by endorsement, the endorsement is made by an 23 appropriate person, or if the endorsement is by an agent, the agent has actual authority 24 to act on behalf of the appropriate person; and 25 (6) the transfer is otherwise effective and rightful. 26 (b) A person who originates an instruction for registration of transfer of an 27 uncertificated security to a purchaser for value warrants to the purchaser that 28 (1) the instruction is made by an appropriate person, or if the 29 instruction is by an agent, the agent has actual authority to act on behalf of the 30 appropriate person; 31 (2) the security is valid;
01 (3) there is no adverse claim to the security; and 02 (4) at the time the instruction is presented to the issuer, 03 (A) the purchaser will be entitled to the registration of transfer; 04 (B) the transfer will be registered by the issuer free from all 05 liens, security interests, restrictions, and claims other than those specified in the 06 instruction; 07 (C) the transfer will not violate any restriction on transfer; and 08 (D) the requested transfer will otherwise be effective and 09 rightful. 10 (c) A person who transfers an uncertificated security to a purchaser for value 11 and does not originate an instruction in connection with the transfer warrants that 12 (1) the uncertificated security is valid; 13 (2) there is no adverse claim to the security; 14 (3) the transfer does not violate any restriction on transfer; and 15 (4) the transfer is otherwise effective and rightful. 16 (d) A person who endorses a security certificate warrants to the issuer that 17 (1) there is no adverse claim to the security; and 18 (2) the endorsement is effective. 19 (e) A person who originates an instruction for registration of transfer of an 20 uncertificated security warrants to the issuer that 21 (1) the instruction is effective; and 22 (2) at the time the instruction is presented to the issuer, the purchaser 23 will be entitled to the registration of transfer. 24 (f) A person who presents a certificated security for registration of transfer or 25 for payment or exchange warrants to the issuer that the person is entitled to the 26 registration, payment, or exchange, but a purchaser for value and without notice of 27 adverse claims to whom transfer is registered warrants only that the person does not 28 have knowledge of an unauthorized signature in a necessary endorsement. 29 (g) If a person acts as agent of another in delivering a certificated security to 30 a purchaser, the identity of the principal was known to the person to whom the 31 certificate was delivered, and the certificate delivered by the agent was received by the
01 agent from the principal or received by the agent from another person at the direction 02 of the principal, the person delivering the security certificate warrants only that the 03 delivering person has authority to act for the principal and does not know of an 04 adverse claim to the certificated security. 05 (h) A secured party who redelivers a security certificate received, or after 06 payment and on order of the debtor delivers the security certificate to another person, 07 makes only the warranties of an agent under (g) of this section. 08 (i) Except as otherwise provided in (g) of this section, a broker acting for a 09 customer makes to the issuer and a purchaser the warranties provided in (a) - (f) of 10 this section. A broker that delivers a security certificate to its customer, or causes its 11 customer to be registered as the owner of an uncertificated security, makes to the 12 customer the warranties provided in (a) or (b) of this section, and has the rights and 13 privileges of a purchaser under this section. The warranties of and in favor of the 14 broker acting as an agent are in addition to applicable warranties given by and in favor 15 of the customer. 16 * Sec. 12. AS 45.08 is amended by adding new sections to article 1 to read: 17 Sec. 45.08.109. WARRANTIES IN INDIRECT HOLDING. (a) A person 18 who originates an entitlement order to a securities intermediary warrants to the 19 securities intermediary that 20 (1) the entitlement order is made by an appropriate person, or if the 21 entitlement order is by an agent, the agent has actual authority to act on behalf of the 22 appropriate person; and 23 (2) there is no adverse claim to the security entitlement. 24 (b) A person who delivers a security certificate to a securities intermediary for 25 credit to a securities account or originates an instruction with respect to an 26 uncertificated security directing that the uncertificated security be credited to a 27 securities account makes to the securities intermediary the warranties specified in 28 AS 45.08.108(a) or (b). 29 (c) If a securities intermediary delivers a security certificate to its entitlement 30 holder or causes its entitlement holder to be registered as the owner of an 31 uncertificated security, the securities intermediary makes to the entitlement holder the
01 warranties specified in AS 45.08.108(a) or (b). 02 Sec. 45.08.110. APPLICABILITY; CHOICE OF LAW. (a) The local law of 03 the issuer's jurisdiction, as specified in (f) of this section, governs 04 (1) the validity of a security; 05 (2) the rights and duties of the issuer with respect to registration of 06 transfer; 07 (3) the effectiveness of registration of transfer by the issuer; 08 (4) whether the issuer owes a duty to an adverse claimant to a security; 09 and 10 (5) whether an adverse claim can be asserted against a person to whom 11 transfer of a certificated or uncertificated security is registered or a person who obtains 12 control of an uncertificated security. 13 (b) The local law of the securities intermediary's jurisdiction, as specified in 14 (e) of this section, governs 15 (1) acquisition of a security entitlement from the securities 16 intermediary; 17 (2) the rights and duties of the securities intermediary and entitlement 18 holder arising out of a security entitlement; 19 (3) whether the securities intermediary owes a duty to an adverse 20 claimant to a security entitlement; and 21 (4) whether an adverse claim can be asserted against a person who 22 acquires a security entitlement from the securities intermediary or a person who 23 purchases a security entitlement or interest in a security entitlement from an 24 entitlement holder. 25 (c) The local law of the jurisdiction in which a security certificate is located 26 at the time of delivery governs whether an adverse claim can be asserted against a 27 person to whom the security certificate is delivered. 28 (d) The following rules determine a securities intermediary's jurisdiction for 29 purposes of this section: 30 (1) if an agreement between the securities intermediary and its 31 entitlement holder specifies that it is governed by the law of a particular jurisdiction,
01 that jurisdiction is the securities intermediary's jurisdiction; 02 (2) if an agreement between the securities intermediary and its 03 entitlement holder does not specify the governing law as provided in (1) of this 04 subsection, but expressly specifies that the securities account is maintained at an office 05 in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction; 06 (3) if an agreement between the securities intermediary and its 07 entitlement holder does not specify a jurisdiction as provided in (1) or (2) of this 08 subsection, the securities intermediary's jurisdiction is the jurisdiction in which is 09 located the office identified in an account statement as the office serving the 10 entitlement holder's account; 11 (4) if an agreement between the securities intermediary and its 12 entitlement holder does not specify a jurisdiction as provided in (1) or (2) of this 13 subsection and an account statement does not identify an office serving the entitlement 14 holder's account as provided in (3) of this subsection, the securities intermediary's 15 jurisdiction is the jurisdiction in which is located the chief executive office of the 16 securities intermediary. 17 (e) A securities intermediary's jurisdiction is not determined by the physical 18 location of certificates representing financial assets, by the jurisdiction in which is 19 organized the issuer of the financial asset with respect to which an entitlement holder 20 has a security entitlement, or by the location of facilities for data processing or other 21 record keeping concerning the account. 22 (f) In this chapter, "issuer's jurisdiction" means the jurisdiction under which 23 the issuer of the security is organized or, if permitted by the law of that jurisdiction, 24 the law of another jurisdiction specified by the issuer. An issuer organized under the 25 law of this state may specify the law of another jurisdiction as the law governing the 26 matters specified in (a)(2) - (5) of this section. 27 Sec. 45.08.111. CLEARING CORPORATION RULES. A rule adopted by a 28 clearing corporation governing rights and obligations among the clearing corporation 29 and its participants in the clearing corporation is effective even if the rule conflicts 30 with this chapter and affects another party who does not consent to the rule. 31 Sec. 45.08.112. CREDITOR'S LEGAL PROCESS. (a) The interest of a
01 debtor in a certificated security may be reached by a creditor only by actual seizure 02 of the security certificate by the officer making the attachment or levy, except as 03 otherwise provided in (d) of this section. However, a certificated security for which 04 the certificate has been surrendered to the issuer may be reached by a creditor by legal 05 process upon the issuer. 06 (b) The interest of a debtor in an uncertificated security may be reached by a 07 creditor only by legal process upon the issuer at its chief executive office in the United 08 States, except as otherwise provided in (d) of this section. 09 (c) The interest of a debtor in a security entitlement may be reached by a 10 creditor only by legal process upon the securities intermediary with whom the debtor's 11 securities account is maintained, except as otherwise provided in (d) of this section. 12 (d) The interest of a debtor in a certificated security for which the certificate 13 is in the possession of a secured party, or in an uncertificated security registered in the 14 name of a secured party, or a security entitlement maintained in the name of a secured 15 party, may be reached by a creditor by legal process upon the secured party. 16 (e) A creditor whose debtor is the owner of a certificated security, 17 uncertificated security, or security entitlement is entitled to aid from a court of 18 competent jurisdiction, by injunction or otherwise, in reaching the certificated security, 19 uncertificated security, or security entitlement or in satisfying the claim by means 20 allowed at law or in equity in regard to property that cannot readily be reached by 21 other legal process. 22 Sec. 45.08.113. STATUTE OF FRAUDS INAPPLICABLE. A contract or 23 modification of a contract for the sale or purchase of a security is enforceable whether 24 or not there is a writing signed or record authenticated by a party against whom 25 enforcement is sought, even if the contract or modification is not capable of 26 performance within one year of its making. 27 Sec. 45.08.114. EVIDENTIARY RULES CONCERNING CERTIFICATED 28 SECURITIES. The following rules apply in an action on a certificated security against 29 the issuer: 30 (1) unless specifically denied in the pleadings, each signature on a 31 security certificate or in a necessary endorsement is admitted;
01 (2) if the effectiveness of a signature is put in issue, the burden of 02 establishing effectiveness is on the party claiming under the signature, but the signature 03 is presumed to be genuine or authorized; 04 (3) if signatures on a security certificate are admitted or established, 05 production of the certificate entitles a holder to recover on it unless the defendant 06 establishes a defense or a defect going to the validity of the security; 07 (4) if it is shown that a defense or defect exists, the plaintiff has the 08 burden of establishing that the plaintiff or some person under whom the plaintiff 09 claims is a person against whom the defense or defect cannot be asserted. 10 Sec. 45.08.115. SECURITIES INTERMEDIARY AND OTHERS NOT 11 LIABLE TO ADVERSE CLAIMANT. A securities intermediary that has transferred 12 a financial asset under an effective entitlement order, or a broker or other agent or 13 bailee that has dealt with a financial asset at the direction of its customer or principal, 14 is not liable to a person having an adverse claim to the financial asset, unless the 15 securities intermediary, broker, other agent, or bailee 16 (1) took the action after it had been served with an injunction, 17 restraining order, or other legal process enjoining it from doing so, issued by a court 18 of competent jurisdiction, and had a reasonable opportunity to act on the injunction, 19 restraining order, or other legal process; 20 (2) acted in collusion with the wrongdoer in violating the rights of the 21 adverse claimant; or 22 (3) in the case of a security certificate that has been stolen, acted with 23 notice of the adverse claim. 24 Sec. 45.08.116. SECURITIES INTERMEDIARY AS PURCHASER FOR 25 VALUE. A securities intermediary that receives a financial asset and establishes a 26 security entitlement to the financial asset in favor of an entitlement holder is a 27 purchaser for value of the financial asset. A securities intermediary that acquires a 28 security entitlement to a financial asset from another securities intermediary acquires 29 the security entitlement for value if the securities intermediary acquiring the security 30 entitlement establishes a security entitlement to the financial asset in favor of an 31 entitlement holder.
01 * Sec. 13. AS 45.08.201 is amended to read: 02 Sec. 45.08.201. "ISSUER." (a) With respect to obligations on or defenses to 03 a security, "issuer" includes a person who 04 (1) places or authorizes the placing of the person's name on a 05 [CERTIFICATED] security certificate, other [(OTHERWISE] than as authenticating 06 trustee, registrar, transfer agent, or the like, [)] to evidence [THAT IT REPRESENTS] 07 a share, participation, or other interest in the person's property or in an enterprise, or 08 to evidence the person's duty to perform an obligation represented by the certificate 09 [CERTIFICATED SECURITY]; 10 (2) creates shares, participations, or other interests in that person's 11 property or in an enterprise, or undertakes obligations, if the [WHICH] shares, 12 participations, interests, or obligations are uncertificated securities; 13 (3) directly or indirectly creates fractional interests in the person's 14 rights or property, if the [WHICH] fractional interests are represented by security 15 certificates [CERTIFICATED SECURITIES]; or 16 (4) becomes responsible for, or in place of, another person described 17 as an issuer in this section. 18 (b) With respect to obligations on or defenses to a security, a guarantor is an 19 issuer to the extent of the guarantor's guarantee [GUARANTY], whether or not the 20 guarantor's [PERSON'S] obligation is noted on a [CERTIFICATED] security 21 certificate [OR ON STATEMENTS OF UNCERTIFICATED SECURITIES SENT 22 UNDER AS 45.08.408]. 23 (c) With respect to registration of a transfer, [PLEDGE, OR RELEASE 24 (AS 45.08.401 - 45.08.406),] "issuer" means a person on whose behalf transfer books 25 are maintained. 26 * Sec. 14. AS 45.08.202(a) is repealed and reenacted to read: 27 (a) Even against a purchaser for value and without notice, the terms of a 28 certificated security include terms stated on the certificate and terms made part of the 29 security by reference on the certificate to another instrument, indenture, or document 30 or to a constitution, statute, ordinance, rule, regulation, order, or the like, to the extent 31 the terms referred to do not conflict with terms stated on the certificate. A reference
01 under this subsection does not of itself charge a purchaser for value with notice of a 02 defect going to the validity of the security, even if the certificate expressly states that 03 a person accepting it admits notice. The terms of an uncertificated security include 04 those stated in an instrument, indenture, or document or in a constitution, statute, 05 ordinance, rule, regulation, order, or the like, under which the security is issued. 06 * Sec. 15. AS 45.08.202(b) is repealed and reenacted to read: 07 (b) The following rules apply if an issuer asserts that a security is not valid: 08 (1) a security other than one issued by a government or governmental 09 subdivision, agency, or instrumentality, even though issued with a defect going to its 10 validity, is valid in the hands of a purchaser for value and without notice of the 11 particular defect unless the defect involves a violation of a constitutional provision. In 12 that case, the security is valid in the hands of a purchaser for value and without notice 13 of the defect, other than one who takes by original issue; 14 (2) paragraph (1) of this subsection applies to an issuer that is a 15 government or governmental subdivision, agency, or instrumentality only if there has 16 been substantial compliance with the legal requirements governing the issue or the 17 issuer has received a substantial consideration for the issue as a whole or for the 18 particular security and a stated purpose of the issue is one for which the issuer has 19 power to borrow money or issue the security. 20 * Sec. 16. AS 45.08.202(c) is amended to read: 21 (c) Except as otherwise provided in [THE CASE OF CERTAIN 22 UNAUTHORIZED SIGNATURES (]AS 45.08.205 [)], lack of genuineness of a 23 certificated security [OR AN INITIAL TRANSACTION STATEMENT] is a complete 24 defense, even against a purchaser for value and without notice. 25 * Sec. 17. AS 45.08.202(d) is amended to read: 26 (d) All other defenses of the issuer of a [CERTIFICATED OR 27 UNCERTIFICATED] security, including nondelivery and conditional delivery of a 28 certificated security, are ineffective against a purchaser for value who has taken the 29 certificated security without notice of the particular defense. 30 * Sec. 18. AS 45.08.202(e) is amended to read: 31 (e) This section does not affect [NOTHING IN THIS SECTION AFFECTS]
01 the right of a party to cancel a contract for a security [A] "when, as, and if issued" 02 or a "when distributed" [CONTRACT TO CANCEL THE CONTRACT] in the event 03 of a material change in the character of the security that is the subject of the contract 04 or in the plan or arrangement under which the security is to be issued or distributed. 05 * Sec. 19. AS 45.08.202 is amended by adding a new subsection to read: 06 (f) If a security is held by a securities intermediary against whom an 07 entitlement holder has a security entitlement with respect to the security, the issuer 08 may not assert a defense that the issuer could not assert if the entitlement holder held 09 the security directly. 10 * Sec. 20. AS 45.08.203(a) is amended to read: 11 (a) After an act or event, other than a call that has been revoked, creating 12 a right to immediate performance of the principal obligation represented by a 13 certificated security or setting [THAT SETS] a date on or after which the security is 14 to be presented or surrendered for redemption or exchange, a purchaser is charged with 15 notice of any defect in the security's issue or defense of the issuer, if the act or event 16 (1) requires [THE ACT OR EVENT IS ONE REQUIRING] the 17 payment of money, the delivery of certificated securities, the registration of transfer 18 of uncertificated securities, or any of these on presentation or surrender of the 19 [CERTIFICATED] security certificate, the money [FUNDS] or securities are 20 available on the date set for payment or exchange, and the purchaser takes the security 21 more than one year after that date; or [AND] 22 (2) [THE ACT OR EVENT] is not covered by (1) of this subsection 23 and the purchaser takes the security more than two years after the date set for 24 surrender or presentation or the date on which performance became due. 25 * Sec. 21. AS 45.08.204 is amended to read: 26 Sec. 45.08.204. EFFECT OF ISSUER'S RESTRICTION [RESTRICTIONS] 27 ON TRANSFER. A restriction on transfer of a security imposed by the issuer, even 28 though otherwise lawful, is ineffective against a person without [ACTUAL] 29 knowledge of the restriction [IT] unless [(1)] the security 30 (1) is certificated and the restriction is noted conspicuously on the 31 security certificate; or
01 (2) [THE SECURITY] is uncertificated and [A NOTATION OF THE 02 RESTRICTION IS CONTAINED IN THE INITIAL TRANSACTION STATEMENT 03 SENT TO THE PERSON OR, IF THAT PERSON'S INTEREST IS TRANSFERRED 04 TO THAT PERSON OTHER THAN BY REGISTRATION OF TRANSFER, 05 PLEDGE, OR RELEASE, THE INITIAL TRANSACTION STATEMENT SENT TO] 06 the registered owner has been notified of the restriction [OR THE REGISTERED 07 PLEDGEE]. 08 * Sec. 22. AS 45.08.205 is amended to read: 09 Sec. 45.08.205. EFFECT OF UNAUTHORIZED SIGNATURE ON 10 [CERTIFICATED] SECURITY CERTIFICATE [OR INITIAL TRANSACTION 11 STATEMENT]. An unauthorized signature placed on a [CERTIFICATED] security 12 certificate before or in the course of issue [OR PLACED ON AN INITIAL 13 TRANSACTION STATEMENT] is ineffective, but the signature is effective in favor 14 of a purchaser for value of the certificated security [OR A PURCHASER FOR 15 VALUE OF AN UNCERTIFICATED SECURITY TO WHOM THE INITIAL 16 TRANSACTION STATEMENT HAS BEEN SENT,] if the purchaser is without notice 17 of the lack of authority and the signing has been done by 18 (1) an authenticating trustee, registrar, transfer agent, or other person 19 entrusted by the issuer with the signing of the security certificate or [,] of similar 20 security certificates, [SECURITIES, OR OF INITIAL TRANSACTION 21 STATEMENTS] or the immediate preparation for signing of any of them; or 22 (2) an employee of the issuer, or of a person listed in (1) of this 23 section [ANY OF THE FOREGOING], entrusted with responsible handling of the 24 security certificate [OR INITIAL TRANSACTION STATEMENT]. 25 * Sec. 23. AS 45.08.206(a) is amended to read: 26 (a) If a [CERTIFICATED] security certificate contains the signatures 27 necessary to its issue or transfer but is incomplete in another respect, 28 (1) a person may complete it by filling in the blanks as authorized; and 29 (2) even if [THOUGH] the blanks are incorrectly filled in, the security 30 certificate as completed is enforceable by a purchaser who takes it for value and 31 without notice of the incorrectness.
01 * Sec. 24. AS 45.08.206(b) is amended to read: 02 (b) A complete [CERTIFICATED] security certificate that has been 03 improperly altered, even if [THOUGH] fraudulently, remains enforceable, but only 04 according to its original terms. 05 * Sec. 25. AS 45.08.207(a) is amended to read: 06 (a) Before due presentment for registration of transfer of a certificated security 07 in registered form or of an instruction requesting registration of transfer of an 08 uncertificated security, the issuer or indenture trustee may treat the registered owner 09 as the person exclusively entitled to vote, to receive notifications, and otherwise to 10 exercise all the rights and powers of an owner. 11 * Sec. 26. AS 45.08.207(g) is amended to read: 12 (g) This [NOTHING IN THIS] chapter does not affect [AFFECTS] the 13 liability of the registered owner of a security for calls, assessments, or the like. 14 * Sec. 27. AS 45.08.208 is amended to read: 15 Sec. 45.08.208. EFFECT OF SIGNATURE OF AUTHENTICATING 16 TRUSTEE, REGISTRAR, OR TRANSFER AGENT. (a) A person signing 17 [PLACING THE PERSON'S SIGNATURE UPON] a [CERTIFICATED] security 18 certificate [OR AN INITIAL TRANSACTION STATEMENT] as authenticating 19 trustee, registrar, transfer agent, or the like, warrants to a purchaser for value of the 20 certificated security [OR A PURCHASER FOR VALUE OF AN UNCERTIFICATED 21 SECURITY TO WHOM THE INITIAL TRANSACTION STATEMENT HAS BEEN 22 SENT], if the purchaser is without notice of the particular defect, that 23 (1) the certificate [CERTIFICATED SECURITY OR INITIAL 24 TRANSACTION STATEMENT] is genuine; 25 (2) the person's own participation in the issue [OR REGISTRATION] 26 of the [TRANSFER, PLEDGE, OR RELEASE OF THE] security is within the 27 person's capacity and within the scope of the authority received by the person from 28 the issuer; and 29 (3) the person has reasonable grounds to believe that the certificated 30 security is in the form and within the amount the issuer is authorized to issue. 31 (b) Unless otherwise agreed, a person signing under (a) of this section [BY
01 SO PLACING THE PERSON'S SIGNATURE] does not assume responsibility for the 02 validity of the security in other respects. 03 * Sec. 28. AS 45.08 is amended by adding new sections to article 2 to read: 04 Sec. 45.08.209. ISSUER'S LIEN. A lien in favor of an issuer upon a 05 certificated security is valid against a purchaser only if the right of the issuer to the 06 lien is noted conspicuously on the security certificate. 07 Sec. 45.08.210. OVERISSUE. (a) Except as otherwise provided in (b) and 08 (c) of this section, the provisions of AS 45.08.201 - 45.08.210 that validate a security 09 or compel its issue or reissue do not apply to the extent that validation, issue, or 10 reissue would result in overissue. 11 (b) If an identical security not constituting an overissue is reasonably available 12 for purchase, a person entitled to issue or validation may compel the issuer to purchase 13 the security and deliver it if certificated or register its transfer if uncertificated, against 14 surrender of any security certificate the person holds. 15 (c) If a security is not reasonably available for purchase, a person entitled to 16 issue or validation may recover from the issuer the price the person or the last 17 purchaser for value paid for it with interest from the date of the person's demand. 18 (d) In this section, "overissue" means the issue of securities in excess of the 19 amount the issuer has corporate power to issue, but an overissue does not occur if 20 appropriate action has cured the overissue. 21 * Sec. 29. AS 45.08.301 is repealed and reenacted to read: 22 Sec. 45.08.301. DELIVERY. (a) Delivery of a certificated security to a 23 purchaser occurs when 24 (1) the purchaser acquires possession of the security certificate; 25 (2) another person, other than a securities intermediary, either acquires 26 possession of the security certificate on behalf of the purchaser or, having previously 27 acquired possession of the certificate, acknowledges that it holds for the purchaser; or 28 (3) a securities intermediary acting on behalf of the purchaser acquires 29 possession of the security certificate, only if the certificate is in registered form and 30 has been specially endorsed to the purchaser by an effective endorsement. 31 (b) Delivery of an uncertificated security to a purchaser occurs when
01 (1) the issuer registers the purchaser as the registered owner, upon 02 original issue or registration of transfer; or 03 (2) another person, other than a securities intermediary, either becomes 04 the registered owner of the uncertificated security on behalf of the purchaser or, having 05 previously become the registered owner, acknowledges that it holds for the purchaser. 06 * Sec. 30. AS 45.08.302 is repealed and reenacted to read: 07 Sec. 45.08.302. RIGHTS OF PURCHASER. (a) Except as otherwise provided 08 in (b) and (c) of this section, upon delivery of a certificated or uncertificated security 09 to a purchaser, the purchaser acquires all rights in the security that the transferor had 10 or had power to transfer. 11 (b) A purchaser of a limited interest acquires rights only to the extent of the 12 interest purchased. 13 (c) A purchaser of a certificated security who as a previous holder had notice 14 of an adverse claim does not improve its position by taking from a protected 15 purchaser. 16 * Sec. 31. AS 45.08.303 is repealed and reenacted to read: 17 Sec. 45.08.303. PROTECTED PURCHASER. (a) In this chapter, "protected 18 purchaser" means a purchaser of a certificated or uncertificated security, or of an 19 interest in the security, who gives value, does not have notice of an adverse claim to 20 the security, and obtains control of the certificated or uncertificated security. 21 (b) In addition to acquiring the rights of a purchaser, a protected purchaser 22 also acquires the interest in the security free of any adverse claim. 23 * Sec. 32. AS 45.08.304 is repealed and reenacted to read: 24 Sec. 45.08.304. ENDORSEMENT. (a) An endorsement may be in blank or 25 special. An endorsement in blank includes an endorsement to bearer. A special 26 endorsement specifies to whom a security is to be transferred or who has power to 27 transfer it. A holder may convert a blank endorsement to a special endorsement. 28 (b) An endorsement purporting to be only of part of a security certificate 29 representing units intended by the issuer to be separately transferable is effective to the 30 extent of the endorsement. 31 (c) An endorsement, whether special or in blank, does not constitute a transfer
01 until delivery of the certificate on which it appears or, if the endorsement is on a 02 separate document, until delivery of both the document and the certificate. 03 (d) If a security certificate in registered form has been delivered to a purchaser 04 without a necessary endorsement, the purchaser may become a protected purchaser 05 only when the endorsement is supplied. However, against a transferor, a transfer is 06 complete upon delivery and the purchaser has a specifically enforceable right to have 07 any necessary endorsement supplied. 08 (e) An endorsement of a security certificate in bearer form may give notice of 09 an adverse claim to the certificate, but it does not otherwise affect a right to 10 registration that the holder possesses. 11 (f) Unless otherwise agreed, a person making an endorsement assumes only 12 the obligations provided in AS 45.08.108 and not an obligation that the security will 13 be honored by the issuer. 14 * Sec. 33. AS 45.08.305 is repealed and reenacted to read: 15 Sec. 45.08.305. INSTRUCTION. (a) If an instruction has been originated by 16 an appropriate person but is incomplete in another respect, any person may complete 17 the instruction as authorized and the issuer may rely on the instruction as completed, 18 even though the instruction has been completed incorrectly. 19 (b) Unless otherwise agreed, a person initiating an instruction assumes only 20 the obligations imposed by AS 45.08.108 and not an obligation that the security will 21 be honored by the issuer. 22 * Sec. 34. AS 45.08.306 is repealed and reenacted to read: 23 Sec. 45.08.306. EFFECT OF GUARANTEEING SIGNATURE, 24 ENDORSEMENT, OR INSTRUCTION. (a) A person who guarantees a signature of 25 an endorser of a security certificate warrants that at the time of signing 26 (1) the signature was genuine; 27 (2) the signer was an appropriate person to endorse, or if the signature 28 is by an agent, the agent had actual authority to act on behalf of the appropriate 29 person; and 30 (3) the signer had legal capacity to sign. 31 (b) A person who guarantees a signature of the originator of an instruction
01 warrants that at the time of signing 02 (1) the signature was genuine; 03 (2) the signer was an appropriate person to originate the instruction, or 04 if the signature is by an agent, the agent had actual authority to act on behalf of the 05 appropriate person, if the person specified in the instruction as the registered owner 06 was, in fact, the registered owner, but the signature guarantor does not make a 07 warranty that the person specified in the instruction as the registered owner was, in 08 fact, the registered owner; and 09 (3) the signer had legal capacity to sign. 10 (c) A person who specially guarantees the signature of an originator of an 11 instruction makes the warranties of a signature guarantor under (b) of this section and 12 also warrants that at the time the instruction is presented to the issuer 13 (1) the person specified in the instruction as the registered owner of the 14 uncertificated security will be the registered owner; and 15 (2) the transfer of the uncertificated security requested in the instruction 16 will be registered by the issuer free from all liens, security interests, restrictions, and 17 claims other than those specified in the instruction. 18 (d) A guarantor under (a) and (b) of this section or a special guarantor under 19 (c) of this section does not otherwise warrant the rightfulness of the transfer. 20 (e) A person who guarantees an endorsement of a security certificate makes 21 the warranties of a signature guarantor under (a) of this section and also warrants the 22 rightfulness of the transfer in all respects. 23 (f) A person who guarantees an instruction requesting the transfer of an 24 uncertificated security makes the warranties of a special signature guarantor under (c) 25 of this section and also warrants the rightfulness of the transfer in all respects. 26 (g) An issuer may not require a special guarantee of signature, a guarantee of 27 endorsement, or a guarantee of instruction as a condition to registration of transfer. 28 (h) The warranties under this section are made to a person taking or dealing 29 with the security in reliance on the guarantee, and the guarantor is liable to the person 30 for loss resulting from their breach. An endorser or originator of an instruction whose 31 signature, endorsement, or instruction has been guaranteed is liable to a guarantor for
01 loss suffered by the guarantor as a result of breach of the warranties of the guarantor. 02 * Sec. 35. AS 45.08.307 is repealed and reenacted to read: 03 Sec. 45.08.307. PURCHASER'S RIGHT TO REQUISITES FOR 04 REGISTRATION OF TRANSFER. Unless otherwise agreed, the transferor of a 05 security on due demand shall supply the purchaser with proof of authority to transfer 06 or with any other requisite necessary to obtain registration of the transfer of the 07 security, but if the transfer is not for value, a transferor does not need to comply unless 08 the purchaser pays the necessary expenses. If the transferor fails within a reasonable 09 time to comply with the demand, the purchaser may reject or rescind the transfer. 10 * Sec. 36. AS 45.08.401(a) is repealed and reenacted to read: 11 (a) If a certificated security in registered form is presented to the issuer with 12 a request to register transfer or an instruction is presented to the issuer with a request 13 to register transfer of an uncertificated security, the issuer shall register the transfer as 14 requested if 15 (1) under the terms of the security the person seeking registration of 16 transfer is eligible to have the security registered in the person's name; 17 (2) the endorsement or instruction is made by the appropriate person 18 or by an agent who has actual authority to act on behalf of the appropriate person; 19 (3) reasonable assurance is given under AS 45.08.402 that the 20 endorsement or instruction is genuine and authorized; 21 (4) applicable law relating to the collection of taxes has been complied 22 with; 23 (5) the transfer does not violate a restriction on transfer imposed by the 24 issuer under AS 45.08.204; 25 (6) a demand that the issuer not register transfer has not become 26 effective under AS 45.08.403, or the issuer has complied with AS 45.08.403(b) but 27 legal process or indemnity bond is not obtained under AS 45.08.403(d); and 28 (7) the transfer is in fact rightful or is to a protected purchaser. 29 * Sec. 37. AS 45.08.401(b) is amended to read: 30 (b) If an issuer is under a duty to register a transfer [, PLEDGE, OR 31 RELEASE] of a security, the issuer is [ALSO] liable to a [THE] person presenting a
01 certificated security or an instruction for registration or to the [THAT] person's 02 principal for loss resulting from an unreasonable delay in registration or [FROM] 03 failure or refusal to register the transfer [, PLEDGE, OR RELEASE]. 04 * Sec. 38. AS 45.08.402(a) is amended to read: 05 (a) An [THE] issuer may require the following assurance that each necessary 06 endorsement [OF A CERTIFICATED SECURITY] or each instruction 07 [(AS 45.08.308)] is genuine and authorized [EFFECTIVE]: 08 (1) in all cases, a guarantee of the signature [(AS 45.08.312(a)OR (b))] 09 of the person making an endorsement [ENDORSING A CERTIFICATED 10 SECURITY] or originating an instruction including, in the case of an instruction, [A 11 WARRANTY OF THE TAXPAYER IDENTIFICATION NUMBER OR, IN THE 12 ABSENCE OF ONE, OTHER] reasonable assurance of identity; 13 (2) if the endorsement is made or the instruction is originated by an 14 agent, appropriate assurance of actual authority to sign; 15 (3) if the endorsement is made or the instruction is originated by a 16 fiduciary under AS 45.08.107(e)(4) or (5), appropriate evidence of appointment or 17 incumbency; 18 (4) if there is more than one fiduciary, reasonable assurance that all 19 who are required to sign have done so; and 20 (5) if the endorsement is made or the instruction is originated by a 21 person not covered by another provision of this subsection [ANY OF THE 22 FOREGOING], assurance appropriate to the case corresponding as nearly as may be 23 to the provisions of this subsection [FOREGOING]. 24 * Sec. 39. AS 45.08.402(c) is amended to read: 25 (c) In this section, 26 (1) "appropriate ["APPROPRIATE] evidence of appointment or 27 incumbency" [IN (a) OF THIS SECTION] means 28 (A) [(1)] in the case of a fiduciary appointed or qualified by a 29 court, a certificate issued by or under the direction or supervision of the 30 [THAT] court or an officer of the court and dated within 60 days before the 31 date of presentation for transfer [, PLEDGE, OR RELEASE]; or
01 (B) [(2)] in any other case, a copy of a document showing the 02 appointment or a certificate issued by or on behalf of a person reasonably 03 believed by the issuer to be responsible or, in the absence of that [SUCH A] 04 document or certificate, other evidence [REASONABLY CONSIDERED BY] 05 the issuer reasonably considers to be appropriate; 06 (2) "guarantee of the signature" means a guarantee signed by or 07 on behalf of a person reasonably believed by the issuer to be responsible; an 08 [THE] issuer may adopt standards with respect to responsibility [THE EVIDENCE,] 09 if the standards are not manifestly unreasonable [; THE ISSUER IS NOT CHARGED 10 WITH NOTICE OF THE CONTENTS OF A DOCUMENT OBTAINED UNDER 11 THIS PARAGRAPH EXCEPT TO THE EXTENT THAT THE CONTENTS RELATE 12 DIRECTLY TO THE APPOINTMENT OR INCUMBENCY]. 13 * Sec. 40. AS 45.08.402(d) is amended to read: 14 (d) An [THE] issuer may elect to require reasonable assurance beyond that 15 specified in this section [, BUT IF IT DOES SO AND, FOR A PURPOSE OTHER 16 THAN THAT SPECIFIED IN (c)(2) OF THIS SECTION, BOTH REQUIRES AND 17 OBTAINS A COPY OF A WILL, TRUST, INDENTURE, ARTICLES OF 18 COPARTNERSHIP, BYLAWS, OR OTHER CONTROLLING INSTRUMENT, IT IS 19 CHARGED WITH NOTICE OF ALL MATTERS CONTAINED THEREIN 20 AFFECTING THE TRANSFER, PLEDGE, OR RELEASE]. 21 * Sec. 41. AS 45.08.403 is repealed and reenacted to read: 22 Sec. 45.08.403. DEMAND THAT ISSUER NOT REGISTER TRANSFER. 23 (a) A person who is an appropriate person to make an endorsement or originate an 24 instruction may demand that the issuer not register transfer of a security by 25 communicating to the issuer a notification that identifies the registered owner and the 26 issue of which the security is a part and provides an address for communications 27 directed to the person making the demand. The demand is effective only if it is 28 received by the issuer at a time and in a manner affording the issuer reasonable 29 opportunity to act on it. 30 (b) If a certificated security in registered form is presented to an issuer with 31 a request to register transfer or an instruction is presented to an issuer with a request
01 to register transfer of an uncertificated security after a demand that the issuer not 02 register transfer has become effective, the issuer shall promptly communicate to the 03 person who initiated the demand at the address provided in the demand and to the 04 person who presented the security for registration of transfer or initiated the instruction 05 requesting registration of transfer a notification stating that 06 (1) the certificated security has been presented for registration of 07 transfer or the instruction for registration of transfer of the uncertificated security has 08 been received; 09 (2) a demand that the issuer not register transfer had previously been 10 received; and 11 (3) the issuer will withhold registration of transfer for a period of time 12 stated in the notification in order to provide the person who initiated the demand an 13 opportunity to obtain legal process or an indemnity bond. 14 (c) The period described in (b)(3) of this section may not exceed 30 days after 15 the date of communication of the notification. A shorter period may be specified by 16 the issuer if it is not manifestly unreasonable. 17 (d) An issuer is not liable to a person who initiated a demand that the issuer 18 not register transfer for loss the person suffers as a result of registration of a transfer 19 under an effective endorsement or instruction if the person who initiated the demand 20 does not, within the time stated in the issuer's communication, either 21 (1) obtain an appropriate restraining order, injunction, or other process 22 from a court of competent jurisdiction enjoining the issuer from registering the 23 transfer; or 24 (2) file with the issuer an indemnity bond, sufficient in the issuer's 25 judgment to protect the issuer and any transfer agent, registrar, or other agent of the 26 issuer involved from a loss the issuer, transfer agent, registrar, or other agent of the 27 issuer may suffer by refusing to register the transfer. 28 (e) This section does not relieve an issuer from liability for registering transfer 29 under an endorsement or instruction that was not effective. 30 * Sec. 42. AS 45.08.404 is repealed and reenacted to read: 31 Sec. 45.08.404. WRONGFUL REGISTRATION. (a) Except as otherwise
01 provided in AS 45.08.406, an issuer is liable for wrongful registration of transfer if the 02 issuer has registered a transfer of a security to a person not entitled to the security and 03 the transfer was registered 04 (1) under an ineffective endorsement or instruction; 05 (2) after a demand that the issuer not register transfer became effective 06 under AS 45.08.403(a) and the issuer did not comply with AS 45.08.403(b); 07 (3) after the issuer had been served with an injunction, restraining 08 order, or other legal process enjoining it from registering the transfer, issued by a court 09 of competent jurisdiction, and the issuer had a reasonable opportunity to act on the 10 injunction, restraining order, or other legal process; or 11 (4) by an issuer acting in collusion with the wrongdoer. 12 (b) An issuer that is liable for wrongful registration of transfer under (a) of this 13 section on demand shall provide the person entitled to the security with a like 14 certificated or uncertificated security, and payments or distributions that the person did 15 not receive as a result of the wrongful registration. If an overissue would result, the 16 issuer's liability to provide the person with a like security is governed by 17 AS 45.08.210. 18 (c) Except as otherwise provided in (a) of this section or in a law relating to 19 the collection of taxes, an issuer is not liable to an owner or other person suffering loss 20 as a result of the registration of a transfer of a security if registration was made under 21 an effective endorsement or instruction. 22 * Sec. 43. AS 45.08.405(b) is amended to read: 23 (b) If the owner of a certificated security, whether in registered or bearer 24 form, claims that the certificate [SECURITY] has been lost, destroyed, or wrongfully 25 taken, the issuer shall issue a new certificate [SECURITY IN PLACE OF THE 26 ORIGINAL SECURITY,] if the owner 27 (1) so requests before the issuer has notice that the certificate 28 [SECURITY] has been acquired by a protected [BONA FIDE] purchaser; 29 (2) files with the issuer a sufficient indemnity bond; and 30 (3) satisfies [ANY] other reasonable requirements imposed by the 31 issuer.
01 * Sec. 44. AS 45.08.405(c) is repealed and reenacted to read: 02 ( c) If, after the issue of a new security certificate, a protected purchaser of 03 the original certificate presents the original certificate for registration of transfer, the 04 issuer shall register the transfer unless an overissue would result. In that case, the 05 issuer's liability is governed by AS 45.08.210. In addition to rights on the indemnity 06 bond, an issuer may recover the new certificate from a person to whom it was issued 07 or a person taking under that person, except a protected purchaser. 08 * Sec. 45. AS 45.08.406 is repealed and reenacted to read: 09 Sec. 45.08.406. OBLIGATION TO NOTIFY ISSUER OF LOST, 10 DESTROYED, OR WRONGFULLY TAKEN SECURITY CERTIFICATE. If a 11 security certificate has been lost, apparently destroyed, or wrongfully taken, the owner 12 fails to notify the issuer of the loss, destruction, or taking within a reasonable time 13 after the owner has notice of the loss, destruction, or taking, and the issuer registers 14 a transfer of the security before receiving notification, the owner may not assert against 15 the issuer a claim for registering the transfer under AS 45.08.404 or a claim to a new 16 security certificate under AS 45.08.405. 17 * Sec. 46. AS 45.08.407 is repealed and reenacted to read: 18 Sec. 45.08.407. AUTHENTICATING TRUSTEE, TRANSFER AGENT, AND 19 REGISTRAR. A person acting as authenticating trustee, transfer agent, registrar, or 20 other agent for an issuer in the registration of a transfer of its securities, in the issue 21 of new security certificates or uncertificated securities, or in the cancellation of 22 surrendered security certificates has the same obligation to the holder or owner of a 23 certificated or uncertificated security with regard to the particular functions performed 24 as the issuer has in regard to those functions. 25 * Sec. 47. AS 45.08 is amended by adding new sections to read: 26 ARTICLE 5. SECURITY ENTITLEMENTS. 27 Sec. 45.08.501. ACQUISITION OF SECURITY ENTITLEMENT FROM 28 SECURITIES INTERMEDIARY; SECURITIES ACCOUNT. (a) Except as otherwise 29 provided in (b) and (c) of this section, a person acquires a security entitlement if a 30 securities intermediary 31 (1) indicates by book entry that a financial asset has been credited to
01 the person's securities account; 02 (2) receives a financial asset from the person or acquires a financial 03 asset for the person and, in either case, accepts the asset for credit to the person's 04 securities account; or 05 (3) becomes obligated under another law, regulation, or rule to credit 06 a financial asset to the person's securities account. 07 (b) If a condition of (a) of this section has been met, a person has a security 08 entitlement even if the securities intermediary does not itself hold the financial asset. 09 (c ) If a securities intermediary holds a financial asset for another person, and 10 the financial asset is registered in the name of, payable to the order of, or specially 11 endorsed to the other person, and has not been endorsed to the securities intermediary 12 or in blank, the other person is treated as holding the financial asset directly rather 13 than as having a security entitlement with respect to the financial asset. 14 (d) Issuance of a security is not establishment of a security entitlement. 15 (e) In this chapter, "securities account" means an account to which a financial 16 asset is or may be credited in accordance with an agreement under which the person 17 maintaining the account undertakes to treat the person for whom the account is 18 maintained as entitled to exercise the rights that comprise the financial asset. 19 Sec. 45.08.502. ASSERTION OF ADVERSE CLAIM AGAINST 20 ENTITLEMENT HOLDER. An action based on an adverse claim to a financial asset, 21 whether framed in conversion, replevin, constructive trust, equitable lien, or other 22 theory, may not be asserted against a person who acquires a security entitlement under 23 AS 45.08.501 for value and without notice of the adverse claim. 24 Sec. 45.08.503. PROPERTY INTEREST OF ENTITLEMENT HOLDER IN 25 FINANCIAL ASSET HELD BY SECURITIES INTERMEDIARY. (a) To the extent 26 necessary for a securities intermediary to satisfy all security entitlements with respect 27 to a particular financial asset, all interests in that financial asset held by the securities 28 intermediary are held by the securities intermediary for the entitlement holders, are not 29 property of the securities intermediary, and are not subject to claims of creditors of the 30 securities intermediary, except as otherwise provided in AS 45.08.511. 31 (b) An entitlement holder's property interest with respect to a particular
01 financial asset under (a) of this section is a pro rata property interest in all interests 02 in that financial asset held by the securities intermediary, without regard to the time 03 the entitlement holder acquired the security entitlement or the time the securities 04 intermediary acquired the interest in that financial asset. 05 (c) An entitlement holder's property interest with respect to a particular 06 financial asset under (a) of this section may not be enforced against the securities 07 intermediary unless the interest is enforced by exercising the entitlement holder's rights 08 under AS 45.08.505 - 45.08.508. 09 (d) An entitlement holder's property interest with respect to a particular 10 financial asset under (a) of this section may not be enforced against a purchaser of the 11 financial asset or of an interest in the financial asset, unless 12 (1) insolvency proceedings have been initiated by or against the 13 securities intermediary; 14 (2) the securities intermediary does not have sufficient interests in the 15 financial asset to satisfy the security entitlements of all of the intermediary's 16 entitlement holders to that financial asset; 17 (3) the securities intermediary violated the intermediary's obligations 18 under AS 45.08.504 by transferring the financial asset or interest in the financial asset 19 to the purchaser; and 20 (4) the purchaser is not protected under (f) of this section. 21 (e) Under (d) of this section, the trustee or other liquidator, acting on behalf 22 of all entitlement holders having security entitlements with respect to a particular 23 financial asset, may recover the financial asset, or the interest in the financial asset, 24 from the purchaser; if the trustee or other liquidator elects not to pursue this right of 25 recovery, an entitlement holder whose security entitlement remains unsatisfied has the 26 right to recover the entitlement holder's interest in the financial asset from the 27 purchaser. 28 (f) An action based on the entitlement holder's property interest with respect 29 to a particular financial asset under (a) of this section, whether framed in conversion, 30 replevin, constructive trust, equitable lien, or other theory, may not be asserted against 31 a purchaser of a financial asset or an interest in a financial asset who gives value,
01 obtains control, and does not act in collusion with the securities intermediary in 02 violating the securities intermediary's obligations under AS 45.08.504. 03 Sec. 45.08.504. DUTY OF SECURITIES INTERMEDIARY TO MAINTAIN 04 FINANCIAL ASSET. (a) A securities intermediary shall promptly obtain and 05 maintain a financial asset in a quantity corresponding to the aggregate of all security 06 entitlements the securities intermediary has established in favor of the securities 07 intermediary's entitlement holders with respect to that financial asset. The securities 08 intermediary may maintain those financial assets directly or through one or more other 09 securities intermediaries. 10 (b) Except to the extent otherwise agreed by its entitlement holder, a securities 11 intermediary may not grant a security interest in a financial asset the securities 12 intermediary is obligated to maintain under (a) of this section. 13 (c) A securities intermediary satisfies the duty in (a) of this section if 14 (1) the securities intermediary acts with respect to the duty as agreed 15 upon by the entitlement holder and the securities intermediary; or 16 (2) in the absence of agreement, the securities intermediary exercises 17 due care in accordance with reasonable commercial standards to obtain and maintain 18 the financial asset. 19 (d) This section does not apply to a clearing corporation if the clearing 20 corporation is the obligor of an option or similar obligation to which the entitlement 21 holders of the clearing corporation have security entitlements. 22 Sec. 45.08.505. DUTY OF SECURITIES INTERMEDIARY WITH RESPECT 23 TO PAYMENTS AND DISTRIBUTIONS. (a) A securities intermediary shall take 24 action to obtain a payment or distribution made by the issuer of a financial asset. A 25 securities intermediary satisfies the duty if 26 (1) the securities intermediary acts with respect to the duty as agreed 27 upon by the entitlement holder and the securities intermediary; or 28 (2) in the absence of agreement, the securities intermediary exercises 29 due care in accordance with reasonable commercial standards to attempt to obtain the 30 payment or distribution. 31 (b) A securities intermediary is obligated to the securities intermediary's
01 entitlement holder for a payment or distribution made by the issuer of a financial asset 02 if the payment or distribution is received by the securities intermediary. 03 Sec. 45.08.506. DUTY OF SECURITIES INTERMEDIARY TO EXERCISE 04 RIGHTS AS DIRECTED BY ENTITLEMENT HOLDER. A securities intermediary 05 shall exercise rights with respect to a financial asset if directed by an entitlement 06 holder to exercise the rights. A securities intermediary satisfies the duty if 07 (1) the securities intermediary acts with respect to the duty as agreed 08 upon by the entitlement holder and the securities intermediary; or 09 (2) in the absence of agreement, the securities intermediary either 10 places the entitlement holder in a position to exercise the rights directly or exercises 11 due care in accordance with reasonable commercial standards to follow the direction 12 of the entitlement holder. 13 Sec. 45.08.507. DUTY OF SECURITIES INTERMEDIARY TO COMPLY 14 WITH ENTITLEMENT ORDER. (a) A securities intermediary shall comply with an 15 entitlement order if the entitlement order is originated by the appropriate person, the 16 securities intermediary has had reasonable opportunity to assure itself that the 17 entitlement order is genuine and authorized, and the securities intermediary has had 18 reasonable opportunity to comply with the entitlement order. A securities intermediary 19 satisfies the duty if 20 (1) the securities intermediary acts with respect to the duty as agreed 21 upon by the entitlement holder and the securities intermediary; or 22 (2) in the absence of agreement, the securities intermediary exercises 23 due care in accordance with reasonable commercial standards to comply with the 24 entitlement order. 25 (b) If a securities intermediary transfers a financial asset under an ineffective 26 entitlement order, the securities intermediary shall reestablish a security entitlement in 27 favor of the person entitled to the entitlement order, and pay or credit payments or 28 distributions that the person did not receive as a result of the wrongful transfer. If the 29 securities intermediary does not reestablish a security entitlement, the securities 30 intermediary is liable to the entitlement holder for damages. 31 Sec. 45.08.508. DUTY OF SECURITIES INTERMEDIARY TO CHANGE
01 ENTITLEMENT HOLDER'S POSITION TO OTHER FORM OF SECURITY 02 HOLDING. A securities intermediary shall act at the direction of an entitlement 03 holder to change a security entitlement into another available form of holding for 04 which the entitlement holder is eligible or to cause the financial asset to be transferred 05 to a securities account of the entitlement holder with another securities intermediary. 06 A securities intermediary satisfies the duty if 07 (1) the securities intermediary acts as agreed upon by the entitlement 08 holder and the securities intermediary; or 09 (2) in the absence of agreement, the securities intermediary exercises 10 due care in accordance with reasonable commercial standards to follow the direction 11 of the entitlement holder. 12 Sec. 45.08.509. SPECIFICATION OF DUTIES OF SECURITIES 13 INTERMEDIARY BY OTHER STATUTE, REGULATION, OR RULE; MANNER 14 OF PERFORMANCE OF DUTIES OF SECURITIES INTERMEDIARY AND 15 EXERCISE OF RIGHTS OF ENTITLEMENT HOLDER. (a) If the substance of a 16 duty imposed upon a securities intermediary by AS 45.08.504 - 45.08.508 is the 17 subject of other statute, regulation, or rule, compliance with that statute, regulation, or 18 rule satisfies the duty. 19 (b) To the extent that specific standards for the performance of the duties of 20 a securities intermediary or the exercise of the rights of an entitlement holder are not 21 specified by other statute, regulation, or rule or by agreement between the securities 22 intermediary and entitlement holder, the securities intermediary shall perform the duties 23 of the securities intermediary and the entitlement holder shall exercise the rights of the 24 entitlement holder in a commercially reasonable manner. 25 (c) The obligation of a securities intermediary to perform the duties imposed 26 by AS 45.08.504 - 45.08.508 is subject to the rights of the securities intermediary 27 (1) arising out of a security interest under a security agreement with the 28 entitlement holder or otherwise; and 29 (2) under other law, regulation, rule, or agreement to withhold 30 performance of the duties of the securities intermediary as a result of unfulfilled 31 obligations of the entitlement holder to the securities intermediary.
01 (d) AS 45.08.504 - 45.08.508 do not require a securities intermediary to take 02 action that is prohibited by other statute, regulation, or rule. 03 Sec. 45.08.510. RIGHTS OF PURCHASER OF SECURITY ENTITLEMENT 04 FROM ENTITLEMENT HOLDER. (a) An action based on an adverse claim to a 05 financial asset or security entitlement, whether framed in conversion, replevin, 06 constructive trust, equitable lien, or other theory, may not be asserted against a person 07 who purchases a security entitlement, or an interest in a security entitlement, from an 08 entitlement holder if the purchaser gives value, does not have notice of the adverse 09 claim, and obtains control. 10 (b) If an adverse claim could not have been asserted against an entitlement 11 holder under AS 45.08.502, the adverse claim cannot be asserted against a person who 12 purchases a security entitlement, or an interest in a security entitlement, from the 13 entitlement holder. 14 (c) In a case not covered by the priority rules in AS 45.09, a purchaser for 15 value of a security entitlement, or an interest in a security entitlement, who obtains 16 control has priority over a purchaser of a security entitlement, or an interest in a 17 security entitlement, who does not obtain control. Purchasers who have control rank 18 equally, except that a securities intermediary as purchaser has priority over a 19 conflicting purchaser who has control unless otherwise agreed by the securities 20 intermediary. 21 Sec. 45.08.511. PRIORITY AMONG SECURITY INTERESTS AND 22 ENTITLEMENT HOLDERS. (a) Except as otherwise provided in (b) and (c) of this 23 section, if a securities intermediary does not have sufficient interests in a particular 24 financial asset to satisfy both the securities intermediary's obligations to entitlement 25 holders who have security entitlements to that financial asset and the securities 26 intermediary's obligation to a creditor of the securities intermediary who has a security 27 interest in the financial asset, the claims of entitlement holders, other than the creditor, 28 have priority over the claim of the creditor. 29 (b) A claim of a creditor of a securities intermediary who has a security 30 interest in a financial asset held by a securities intermediary has priority over claims 31 of the securities intermediary's entitlement holders who have security entitlements with
01 respect to the financial asset if the creditor has control over the financial asset. 02 (c) If a clearing corporation does not have sufficient financial assets to satisfy 03 both the clearing corporation's obligations to entitlement holders who have security 04 entitlements with respect to a financial asset and the clearing corporation's obligation 05 to a creditor of the clearing corporation who has a security interest in the financial 06 asset, the claim of the creditor has priority over the claims of entitlement holders. 07 * Sec. 48. AS 45.09.103(f) is repealed and reenacted to read: 08 (f) With regard to investment property, 09 (1) except as otherwise provided in (5) of this subsection, during the 10 time that a security certificate is located in a jurisdiction, perfection of a security 11 interest, the effect of perfection or nonperfection, and the priority of a security interest 12 in the certificated security represented by the security certificate are governed by the 13 local law of that jurisdiction; 14 (2) except as otherwise provided in (5) of this subsection, perfection 15 of a security interest, the effect of perfection or nonperfection, and the priority of a 16 security interest in an uncertificated security are governed by the local law of the 17 issuer's jurisdiction as specified in AS 45.08.110(f); 18 (3) except as otherwise provided in (5) of this subsection, perfection 19 of a security interest, the effect of perfection or nonperfection, and the priority of a 20 security interest in a security entitlement or securities account are governed by the 21 local law of the securities intermediary's jurisdiction as specified in AS 45.08.110(f); 22 (4) except as otherwise provided in (5) of this subsection, perfection 23 of a security interest, the effect of perfection or nonperfection, and the priority of a 24 security interest in a commodity contract or commodity account are governed by the 25 local law of the commodity intermediary's jurisdiction; the following rules determine 26 a commodity intermediary's jurisdiction for purposes of this paragraph: 27 (A) if an agreement between the commodity intermediary and 28 commodity customer specifies that it is governed by the law of a particular 29 jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction; 30 (B) if an agreement between the commodity intermediary and 31 commodity customer does not specify the governing law as provided in (A) of
01 this paragraph, but expressly specifies that the commodity account is 02 maintained at an office in a particular jurisdiction, that jurisdiction is the 03 commodity intermediary's jurisdiction; 04 (C) if an agreement between the commodity intermediary and 05 commodity customer does not specify a jurisdiction as provided in (A) or (B) 06 of this paragraph, the commodity intermediary's jurisdiction is the jurisdiction 07 in which is located the office identified in an account statement as the office 08 serving the commodity customer's account; 09 (D) if an agreement between the commodity intermediary and 10 commodity customer does not specify a jurisdiction as provided in (A) or (B) 11 of this paragraph and an account statement does not identify an office serving 12 the commodity customer's account as provided in (C) of this paragraph, the 13 commodity intermediary's jurisdiction is the jurisdiction in which is located the 14 chief executive office of the commodity intermediary; 15 (5) perfection of a security interest by filing, automatic perfection of 16 a security interest in investment property granted by a broker or securities 17 intermediary, and automatic perfection of a security interest in a commodity contract 18 or commodity account granted by a commodity intermediary are governed by the local 19 law of the jurisdiction in which the debtor is located; the rules in (c)(2) - (4) of this 20 section apply to security interests to which this paragraph applies. 21 * Sec. 49. AS 45.09.105(a)(8) is amended to read: 22 (8) "goods" includes all things that [WHICH] are movable at the time 23 the security interest attaches or that [WHICH] are fixtures (AS 45.09.313), but does 24 not include money, documents, instruments, investment property, accounts, chattel 25 paper, general intangibles [TANGIBLES], or minerals or the like (including oil and 26 gas) before extraction; "goods" also includes the unborn young of animals, growing 27 crops, and standing timber that [WHICH] is to be cut and removed under a 28 conveyance or contract for sale; 29 * Sec. 50. AS 45.09.105(a)(9) is amended to read: 30 (9) "instrument" means a negotiable instrument as [(] defined in 31 AS 45.03.104 [)], [OR A CERTIFICATED SECURITY (DEFINED IN AS 45.08.102),]
01 or any other writing that evidences a right to the payment of money and is not itself 02 a security agreement or lease and is of a type that is in ordinary course of business 03 transferred by delivery with any necessary endorsement or assignment; "instrument" 04 does not include investment property; 05 * Sec. 51. AS 45.09.105(b) is amended to read: 06 (b) Other definitions applying to this chapter and the sections in which they 07 appear are: 08 (1) "account" (AS 45.09.106) 09 (2) "attach" (AS 45.09.203) [(AS 45.09.204)] 10 (3) "commodity contract" (AS 45.09.115) 11 (4) "commodity customer" (AS 45.09.115) 12 (5) "commodity intermediary" (AS 45.09.115) 13 (6) "construction mortgage" (AS 45.09.313) 14 (7) [(4)] "consumer goods" (AS 45.09.109(1)) 15 (8) "control" (AS 45.09.115) 16 (9) [(5)] "equipment" (AS 45.09.109(2)) 17 (10) [(6)] "farm products" (AS 45.09.109(3)) 18 (11 [(7)] "fixture" (AS 45.09.313(a)(1)) 19 (12) [(8)] "fixture filing" (AS 45.09.313(a)) 20 (13) [(9)] "general intangibles" (AS 45.09.106) 21 (14) [(10)] "inventory" (AS 45.09.109(4)) 22 (15) "investment property" (AS 45.09.115) 23 (16) [(11)] "lien creditor" (AS 45.09.301(c)) 24 (17) [(12)] "proceeds" (AS 45.09.306(a)) 25 (18) [(13)] "purchase money security interest" (AS 45.09.107) 26 (19) [(14)] "United States" (AS 45.09.103). 27 * Sec. 52. AS 45.09.105(c) is amended to read: 28 (c) The following definitions apply to this chapter: 29 (1) "broker" (AS 45.08.102) 30 (2) "certificated security" (AS 45.08.102) 31 (3) "check" (AS 45.03.104)
01 (4) "clearing corporation" (AS 45.08.102) 02 (5) [(2)] "contract for sale" (AS 45.02.106) 03 (6) "control" (AS 45.08.106) 04 (7) "delivery" (AS 45.08.301) 05 (8) "entitlement holder" (AS 45.08.102) 06 (9) "financial asset" (AS 45.08.102) 07 (10) [(3)] "holder in due course" (AS 45.03.302) 08 (11) [(4)] "note" (AS 45.03.104) 09 (12) [(5)] "sale" (AS 45.02.106) 10 (13) "securities intermediary" (AS 45.08.102) 11 (14) "security" (AS 45.08.102) 12 (15) "security certificate" (AS 45.08.102) 13 (16) "security entitlement" (AS 45.08.102) 14 (17) "uncertificated security" (AS 45.08.102). 15 * Sec. 53. AS 45.09.106 is amended to read: 16 Sec. 45.09.106. DEFINITIONS: "ACCOUNT"; "GENERAL INTANGIBLES." 17 "Account" means a right to payment for goods sold or leased or for services rendered 18 that [WHICH] is not evidenced by an instrument or chattel paper, whether or not it 19 has been earned by performance. "General intangibles" means personal property 20 (including a thing in action) other than goods, accounts, chattel paper, documents, 21 instruments, investment property, and money. All rights to payment earned or 22 unearned under a charter or other contract involving the use or hire of a vessel and all 23 rights incident to the charter or contract are accounts. 24 * Sec. 54. AS 45.09 is amended by adding new sections to article 1 to read: 25 Sec. 45.09.115. INVESTMENT PROPERTY. (a) In AS 45.09, 26 (1) "commodity account" means an account maintained by a commodity 27 intermediary in which a commodity contract is carried for a commodity customer; 28 (2) "commodity contract" means a commodity futures contract, an 29 option on a commodity futures contract, a commodity option, or other contract that, 30 in each case, is traded on 31 (A) or subject to the rules of a board of trade that has been
01 designated under federal commodities laws as a contract market for that type 02 of contract; or 03 (B) a foreign commodity board of trade, exchange, or market, 04 and is carried on the books of a commodity intermediary for a commodity 05 customer; 06 (3) "commodity customer" means a person for whom a commodity 07 intermediary carries a commodity contract on its books; 08 (4) "commodity intermediary" means a person who 09 (A) is registered as a futures commission merchant under the 10 federal commodities laws; or 11 (B) in the ordinary course of its business provides clearance or 12 settlement services for a board of trade that has been designated as a contract 13 market under federal commodities laws; 14 (5) "control" with respect to a certificated security, uncertificated 15 security, or security entitlement has the meaning given in AS 45.08.106; a secured 16 party has control over a commodity contract if by agreement among the commodity 17 customer, the commodity intermediary, and the secured party, the commodity 18 intermediary has agreed that the commodity intermediary will apply any value 19 distributed on account of the commodity contract as directed by the secured party 20 without further consent by the commodity customer; if a commodity customer grants 21 a security interest in a commodity contract to the commodity customer's own 22 commodity intermediary, the commodity intermediary as secured party has control; a 23 secured party has control over a securities account or commodity account if the 24 secured party has control over all security entitlements or commodity contracts carried 25 in the securities account or commodity account; 26 (6) "investment property" means 27 (A) a security, whether certificated or uncertificated; 28 (B) a security entitlement; 29 (C) a securities account; 30 (D) a commodity contract; or 31 (E) a commodity account.
01 (b) Attachment or perfection of a security interest in a securities account is 02 also attachment or perfection of a security interest in all security entitlements carried 03 in the securities account. Attachment or perfection of a security interest in a 04 commodity account is also attachment or perfection of a security interest in all 05 commodity contracts carried in the commodity account. 06 (c) A description of collateral in a security agreement or financing statement 07 is sufficient to create or perfect a security interest in a certificated security, 08 uncertificated security, security entitlement, securities account, commodity contract, or 09 commodity account whether it describes the collateral by those terms, or as investment 10 property, or by description of the underlying security, financial asset, or commodity 11 contract. A description of investment property collateral in a security agreement or 12 financing statement is sufficient if it identifies the collateral by specific listing, by 13 category, by quantity, by a computational or allocational formula or procedure, or by 14 another method, if the identity of the collateral is objectively determinable. 15 (d) Perfection of a security interest in investment property is governed by the 16 following rules: 17 (1) a security interest in investment property may be perfected by 18 control; 19 (2) except as otherwise provided in (3) and (4) of this subsection, a 20 security interest in investment property may be perfected by filing; 21 (3) if the debtor is a broker or securities intermediary, a security 22 interest in investment property is perfected when it attaches; the filing of a financing 23 statement with respect to a security interest in investment property granted by a broker 24 or securities intermediary does not affect the perfection or priority with respect to the 25 security interest; 26 (4) if a debtor is a commodity intermediary, a security interest in a 27 commodity contract or a commodity account is perfected when it attaches; the filing 28 of a financing statement with respect to a security interest in a commodity contract or 29 a commodity account granted by a commodity intermediary does not affect the 30 perfection or priority with respect to the security interest. 31 (e) Priority between conflicting security interests in the same investment
01 property is governed by the following rules: 02 (1) a security interest of a secured party who has control over 03 investment property has priority over a security interest of a secured party who does 04 not have control over the investment property; 05 (2) except as otherwise provided in (3) and (4) of this subsection, 06 conflicting security interests of secured parties rank equally if each of the secured 07 parties has control; 08 (3) except as otherwise agreed by the securities intermediary, a security 09 interest in a security entitlement or a securities account granted to the debtor's own 10 securities intermediary has priority over a security interest granted by the debtor to 11 another secured party; 12 (4) except as otherwise agreed by the commodity intermediary, a 13 security interest in a commodity contract or a commodity account granted to the 14 debtor's own commodity intermediary has priority over a security interest granted by 15 the debtor to another secured party; 16 (5) conflicting security interests granted by a broker, a securities 17 intermediary, or a commodity intermediary that are perfected without control rank 18 equally; 19 (6) in all other cases, priority between conflicting security interests in 20 investment property is governed by AS 45.09.312(e) - (g); AS 45.09.312(d) does not 21 apply to investment property. 22 (f) If a security certificate in registered form is delivered to a secured party 23 under an agreement, a written security agreement is not required for attachment or 24 enforceability of the security interest, delivery suffices for perfection of the security 25 interest, and the security interest has priority over a conflicting security interest 26 perfected by means other than control, even if a necessary endorsement is lacking. 27 Sec. 45.09.116. SECURITY INTEREST ARISING IN PURCHASE OR 28 DELIVERY OF FINANCIAL ASSET. (a) If a person buys a financial asset through 29 a securities intermediary in a transaction in which the buyer is obligated to pay the 30 purchase price to the securities intermediary at the time of the purchase, and if the 31 securities intermediary credits the financial asset to the buyer's securities account
01 before the buyer pays the securities intermediary, the securities intermediary has a 02 security interest in the buyer's security entitlement securing the buyer's obligation to 03 pay. A security agreement is not required for attachment or enforceability of the 04 security interest, and the security interest is automatically perfected. 05 (b) If a certificated security, or other financial asset represented by a writing 06 that in the ordinary course of business is transferred by delivery with any necessary 07 endorsement or assignment, is delivered under an agreement between persons in the 08 business of dealing with that type of security or financial asset and the agreement calls 09 for delivery versus payment, the person delivering the certificate or other financial 10 asset has a security interest in the certificated security or other financial asset securing 11 the seller's right to receive payment. A security agreement is not required for 12 attachment or enforceability of the security interest, and the security interest is 13 automatically perfected. 14 * Sec. 55. AS 45.09.203(a) is amended to read: 15 (a) Subject to the provisions of AS 45.04.210 on the security interest of a 16 collecting bank, AS 45.09.115 - 45.09.116 [AS 45.08.321] on security interests in 17 investment property [SECURITIES], and AS 45.09.113 on a security interest arising 18 under AS 45.02, a security interest is not enforceable against the debtor or third parties 19 with respect to the collateral and does not attach unless 20 (1) the collateral is in the possession of the secured party under an 21 agreement, the collateral is investment property and the secured party has control 22 under an agreement, or the debtor has signed a security agreement that contains a 23 description of the collateral, and, in addition, if the security interest covers crops 24 growing or to be grown or timber to be cut, a description of the land concerned; 25 (2) value has been given; and 26 (3) the debtor has rights in the collateral. 27 * Sec. 56. AS 45.09.301(a) is amended to read: 28 (a) Except as otherwise provided in (b) of this section, an unperfected security 29 interest is subordinate to the rights of 30 (1) persons entitled to priority under AS 45.09.312; 31 (2) a person who becomes a lien creditor before it is perfected;
01 (3) in the case of goods, instruments, documents, and chattel paper, a 02 person who is not a secured party, and who is a transferee in bulk or other buyer not 03 in ordinary course of business or is a buyer of farm products in ordinary course of 04 business, to the extent that the person gives value and receives delivery of the 05 collateral without knowledge of the security interest and before it is perfected; 06 (4) in the case of accounts, [AND] general intangibles, and investment 07 property, a person who is not a secured party and who is a transferee to the extent 08 that the person gives value without knowledge of the security interest and before the 09 security interest [IT] is perfected. 10 * Sec. 57. AS 45.09.302(a) is amended to read: 11 (a) A financing statement must be filed to perfect all security interests except 12 the following: 13 (1) a security interest in collateral in possession of the secured party 14 under AS 45.09.305; 15 (2) a security interest temporarily perfected in instruments, certificated 16 securities, or documents without delivery under AS 45.09.304 or in proceeds for a 10- 17 day period under AS 45.09.306; 18 (3) a security interest created by an assignment of a beneficial interest 19 in a trust or a decedent's estate; 20 (4) a purchase money security interest in consumer goods; but filing 21 is required for a motor vehicle required to be registered; and fixture filing is required 22 for priority over conflicting interests in fixtures to the extent provided in 23 AS 45.09.313; 24 (5) an assignment of accounts that does not alone or in conjunction 25 with other assignments to the same assignee transfer a significant part of the 26 outstanding accounts of the assignor; 27 (6) a security interest of a collecting bank under AS 45.04.210, [OR 28 IN SECURITIES UNDER AS 45.08.321,] or arising under AS 45.02 (see 29 AS 45.09.113) or covered in (c) of this section; 30 (7) as assignment for the benefit of all the creditors of the transferor, 31 and subsequent transfers by the assignee;
01 (8) a security interest in investment property that is perfected 02 without filing under AS 45.09.115 or 45.09.116. 03 * Sec. 58. AS 45.09.303(a) is amended to read: 04 (a) A security interest is perfected when it has attached and when all of the 05 applicable steps required for perfection have been taken. These steps are specified in 06 AS 45.09.115, 45.09.302, [AS 45.09.302] and 45.09.304 - 45.09.306. If these steps 07 are taken before the security interest attaches, the security interest [IT] is perfected 08 when the security interest [IT] attaches. 09 * Sec. 59. AS 45.09.304(a) is amended to read: 10 (a) A security interest in chattel paper or negotiable documents may be 11 perfected by filing. A security interest in money or instruments, [(] other than 12 [CERTIFICATED SECURITIES OR] instruments that constitute part of chattel paper, 13 [)] can be perfected only by the secured party's taking possession, except as provided 14 in (d) and (e) of this section and AS 45.09.306(b) and (c) on proceeds. 15 * Sec. 60. AS 45.09.304(d) is amended to read: 16 (d) A security interest in instruments, [(OTHER THAN] certificated securities, 17 [)] or negotiable documents is perfected without filing or the taking of possession for 18 a period of 21 days from the time it attaches to the extent that it arises for new value 19 given under a written security agreement. 20 * Sec. 61. AS 45.09.304(e) is amended to read: 21 (e) A security interest remains perfected for a period of 21 days without filing 22 if a secured party has a perfected security interest in an instrument, [(OTHER THAN] 23 a certificated security [)], a negotiable document, or goods in possession of a bailee 24 other than one who has issued a negotiable document for the goods, and 25 (1) makes the goods or documents representing the goods available to 26 the debtor for ultimate sale or exchange or to load, unload, store, ship, transship, 27 manufacture, process, or otherwise dealing with them in a manner preliminary to their 28 sale or exchange, but priority between conflicting security interests in the goods is 29 subject to AS 45.09.312; or 30 (2) delivers the instrument or certified security to the debtor for 31 ultimate sale, exchange, presentation, collection, renewal, or registration of transfer.
01 * Sec. 62. AS 45.09.305 is amended to read: 02 Sec. 45.09.305. WHEN POSSESSION BY SECURED PARTY PERFECTS 03 SECURITY INTEREST WITHOUT FILING. A security interest in letters of credit 04 and advices of credit (AS 45.05.116(b)(1)), goods, instruments [(OTHER THAN 05 CERTIFICATED SECURITIES)], money, negotiable documents, or chattel paper may 06 be perfected by the secured party's taking possession of the collateral. If the collateral, 07 other than goods covered by a negotiable document, is held by a bailee, the secured 08 party is considered to have possession from the time the bailee receives notification 09 of the secured party's interest. A security interest is perfected by possession from the 10 time possession is taken without relation back and continues only so long as possession 11 is retained unless otherwise specified in this chapter. The security interest may be 12 otherwise perfected as provided in this chapter before or after the period of possession 13 by the secured party. 14 * Sec. 63. AS 45.09.306(a) is amended to read: 15 (a) "Proceeds" includes what is received when collateral or proceeds are sold, 16 exchanged, collected, or otherwise disposed of. Insurance payable by reason of loss 17 or damage to the collateral is "proceeds," except to the extent that it is payable to a 18 person other than a party to the security agreement. Payments or distributions made 19 with respect to investment property collateral are "proceeds." Money, checks, 20 deposit accounts, and the like are "cash proceeds." All other proceeds are "noncash 21 proceeds." 22 * Sec. 64. AS 45.09.306(c) is amended to read: 23 (c) Except as provided in this section, a security interest in proceeds can 24 be perfected only by the methods or under the circumstances permitted in this 25 chapter for original collateral of the same type. The security interest in proceeds 26 is a continuously perfected security interest if the interest in the original collateral was 27 perfected, but the security interest [IT] ceases to be a perfected security interest and 28 becomes unperfected 10 days after receipt of the proceeds by the debtor unless 29 (1) a filed financing statement covers the original collateral and the 30 proceeds are collateral in which a security interest may be perfected by filing in the 31 office [OR OFFICES] where the financing statement has been filed and, if the
01 proceeds are acquired with cash proceeds, the description of collateral in the financing 02 statement indicates the types of property constituting the proceeds; 03 (2) the security interest in the proceeds is perfected before the 04 expiration of the 10-day period; [OR] 05 (3) the original collateral was investment property and the proceeds 06 are identifiable cash proceeds; or 07 (4) a filed financing statement covers the original collateral and the 08 proceeds are identifiable cash proceeds. 09 * Sec. 65. AS 45.09.309 is amended to read: 10 Sec. 45.09.309. PROTECTION OF PURCHASERS OF INSTRUMENTS, 11 [AND] DOCUMENTS, AND SECURITIES. Nothing in this chapter limits the rights 12 of a holder in due course of a negotiable instrument (AS 45.03.302) or a holder to 13 whom a negotiable document of title has been duly negotiated (AS 45.07.501) or a 14 protected [BONA FIDE] purchaser of a security (AS 45.08.303) [(AS 45.08.302)], and 15 the holders or purchasers take priority over an earlier security interest even though 16 perfected. Filing under this chapter does not constitute notice of the security interest 17 to the holders or purchasers. 18 * Sec. 66. AS 45.09.312(a) is amended to read: 19 (a) The rules of priority stated in AS 45.09.301 - 45.09.318 and in the 20 following sections govern where applicable: AS 45.04.210 with respect to the security 21 interest of collecting banks in items being collected, accompanying documents, and 22 proceeds; AS 45.09.103 on security interests related to other jurisdictions; 23 AS 45.09.114 on consignments; and AS 45.09.115 on security interests in 24 investment property. 25 * Sec. 67. AS 45.09.312(g) is amended to read: 26 (g) If future advances are made while a security interest is perfected by filing 27 or the taking of possession, or perfected under AS 45.09.115 or 45.09.116 on 28 investment property [AS 45.08.321 ON SECURITIES], the security interest has the 29 same priority for the purposes of (e) of this section or AS 45.09.115(e) with respect 30 to the future advances as it does with respect to the first advance. If a commitment 31 is made before or while the security interest is so perfected, the security interest has
01 the same priority with respect to advances made under the commitment. In other cases 02 a perfected security interest has priority from the date the advance is made. 03 * Sec. 68. AS 45.08.203(b), 45.08.206(c), 45.08.206(d), 45.08.207(b), 45.08.207(c), 04 45.08.207(d), 45.08.207(e), 45.08.207(f), 45.08.308, 45.08.309, 45.08.310, 45.08.311, 05 45.08.312, 45.08.313, 45.08.314, 45.08.315, 45.08.316, 45.08.317, 45.08.318, 45.08.319, 06 45.08.320, 45.08.321, 45.08.402(b), 45.08.405(a), and 45.08.408 are repealed. 07 * Sec. 69. SAVINGS CLAUSE. (a) This Act does not affect an action or proceeding 08 commenced before the effective date of this Act. 09 (b) If a security interest in a security is perfected before the effective date of this Act 10 and the action by which the security interest was perfected would suffice to perfect a security 11 interest under this Act, further action is not required to continue perfection. If a security 12 interest in a security is perfected before the effective date of this Act but the action by which 13 the security interest was perfected would not suffice to perfect a security interest under this 14 Act, the security interest remains perfected for a period of four months after the effective date 15 of this Act and continues perfected after this four-month period if appropriate action to perfect 16 under this Act is taken within the four-month period. If a security interest is perfected before 17 the effective date of this Act and the security interest can be perfected by filing under this 18 Act, a financing statement signed by the secured party instead of the debtor may be filed 19 within four months after the effective date of this Act to continue perfection or may be filed 20 after the four-month period to perfect. 21 * Sec. 70. COURT RULE CHANGE. AS 45.08.114, added by sec. 12 of this Act, amends 22 Rule 8, Alaska Rules of Civil Procedure, by requiring that a denial of a signature be specific 23 or the signature is admitted, and by requiring a denial even if a responsive pleading is not 24 required. 25 * Sec. 71. This Act takes effect January 1, 1997.