Colorado § 4-8-401 - Duty of issuer to register transfer.

§ 4-8-401. Duty of issuer to register transfer.

(a) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if:

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

(2) The indorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

(3) Reasonable assurance is given that the indorsement or instruction is genuine and authorized (section 4-8-402);

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

(5) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with section 4-8-204;

(6) A demand that the issuer not register transfer has not become effective under section 4-8-403, or the issuer has complied with section 4-8-403 (b) but no legal process or indemnity bond is obtained as provided in section 4-8-403 (d); and

(7) The transfer is in fact rightful or is to a protected purchaser.

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

Source: L. 96: Entire article R&RE, p. 223, § 2, effective July 1.

Editor's note: This section is similar to former § 4-8-401 as it existed prior to 1996.

ANNOTATION

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Under this section an issuer has a duty to register the transfer of securities as requested if certain preconditions are clearly met. Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

The transfer of cancelled certificates is not rightful. Where evidence establishes that stock certificates are no longer valid, having been cancelled on the books of the company, and no evidence is offered to contradict the correctness of the company records or to establish that the certificates are in fact valid, there is not a rightful transfer, since transfer of cancelled, invalidated, certificates does not constitute a rightful transfer. Folsom v. Sec. Nat'l Bank, 32 Colo. App. 91, 507 P.2d 1114 (1973).

The court could not conclude, as a matter of law, that a transfer agent was immune from liability absent a legal opinion that the proposed transfer was permissible. Am. Sec. Transfer, Inc. v. Pantheon Indus., Inc., 871 F. Supp. 400 (D. Colo. 1994).

Request to reissue a stock certificate without the restrictive legend is considered a "request to transfer shares" within the meaning of this section. Therefore it falls within the duties of § 4-8-406. Am. Sec. Transfer, Inc. v. Pantheon Indus., Inc., 871 F. Supp. 400 (D. Colo. 1994).

This section preempts common law remedies relating to the placement and removal of restrictive legends. Clancy Sys. Int'l, Inc. v. Salazar, 177 P.3d 1235 (Colo. 2008).

A party requesting reissuance of a stock certificate cannot claim status as a purchaser for value. Am. Sec. Transfer, Inc. v. Pantheon Indus., Inc., 871 F. Supp. 400 (D. Colo. 1994).

Former provisions voided all transfers unless they were recorded on the books of the company within 60 days. Conway v. John, 14 Colo. 30, 23 P. 170 (1890); Weber v. Bullock, 19 Colo. 214, 35 P. 183 (1893); First Nat'l Bank v. Hastings, 7 Colo. App. 129, 42 P. 691 (1895); Nat'l Bank v. Graham, 16 Colo. App. 498, 66 P. 684 (1901); Richardson v. Longmont Supply Ditch Co., 19 Colo. App. 483, 76 P. 546 (1904); Isbell v. Graybill, 19 Colo. App. 508, 76 P. 550 (1904); Equitable Sec. Co. v. Johnson, 36 Colo. 377, 85 P. 840 (1906); Pueblo Sav. Bank v. Richardson, 39 Colo. 319, 89P. 799 (1907); Central Sav. Bank v. Smith, 43 Colo. 90, 95 P. 307 (1908); O'Neil v. Wolcott Mining Co., 174 F. 527 (8th Cir. 1909); Shires v. Allen, 47 Colo. 440, 107 P. 1072 (1910); Ironstone Ditch Co. v. Equitable Sec. Co., 52 Colo. 268, 121 P. 174 (1911); Lucifer Coal Co. v. Buster, 64 Colo. 179, 171 P. 61 (1918); Carlton v. Camfield, 64 Colo. 373, 171 P. 1140 (1918); Hexter v. Shahan, 66 Colo. 156, 180 P. 92 (1919); Valleyview Consol. Gold Mining Co. v. Whitehead, 66 Colo. 237, 180 P. 737 (1919); Capitol Petroleum Co. v. Haldeman, 66 Colo. 265, 180 P. 758 (1919); Snider v. Bourquin, 68 Colo. 207, 188 P. 727 (1920); McClelland v. Merchants' & Miners' Nat'l Bank, 77 Colo. 302, 236 P. 774 (1925); Hawkins v. Hershey, 78 Colo. 539, 242 P. 975 (1925); Mulvihill v. First Nat'l Bank, 80 Colo. 72, 249 P. 504 (1926); Hollingsworth v. Multa Trina Ditch Co., 51 F.2d 649 (10th Cir. 1931); Hertz Drive-Ur-Self Sys. v. Doak, 94 Colo. 200, 29 P.2d 625 (1934) (decided under repealed C.L. 1921, § 2268 and laws antecedent thereto).