Nevada § 104.8202 - Issuer's responsibility and defenses; notice of defect or defense

§ 104.8202. Issuer's responsibility and defenses; notice of defect or defense

1. Even against a purchaser for value and without notice, the terms of a certificated

security include the terms stated on the certificate and the terms made part of the

security by reference on the certificate to another instrument, indenture, or document

or to a constitution, statute, ordinance, rule, regulation, order or the like, to

the extent the terms referred to do not conflict with terms stated on the certificate.

A reference under this subsection does not of itself charge a purchaser for value

with notice of a defect going to the validity of the security, even if the certificate

expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in any instrument, indenture

or document, or in a constitution, statute, ordinance, rule, regulation, order or

the like, pursuant to which the security was issued. 2. The following rules apply if an issuer asserts that a security is not valid: (a) A security other than one issued by a government or governmental subdivision,

agency or instrumentality, even though issued with a defect going to its validity,

is valid in the hands of a purchaser for value and without notice of the particular

defect unless the defect involves a violation of a constitutional provision. In that case the security is valid in the hands of a purchaser for value and without

notice of the defect other than one who takes by original issue. (b) Paragraph (a) applies to an issuer that is a government or governmental subdivision,

agency or instrumentality only if there has been substantial compliance with the legal

requirements governing the issue or the issuer has received a substantial consideration

for the issue as a whole or for the particular security and a stated purpose of the

issue is one for which the issuer has power to borrow money or issue the security. 3. Except as otherwise provided in NRS 104.8205 , lack of genuineness of a certificated security is a complete defense even against

a purchaser for value and without notice. 4. All other defenses of the issuer of a security, including nondelivery and conditional

delivery of a certificated security, are ineffective against a purchaser for value

who has taken the certificated security without notice of the particular defense. 5. This section does not affect the right of a party to cancel a contract for a security

“when, as and if issued” or “when distributed” in the event of a material change in

the character of the security that is the subject of the contract or in the plan or

arrangement pursuant to which the security is to be issued or distributed. 6. If a security is held by a securities intermediary against whom an entitlement

holder has a security entitlement with respect to the security, the issuer may not

assert any defense that it could not assert if the entitlement holder held the security

directly.