Vermont § 202 - § 8—202.

§ 202. § 8—202.

• Issuer’s responsibility and defenses; notice of defect or defense (a) Even against a purchaser for value and without notice, the terms of a certificated
  security include terms stated on the certificate and 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
  is issued. (b) The following rules apply if an issuer asserts that a security is not valid: (1) 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. (2) Subdivision (1) of this subsection 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. (c) Except as otherwise provided in section 8—205 of this title, lack of genuineness of a certificated security is a complete defense, even against
  a purchaser for value and without notice. (d) 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. (e) 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. (f) 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 the issuer could not assert if the entitlement holder held the security
  directly. (Added 1995, No. 92 (Adj. Sess.), § 1, eff. Jan. 1, 1997.)