Chapter 78 — Investment Securities

78.1010 Short title

This chapter may be cited as Uniform Commercial Code–Investment Securities.

78.1020 Definitions and index of definitions

In this chapter: “Adverse claim” means a claim in which a claimant who has a property interest in a financial asset asserts that it is a violation of the rights of the claimant for another person to hold, transfer or deal with the financial asset. “Bearer form,” as applied to a certificated security, means a form in which the security is payable to the bea…

78.1030 Rules for determining whether certain obligations and interests are securities or financial assets

A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security. An “investment company security” is a security. “Investment company security” means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an i…

78.1040 Acquisition of security or financial asset or interest therein

A person acquires a security or an interest therein under this chapter if: The person is a purchaser to whom a security is delivered pursuant to ORS 78.3010; or The person acquires a security entitlement to the security pursuant to ORS 78.5010. A person acquires a financial asset other than a security or an interest therein under this chapter if the perso…

78.1050 Notice of adverse claim

A person has notice of an adverse claim if: The person knows of the adverse claim; The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or The person has a duty, imposed by statute or regulation,…

78.1060 Control

A purchaser has control of a certificated security in bearer form if the certificated security is delivered to the purchaser. A purchaser has control of a certificated security in registered form if the certificated security is delivered to the purchaser, and: The certificate is indorsed to the purchaser or in blank by an effective indorsement; or The cer…

78.1070 Whether indorsement, instruction or entitlement order is effective

“Appropriate person” means: With respect to an indorsement, the person specified by a security certificate or by an effective special indorsement to be entitled to the security; With respect to an instruction, the registered owner of an uncertificated security; With respect to an entitlement order, the entitlement holder; If the person designated in para…

78.1080 Warranties in direct holding

A person that transfers a certificated security to a purchaser for value warrants to the purchaser, and an indorser, if the transfer is by indorsement, warrants to any subsequent purchaser, that: The certificate is genuine and has not been materially altered; The transferor or indorser does not know of any fact that might impair the validity of the securit…

78.1090 Warranties in indirect holding

A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that: The entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and There is no adverse claim to the security entitlement. A p…

78.1100 Applicability; choice of law

The local law of the issuer’s jurisdiction, as defined in subsection (4) of this section, governs: The validity of a security; The rights and duties of the issuer with respect to registration of transfer; The effectiveness of registration of transfer by the issuer; Whether the issuer owes any duties to an adverse claimant to a security; and Whether an a…

78.1110 Clearing corporation rules

A rule adopted by a clearing corporation governing rights and obligations of the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with chapter 328, Oregon Laws 1995, and affects another party who does not consent to the rule. Note: Legislative Counsel has substituted “chapter 328, Oregon Laws 1995…

78.1120 Creditor’s legal process

The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in subsection (4) of this section. However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a cred…

78.1130 Statute of frauds inapplicable

A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one year of its making.

78.1140 Evidentiary rules concerning certificated securities

The following rules apply in an action on a certificated security against the issuer: Unless specifically denied in the pleadings, each signature on a security certificate or in a necessary indorsement is admitted. If the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but…

78.1150 Securities intermediary and others not liable to adverse claimant

A securities intermediary that has transferred a financial asset pursuant to an effective entitlement order, or a broker or other agent or bailee that has dealt with a financial asset at the direction of its customer or principal, is not liable to a person having an adverse claim to the financial asset, unless the securities intermediary, or broker or other …

78.1160 Securities intermediary as purchaser for value

A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favor of an entitlement holder is a purchaser for value of the financial asset. A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement fo…

78.2010 “Issuer.”

With respect to an obligation on or a defense to a security, an “issuer” includes a person that: Places or authorizes the placing of its name on a security certificate, other than as authenticating trustee, registrar, transfer agent or the like, to evidence a share, participation or other interest in its property or in an enterprise, or to evidence its duty…

78.2020 Terms of security; issuer’s responsibility and defenses; notice of defect or defense

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 that the terms referre…

78.2030 Staleness as notice of defects or defenses

After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in the security’s issue or …

78.2040 Effect of issuer’s restriction on transfer

A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without knowledge of the restriction unless: The security is certificated and the restriction is noted conspicuously on the security certificate; or The security is uncertificated and the registered owner has been notified of the restric…

78.2050 Effect of unauthorized signature on security certificate

An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by: An authenticating trustee, registrar, transfer agent or other p…

78.2060 Completion or alteration of security certificate

If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect: Any person may complete it by filling in the blanks as authorized; and Even if the blanks are incorrectly filled in, the security certificate as completed is enforceable by a purchaser who took it for value and without notice of the …

78.2070 Rights of issuer with respect to registered owners

Before due presentment for registration of transfer of a certificated security in registered form or of an instruction requesting registration of transfer of an uncertificated security, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, receive notifications and otherwise exercise all the rights and pow…

78.2080 Effect of signature of authenticating trustee, registrar or transfer agent

A person signing a security certificate as authenticating trustee, registrar, transfer agent or the like, warrants to a purchaser for value of the certificated security, if the purchaser is without notice of a particular defect, that: The certificate is genuine; The person’s own participation in the issue of the security is within the person’s capacity and…

78.2090 Issuer’s lien

A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate.

78.2100 Overissue

In this section, “overissue” means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue. Except as otherwise provided in subsections (3) and (4) of this section, the provisions of this chapter that validate a security or compel its issue or reis…

78.3010 Delivery

Delivery of a certificated security to a purchaser occurs when: The purchaser acquires possession of the security certificate; Another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for th…

78.3020 Rights of purchaser

Except as otherwise provided in subsections (2) and (3) of this section, a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer. A purchaser of a limited interest acquires rights only to the extent of the interest purchased. A purchaser of a certificated security who as …

78.3030 “Protected purchaser.”

“Protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who: Gives value; Does not have notice of any adverse claim to the security; and Obtains control of the certificated or uncertificated security. A protected purchaser acquires its interest in the security free of any adverse claim.

78.3040 Indorsement

An indorsement may be in blank or special. An indorsement in blank includes an indorsement to bearer. A special indorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank indorsement to a special indorsement. An indorsement purporting to be only of part of a security certificate representing u…

78.3050 Instruction

If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly. Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by ORS 78.1080 and not an o…

78.3060 Effect of guaranteeing signature, indorsement or instruction

A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing: The signature was genuine; The signer was an appropriate person to indorse, or if the signature was by an agent, the agent had actual authority to act on behalf of the appropriate person; and The signer had legal capacity to sign. A person w…

78.3070 Purchaser’s rights to requisites for registration of transfer

Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the transfer of the security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor …

78.3080 [1961 c.726 §78.3080; 1985 c.676 §78.3080; repealed by 1995 c.328 §71]

78.3090 [1961 c.726 §78.3090; 1985 c.676 §78.3090; repealed by 1995 c.328 §71]

78.3100 [1961 c.726 §78.3100; 1985 c.676 §78.3100; repealed by 1995 c.328 §71]

78.3110 [1961 c.726 §78.3110; 1985 c.676 §78.3110; repealed by 1995 c.328 §71]

78.3120 [1961 c.726 §78.3120; 1985 c.676 §78.3120; repealed by 1995 c.328 §71]

78.3130 [1961 c.726 §78.3130; 1965 c.271 §4; 1985 c.676 §78.3130; repealed by 1995 c.328 §71]

78.3140 [1961 c.726 §78.3140; 1985 c.676 §78.3140; repealed by 1995 c.328 §71]

78.3150 [1961 c.726 §78.3150; 1985 c.676 §78.3150; repealed by 1995 c.328 §71]

78.3160 [1961 c.726 §78.3160; 1985 c.676 §78.3160; repealed by 1995 c.328 §71]

78.3170 [1961 c.726 §78.3170; 1985 c.676 §78.3170; repealed by 1995 c.328 §71]

78.3180 [1961 c.726 §78.3180; 1985 c.676 §78.3180; repealed by 1995 c.328 §71]

78.3190 [1961 c.726 §78.3190; 1985 c.676 §78.3190; repealed by 1995 c.328 §71]

78.3200 [1965 c.271 §2; 1985 c.676 §78.3200; repealed by 1995 c.328 §71]

78.3210 [1985 c.676 §78.3210; repealed by 1995 c.328 §71]

REGISTRATION

78.4010 Duty of issuer to register transfer

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: Under the terms of the security the person seeking registration of transfer is eligi…

78.4020 Assurance that indorsement or instruction is effective

An issuer may require the following assurance that each necessary indorsement or each instruction is genuine and authorized: In all cases, a guaranty of the signature of the person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity; If the indorsement is made or the instruction is …

78.4030 Demand that issuer not register transfer

A person who is an appropriate person to make an indorsement or originate an instruction may demand that the issuer not register transfer of a security by communicating to the issuer a notification that identifies the registered owner and the issue of which the security is a part and provides an address for communications directed to the person making the de…

78.4040 Wrongful registration

Except as otherwise provided in ORS 78.4060, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it and the transfer was registered: Pursuant to an ineffective indorsement or instruction; After a demand that the issuer not register transfer became effective under ORS 78…

78.4050 Replacement of lost, destroyed or wrongfully taken security certificate

If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed or wrongfully taken, the issuer shall issue a new certificate if the owner: So requests before the issuer has notice that the certificate has been acquired by a protected purchaser; Files with the issuer a sufficient indemnity …

78.4060 Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate

If a security certificate has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer u…

78.4070 Authenticating trustee, transfer agent and registrar

A person acting as authenticating trustee, transfer agent, registrar or other agent for an issuer in the registration of a transfer of the issuer’s securities, in the issue of new security certificates or uncertificated securities or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or u…

78.4080 [1985 c.676 §78.4080; repealed by 1995 c.328 §71]

SECURITY ENTITLEMENTS

78.5010 Securities account; acquisition of security entitlement from securities intermediary

“Securities account” means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. Except as otherwise provided in subsections (4) and (5) o…

78.5020 Assertion of adverse claim against entitlement holder

An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who acquires a security entitlement under ORS 78.5010 for value and without notice of the adverse claim.

78.5030 Property interest of entitlement holder in financial asset held by securities intermediary

To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary and are not subject to claims of…

78.5040 Duty of securities intermediary to maintain financial asset

A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other s…

78.5050 Duty of securities intermediary with respect to payments and distributions

A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if: The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or In the absence of agreement, the securities intermedi…

78.5060 Duty of securities intermediary to exercise rights as directed by entitlement holder

A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder. A securities intermediary satisfies the duty if: The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or In the absence of agreement, the securities i…

78.5070 Duty of securities intermediary to comply with entitlement order

A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized and the securities intermediary has had reasonable opportunity to comply with the entitlement order.…

78.5080 Duty of securities intermediary to change entitlement holder’s position to other form of security holding

A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary …

78.5090 Specification of duties of securities intermediary by other statute or regulation; manner of performance of duties of securities intermediary and exercise of rights of entitlement holder

If the substance of a duty imposed upon a securities intermediary by ORS 78.5040, 78.5050, 78.5060, 78.5070 and 78.5080 is the subject of other statute, regulation or rule, compliance with that statute, regulation or rule satisfies the duty. To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise …

78.5100 Rights of purchaser of security entitlement from entitlement holder

In a case not covered by the priority rules in ORS chapter 79A or the rules stated in subsection (3) of this section, an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitl…

78.5110 Priority among security interests and entitlement holders

Except as otherwise provided in subsections (2) and (3) of this section if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security…