N.D. Cent. Code § 41-08-29
(8-303) Protected purchaser
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who: Gives value;
(1) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who: Gives value;
(2) Does not have notice of any adverse claim to the security; and
(2) Does not have notice of any adverse claim to the security; and
(3) Obtains control of the certificated or uncertificated security.
(3) Obtains control of the certificated or uncertificated security.
(4) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.
(4) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.
(5) The requirements for control differ depending on the form of the security. For securities represented by bearer certificates, a purchaser obtains control by delivery. See Sections 8-106(a) and 8-301(a). For securities represented by certificates in registered form, the requirements for control are: (1) delivery as defined in Section 8-301(b), plus (2) either an effective indorsement or registration of transfer by the issuer. See Section 8-106(b). Thus, a person who takes through a forged indorsement does not qualify as a protected purchaser by virtue of the delivery alone. If, however, the purchaser presents the certificate to the issuer for registration of transfer, and the issuer registers transfer over the forged indorsement, the purchaser can qualify as a protected purchaser of the new certificate. If the issuer registers transfer on a forged indorsement, the true owner will be able to recover from the issuer for wrongful registration, see Section 8-404, unless the owner’s delay in notifying the issuer of a loss or theft of the certificate results in preclusion under Section 8-406.
(6) This section states directly the rules determining whether one takes free from adverse claims without using the phrase “good faith.” Whether a person who takes under suspicious circumstances is disqualified is determined by the rules of Section 8-105 on notice of adverse claims. The term “protected purchaser,” which replaces the term “bona fide purchaser” used in the prior version of Article 8, is derived from the term “protected holder” used in the Convention on International Bills and Notes prepared by the United Nations Commission on International Trade Law (“UNCITRAL”).
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.