C.R.S. Section 4-8-202
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 (a) 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)

Paragraph (1) of this subsection (b) 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 4-8-205, 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.

Source: Section 4-8-202 — Issuer’s responsibility and defenses - notice of defect or defense, https://leg.­colorado.­gov/sites/default/files/images/olls/crs2023-title-04.­pdf (accessed Oct. 20, 2023).

4‑8‑101
Short title
4‑8‑102
Definitions
4‑8‑103
Rules for determining whether certain obligations and interests are securities or financial assets
4‑8‑104
Acquisition of security or financial asset or interest therein
4‑8‑105
Notice of adverse claim
4‑8‑106
Control
4‑8‑107
Whether indorsement, instruction, or entitlement order is effective
4‑8‑108
Warranties in direct holding
4‑8‑109
Warranties in indirect holding
4‑8‑110
Applicability - choice of law
4‑8‑111
Clearing corporation rules
4‑8‑112
Creditor’s legal process
4‑8‑113
Statute of frauds inapplicable
4‑8‑114
Evidentiary rules concerning certificated securities
4‑8‑115
Securities intermediary and others not liable to adverse claimant
4‑8‑116
Securities intermediary as purchaser for value
4‑8‑201
Issuer
4‑8‑202
Issuer’s responsibility and defenses - notice of defect or defense
4‑8‑203
Staleness as notice of defect or defense
4‑8‑204
Effect of issuer’s restriction on transfer
4‑8‑205
Effect of unauthorized signature on security certificate
4‑8‑206
Completion or alteration of security certificate
4‑8‑207
Rights and duties of issuer with respect to registered owners
4‑8‑208
Effect of signature of authenticating trustee, registrar, or transfer agent
4‑8‑209
Issuer’s lien
4‑8‑210
Overissue
4‑8‑301
Delivery
4‑8‑302
Rights of purchaser
4‑8‑303
Protected purchaser
4‑8‑304
Indorsement
4‑8‑305
Instruction
4‑8‑306
Effect of guaranteeing signature, indorsement, or instruction
4‑8‑307
Purchaser’s right to requisites for registration of transfer
4‑8‑401
Duty of issuer to register transfer
4‑8‑402
Assurance that indorsement or instruction is effective
4‑8‑403
Demand that issuer not register transfer
4‑8‑404
Wrongful registration
4‑8‑405
Replacement of lost, destroyed, or wrongfully taken security certificate
4‑8‑406
Obligation to notify issuer of lost, destroyed, or wrongfully taken security certificate
4‑8‑407
Authenticating trustee, transfer agent, and registrar
4‑8‑501
Securities account - acquisition of security entitlement from securities intermediary
4‑8‑502
Assertion of adverse claim against entitlement holder
4‑8‑503
Property interest of entitlement holder in financial asset held by securities intermediary
4‑8‑504
Duty of securities intermediary to maintain financial asset
4‑8‑505
Duty of securities intermediary with respect to payments and distributions
4‑8‑506
Duty of securities intermediary to exercise rights as directed by entitlement holder
4‑8‑507
Duty of securities intermediary to comply with entitlement order
4‑8‑508
Duty of securities intermediary to change entitlement holder’s position to other form of security holding
4‑8‑509
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
4‑8‑510
Rights of purchaser of security entitlement from entitlement holder
4‑8‑511
Priority among security interests and entitlement holders
4‑8‑601
Effective date
4‑8‑602
Repeals
4‑8‑603
Saving clause
Green check means up to date. Up to date

Current through Fall 2024

§ 4-8-202’s source at colorado​.gov