Okla. Stat. tit. 12A § 8-306

Current through Laws 2024, c. 378.

Section 8-306 - Effect of Guaranteeing Signature, Indorsement, or Instruction

(a) A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing:

(1) the signature was genuine;

(2) the signer was an appropriate person to indorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(3) the signer had legal capacity to sign.

(b) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing:

(1) the signature was genuine;

(2) the signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and

(3) the signer had legal capacity to sign.

(c) A person who specially guarantees the signature of an originator of an instruction make the warranties of a signature guarantor under subsection (b) of this section and also warrants that at the time the instruction is presented to the issuer:

(1) the person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

(2) the transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.

(d) A guarantor under subsections (a) and (b) of this section or a special guarantor under subsection (c) of this section does not otherwise warrant the rightfulness of the transfer.

(e) A person who guarantees an indorsement of a security certificate makes the warranties of a signature guarantor under subsection (a) of this section and also warrants the rightfulness of the transfer in all respects.

(f) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under subsection (c) of this section and also warrants the rightfulness of the transfer in all respects.

(g) An issuer may not require a special guaranty of signature, a guaranty of indorsement, or a guaranty of instruction as a condition to registration of transfer.

(h) The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An indorser or originator of an instruction whose signature, indorsement, or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor.

Okla. Stat. tit. 12A, § 8-306

Added by Laws 1961, p. 156, § 8-306. Amended by Laws 1984, HB 1800, c. 76, § 23, eff. 11/1/1984; Amended by Laws 1995, SB 522, c. 242, § 32, eff. 2/1/1996.

Oklahoma Code Comment

This Section is a restatement of pre-revision Section 8-312. Section 8-306 has deleted all references to "registered pledgee" and "pledge" contained in former Section 8-312. See Official Revision Note 5 as to the reason. Subsection (a)(2) has added the warranty that an agent has actual authority to act on behalf of the appropriate person, which warranty was not contained in former sub section 8-312(1)(b). Likewise, subsection (b)(2) has added the warranty that an agent has actual authority to act on behalf of the appropriate person, which warranty was not contained in former sub section 8-312(2)(b).

Former sub section 8-312(2)(d) provided for a warranty by a person guaranteeing a signature of the originator of an instruction that the taxpayer identification number appearing on the instruction as that of the registered owner was, in fact, the taxpayer identification number of the signer. This warranty has been omitted from sub section 8-306(b) .

Since the mid-1970s, transfer agents have been subject to federal regulation under Section 17A(C) of the Securities Exchange Act of 1934 (the "Exchange Act"), in connection with Congress's goal of a national system for the clearance and settlement of securities transactions. SEC Rules 17Ac2-1, 17Ad-1 through -7, and 17Ad-9 through -13, require transfer agents meeting certain standards to register with the Securities and Exchange Commission or an appropriate bank regulatory agency and to comply with applicable rules promulgated by the SEC or any such agency. To date, these rules pertain to efficiency of processing (17Ad-2 and -3), response to inquiries (17Ad-5), record keeping (17Ad-6, -9 and -10), record retention (17Ad-7), reports to issuers and regulatory agencies (17Ad-11), safeguarding of funds and securities (17Ad-12) and internal accounting (17Ad-13). Even if a transfer agent is not required to register with the federal authorities, it still may be subject to the Commission's regulations.

Exchange Act Section 17(d) authorizes the Securities and Exchange Commission to relieve self-regulatory organizations of regulatory responsibilities for persons who are members of or participants in more than one self-regulatory organization and to allocate among self-regulatory organizations the authority to exercise regulatory jurisdiction.

Section 17A(d)(5) of the federal Securities Enforcement Remedies and Penny Stock Reform Act of 1990, provides that a registered transfer agent may not, directly or indirectly, engage in any activity in connection with the guaranty of a signature of an indorser of a security, including the acceptance or rejection of such guaranty, in contravention of such rules and regulations as the Securities and Exchange Commission may prescribe as necessary or appropriate in the public interest, for the protection of investors and to facilitate the equitable treatment of financial institutions which issue such guarantees. SEC Regulation § 240.17Ad-15 requires every registered transfer agent to establish written standards for the acceptance of guarantees of securities transfers from eligible guarantor institutions, and to establish procedures to ensure that those standards are applied equally to eligible guarantor institutions. This regulation also provides that a "signature guarantee program" should be established to provide, among other things, adequate protection to the transfer agent against risk of financial loss in the event persons have no recourse against the eligible guarantor institution, and adequate protection to the transfer agent against the issuance of unauthorized guarantees.

The Securities Transfer Association has promulgated rules dealing with signature guarantees. Rule 1.08 provides that unless the security is registered in the name of and beneficially owned by a financial institution that is acceptable as a signature guarantor and the indorsing officer's signature is verifiable by the processor, the indorsement must be accompanied by a signature guaranty. Securities in the name of a non-local financial institution may be transferred if the original indorsing signature is reguaranteed or if it is verified by the non-local financial institution's local correspondent.

Rule 1.09 provides that a signature guaranty should take the following form:

SIGNATURE GUARANTEED

(followed by a corporate or partnership signature).

It is also required that the signature guaranty appear as close as possible to the indorsement on the transfer instrument.

Rule 1.11 provides that a processor should not accept a signature guaranty by a financial institution that he or she knows or has cause to believe has failed, been combined with another entity, or discontinued business.

Prior Statutory Provisions:

Pre-revision UCC § 8-312.