The following rules apply in an action on a certificated security against the issuer: (1) Unless specifically denied in the pleadings, each signature on a security certificate or in a necessary endorsement is admitted. (2) If the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized. (3) If signatures on a security certificate are admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security.

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 agent or bailee: (1) took the action after it had been served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or (2) acted in collusion with the wrongdoer in violating the rights of the adverse claimant; or (3) in the case of a security certificate that has been stolen, acted with notice of the adverse claim.

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 for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favor of an entitlement holder.

This legal document, Minnesota Statutes » TRADE REGULATIONS, CONSUMER PROTECTION » UNIFORM COMMERCIAL CODE 336.8-201, defines the term ‘issuer’ in relation to obligations and defenses related to securities. An ‘issuer’ includes a person who places or authorizes the placing of its name on a security certificate, creates an uncertificated security, creates a fractional interest represented by a security certificate, or becomes responsible for another person described as an issuer. Additionally, a guarantor is considered an issuer to the extent of its guaranty.

This provision, part of the Minnesota Statutes under the Uniform Commercial Code, applies to purchasers of certificated securities. It states that after an act or event creating a right to immediate performance or setting a date for redemption or exchange, a purchaser is charged with notice of any defect in the security’s issue or defense of the issuer if certain conditions are met. These conditions include the payment or delivery of the security on the specified date, and the purchaser taking the security more than one or two years after the specified date, depending on the circumstances.

336.8-204 MS 1994 [Repealed, 1995 c 194 art 1 s 53] 336.8-204 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: (1) the security is certificated and the restriction is noted conspicuously on the security certificate; or (2) the security is uncertificated and the registered owner has been notified of the restriction.

336.8-205 MS 1994 [Repealed, 1995 c 194 art 1 s 53] 336.8-205 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: (1) an authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or (2) an employee of the issuer, or of any of the persons listed in paragraph (1), entrusted with responsible handling of the security certificate.

336.8-206 MS 1994 [Repealed, 1995 c 194 art 1 s 53] 336.8-206 COMPLETION OR ALTERATION OF SECURITY CERTIFICATE. (a) If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect: (1) any person may complete it by filling in the blanks as authorized; and (2) 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 incorrectness.

336.8-207 MS 1994 [Repealed, 1995 c 194 art 1 s 53] 336.8-207 RIGHTS AND DUTIES OF ISSUER WITH RESPECT TO REGISTERED OWNERS. (a) 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 power of an owner.

336.8-208 MS 1994 [Repealed, 1995 c 194 art 1 s 53] 336.8-208 EFFECT OF SIGNATURE OF AUTHENTICATING TRUSTEE, REGISTRAR, OR TRANSFER AGENT. (a) 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: (1) the certificate is genuine; (2) the person’s own participation in the issue of the security is within the person’s capacity and within the scope of the authority received by the person from the issuer; and (3) the person has reasonable grounds to believe that the certificated security is in the form and within the amount the issuer is authorized to issue.