N.Y. Uniform Commercial Code Law § 8-403: Demand that Issuer Not Register Transfer

Section 8--403. Demand that Issuer Not Register Transfer.

(a) 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 demand. The demand is effective only if it is received

by the issuer at a time and in a manner affording the issuer reasonable

opportunity to act on it.

(b) 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 after a demand that the issuer not register

transfer has become effective, the issuer shall promptly communicate, to

the person who initiated the demand at the address provided in the

demand and to the person who presented the security for registration of

transfer or initiated the instruction requesting registration of

transfer, a notification stating that:

(1) the certificated security has been presented for registration

of transfer or the instruction for registration of transfer

of the uncertificated security has been received;

(2) a demand that the issuer not register transfer had previously

been received; and

(3) the issuer will withhold registration of transfer for a

period of time stated in the notification in order to provide

the person who initiated the demand an opportunity to obtain

legal process or an indemnity bond.

(c) The period described in subsection (b)(3) may not exceed 30 days

after the date of communication of the notification. A shorter period

may be specified by the issuer if it is not manifestly unreasonable.

(d) An issuer is not liable to a person who initiated a demand that

the issuer not register transfer for any loss the person suffers as a

result of registration of a transfer pursuant to an effective

indorsement or instruction if the person who initiated the demand does

not, within the time stated in the issuer's communication, either:

(1) obtain an appropriate restraining order, injunction, or other

process from a court of competent jurisdiction enjoining the

issuer from registering the transfer; or

(2) file with the issuer an indemnity bond, sufficient in the

issuer's judgment to protect the issuer and any transfer

agent, registrar, or other agent of the issuer involved from

any loss it or they may suffer by refusing to register the

transfer.

(e) This section does not relieve an issuer from liability for

registering transfer pursuant to an indorsement or instruction that was

not effective.