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Canada Cooperatives Act (S.C. 1998, c. 1)

Act current to 2024-02-06 and last amended on 2022-08-31. Previous Versions

PART 12Security Certificates, Registers and Transfers (continued)

General (continued)

Marginal note:No duty to inquire

  •  (1) A purchaser of a security, or a broker for a seller or purchaser, has no duty to inquire into the rightfulness of the transfer and, subject to section 214, has no notice of an adverse claim.

  • Marginal note:Third party holding

    (2) Subsection (1) applies even if the purchaser or broker has notice that the security is held by a third person or is registered in the name of or endorsed by a fiduciary.

Marginal note:Deemed notice

 A purchaser or broker who knows that the transaction is for the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty is deemed to have notice of an adverse claim.

Marginal note:Staleness

  •  (1) The following events do not constitute notice of an adverse claim except if the security becomes stale within the meaning of subsection (2):

    • (a) an event that creates a right to performance of the principal obligation evidenced by the security; or

    • (b) an event that sets the date on or after which the security is to be presented or surrendered for redemption or exchange.

  • Marginal note:Staleness of security

    (2) A security becomes stale if

    • (a) the purchaser takes the security more than one year after

      • (i) the date on which performance of the principal obligation evidenced by the security was due, or

      • (ii) the date on or after which the security was to be presented or surrendered for redemption or exchange; or

    • (b) the payment of money or the delivery of securities is required in order to present or surrender the security, the money or securities are available on the day for the payment or delivery and the purchaser takes the security more than six months after that day.

Marginal note:Guarantee

  •  (1) A person who presents a security for registration of transfer or for payment or exchange guarantees to the issuer that the person is entitled to do so.

  • Marginal note:Limitation on guarantee

    (2) A good faith purchaser who receives a new, re-issued or re-registered security and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

Marginal note:Content of guarantee

 A person who transfers a security to a purchaser for value guarantees by the transfer only that

  • (a) the transfer is effective and rightful;

  • (b) the security is genuine and has not been materially altered; and

  • (c) the person knows of nothing that might impair the validity of the security.

Marginal note:Guarantee of intermediary

 An intermediary delivering a security to a purchaser who knows that the intermediary is an intermediary guarantees only good faith.

Marginal note:Guarantee of broker

 A broker gives to a customer, to the issuer and to a purchaser the guarantees provided in sections 216 to 218 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent or mandatary are in addition to guarantees given by the customer and guarantees given in favour of the customer.

Marginal note:Right to compel endorsement

 If a registered security is delivered to a purchaser without a necessary endorsement, the purchaser has the right to demand the endorsement. The purchaser becomes a good faith purchaser after the endorsement.

Marginal note:Definition of appropriate

  •  (1) In this section, section 222, subsections 229(1) and 237(1) and section 241, appropriate, with respect to a person, means that the person is

    • (a) the person who is specified by the security or by a special endorsement to be entitled to the security;

    • (b) if a person described in paragraph (a) is described as a fiduciary but is no longer serving as one, either that person or their successor;

    • (c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

    • (d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, minority or incapability, the person’s fiduciary;

    • (e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

    • (f) a person who has the legal power to sign; or

    • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent or mandatary, the person’s authorized agent or mandatary.

  • Marginal note:Time for determination

    (2) The authority of a person signing is determined as of the time of signing.

  • 1998, c. 1, s. 221
  • 2018, c. 8, s. 68

Marginal note:Endorsement

  •  (1) An endorsement of a security in registered form for the purposes of assignment or transfer is made when an appropriate person signs either the security or a separate document, or when the signature of an appropriate person is written without more on the back of the security.

  • Marginal note:Blank or special

    (2) An endorsement may be

    • (a) in blank; or

    • (b) special.

  • Marginal note:Blank endorsement

    (3) An endorsement in blank includes an endorsement to bearer.

  • Marginal note:Special endorsement

    (4) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

  • Marginal note:Right of holder

    (5) A holder may convert an endorsement in blank into a special endorsement.

Marginal note:Immunity of endorser

 Unless agreed otherwise, the endorser does not, by the endorsement, assume any obligation that the security will be honoured by the issuer.

Marginal note:Partial endorsement

 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

 Failure of a fiduciary to comply with the instrument or act that is the source of the fiduciary’s power or with the law of the jurisdiction governing the fiduciary relationship does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

  • 1998, c. 1, s. 225
  • 2011, c. 21, s. 95(E)

Marginal note:Effect of endorsement without delivery

 An endorsement of a security does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and the document.

Marginal note:Endorsement in bearer form

 An endorsement of a security in bearer form may give notice of an adverse claim under section 212 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

  •  (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or a purchaser, other than a good faith purchaser who has in good faith received a new, re-issued or re-registered security on registration of transfer, unless the owner

    • (a) has ratified an unauthorized endorsement of the security; or

    • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

  • Marginal note:Liability of issuer

    (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

  •  (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing, the signer was an appropriate person to endorse and the signature was genuine.

  • Marginal note:Limitation of liability

    (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

  • Marginal note:Warranties of guarantor of endorsement

    (3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

  • Marginal note:Extent of liability

    (4) The guarantees referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to the person for any loss resulting from breach of warranty.

Marginal note:Presumption of delivery

 Delivery of a security to a purchaser occurs when

  • (a) the purchaser or a person designated by the purchaser acquires possession of it;

  • (b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;

  • (c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or

  • (d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Presumption of ownership

  •  (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases described in paragraphs 230(b) and (c).

  • Marginal note:Ownership of part of fungible bulk

    (2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest or right in the fungible bulk.

  • Marginal note:Notice to securities broker of adverse claim

    (3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.

  • 1998, c. 1, s. 231
  • 2011, c. 21, s. 96

Marginal note:Delivery of security

  •  (1) Unless agreed otherwise, if a sale of a security is made on a stock exchange or otherwise through securities brokers,

    • (a) the selling customer fulfils their duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or when they cause an acknowledgement to be made to the selling securities broker; and

    • (b) the selling securities broker, including a correspondence broker, acting for a selling customer fulfils their duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by affecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

  • Marginal note:Duty to deliver

    (2) Except as provided otherwise in this section and unless agreed otherwise, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.

  • Marginal note:Delivery to securities broker

    (3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

Marginal note:Right to reclaim possession

  •  (1) A person against whom the transfer of a security is wrongful may, against anyone except a good faith purchaser,

    • (a) reclaim possession of the security or obtain possession of a new security evidencing all or part of the same rights; or

    • (b) claim damages.

  • Marginal note:Recovery when unauthorized endorsement

    (2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a good faith purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 228.

Marginal note:Right to requisites for registration

  •  (1) Unless agreed otherwise, a transferor must, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for the transferor to provide authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

  • Marginal note:Rescission of transfer

    (2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

 No seizure of a security or other interest or right evidenced by the security is effective until the person making the seizure obtains possession of the security.

  • 1998, c. 1, s. 235
  • 2011, c. 21, s. 97

Marginal note:No liability for acts in good faith

 An agent or mandatary, or a bailee or depositary, who in good faith has received securities and sold, pledged or delivered them according to the instructions of the principal or mandator is not in breach of a fiduciary duty or otherwise liable even though they have no right to dispose of the securities.

  • 1998, c. 1, s. 236
  • 2011, c. 21, s. 97

Marginal note:Duty to register transfer

  •  (1) If a security in registered form is presented for transfer, the issuer must register the transfer if

    • (a) the security is endorsed by an appropriate person;

    • (b) reasonable assurance is given that the endorsement is genuine and effective;

    • (c) the issuer has no duty to inquire into adverse claims or has discharged that duty;

    • (d) all applicable laws relating to the collection of taxes have been complied with;

    • (e) the transfer is rightful or is to a good faith purchaser; and

    • (f) any transfer fee referred to in section 180 has been paid.

  • Marginal note:Liability for delay

    (2) An issuer who has a duty to register a transfer of a security is liable to the person presenting it for registration for any loss resulting from an unreasonable delay in registration or from the failure or refusal to register the transfer.

 

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