§ 25-8-404. Wrongful registration. - North Carolina Statutes

§25‑8‑404.  Wrongful registration.

(a)        Except as otherwiseprovided in G.S. 25‑8‑406, an issuer is liable for wrongfulregistration of transfer if the issuer has registered a transfer of a securityto a person not entitled to it, and the transfer was registered:

(1)        Pursuant to anineffective indorsement or instruction;

(2)        After a demand thatthe issuer not register transfer became effective under G.S. 25‑8‑403(a)and the issuer did not comply with G.S. 25‑8‑403(b);

(3)        After the issuer hadbeen served with an injunction, restraining order, or other legal processenjoining it from registering the transfer, issued by a court of competentjurisdiction, and the issuer had a reasonable opportunity to act on theinjunction, restraining order, or other legal process; or

(4)        By an issuer actingin collusion with the wrongdoer.

(b)        An issuer that isliable for wrongful registration of transfer under subsection (a) of thissection on demand shall provide the person entitled to the security with a likecertificated or uncertificated security, and any payments or distributions thatthe person did not receive as a result of the wrongful registration. If anoverissue would result, the issuer's liability to provide the person with alike security is governed by G.S. 25‑8‑210.

(c)        Except as otherwiseprovided in subsection (a) of this section or in a law relating to thecollection of taxes, an issuer is not liable to an owner or other personsuffering loss as a result of the registration of a transfer of a security ifregistration was made pursuant to an effective indorsement or instruction. (1965,c. 700, s. 1; 1989, c. 588, s. 1; 1997‑181, s. 1.)