Ind. Code ch. 26-1-8.1

Ind. Code ch. 26-1-8.1
in effect

Ind. Code § 26-1-8.1-0.1 Effect of enactment of chapter

Sec. 0.1. The addition of this chapter by P.L.247-1995 does not affect an action or a proceeding commenced before July 1, 1996. As added by P.L.220-2011, SEC.417.

Ind. Code § 26-1-8.1-0.3 Perfection of certain security interests; continuation of perfection

Sec. 0.3. If a security interest in a security is perfected before July 1, 1996, and the action by which the security interest was perfected would suffice to perfect a security interest under this chapter, as added by P.L.247-1995, no further action is required to continue perfection. If a security interest in a security is perfected on July 1, 1996, but the action by which the security interest was perfected would not suffice to perfect a security interest under this chapter, as added by P.L.247-1995, the security interest remains perfected for a period of four (4) months after the effective date and continues perfected thereafter if appropriate action to perfect this chapter, as added by P.L.247-1995, is taken within that period. If a security interest is perfected on July 1, 1996, and the security interest can be perfected by filing under this chapter, as added by P.L.247-1995, a financing statement signed by the secured party instead of the debtor may be filed within that period to continue perfection or thereafter to perfect. As added by P.L.220-2011, SEC.418.

Ind. Code § 26-1-8.1-101 Short title

Sec. 101. IC 26-1-8.1 may be cited as Uniform Commercial Code─Investment Securities. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-102 Definitions and index of definitions; principles of construction and interpretation; characterization of person, business, or transaction

Sec. 102. (a) In IC 26-1-8.1: (1) "Adverse claim" means a claim that a claimant has a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset. (2) "Bearer form", as applied to a certificated security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an endorsement. (3) "Broker" means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity. (4) "Certificated security" means a security that is represented by a certificate. (5) "Clearing corporation" means: (i) a person that is registered as a "clearing agency" under the federal securities laws; (ii) a federal reserve bank; or (iii) any other person that provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority. (6) "Communicate" means to: (i) send a signed record; or (ii) transmit information by any mechanism agreed upon by the persons transmitting and receiving the information. (7) "Entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of IC 26-1-8.1-501(b)(2) or IC 26-1-8.1-501(b)(3), that person is the entitlement holder. (8) "Entitlement order" means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement. (9) "Financial asset", except as otherwise provided in IC 26-1-8.1-103, means: (i) a security; (ii) an obligation of a person or a share, participation, or other interest in a person or in property or an enterprise of a person, that is, or is of a type, dealt in or traded on financial markets, or that is recognized in any area in which it is issued or dealt in as a medium for investment; or (iii) any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under IC 26-1-8.1. As context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or an uncertificated security, a security certificate, or a security entitlement. (10) "Good faith", for purposes of the obligation of good faith in the performance or enforcement of contracts or duties within IC 26-1-8.1, means honesty in fact and the observance of reasonable commercial standards of fair dealing. (11) "Endorsement" means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it. (12) "Instruction" means a notification communicated to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed. (13) "Registered form", as applied to a certificated security, means a form in which: (i) the security certificate specifies a person entitled to the security; and (ii) a transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states. (14) "Securities intermediary" means: (i) a clearing corporation; or (ii) a person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. (15) "Security", except as otherwise provided in IC 26-1-8.1-103, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer: (i) which is represented by a security certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer; (ii) which is one (1) of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations; and (iii) which: (A) is, or is of a type, dealt in or traded on securities exchanges or securities markets; or (B) is a medium for investment and by its terms expressly provides that it is a security governed by IC 26-1-8.1. (16) "Security certificate" means a certificate representing a security. (17) "Security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset specified in IC 26-1-8.1-501 through IC 26-1-8.1-511. (18) "Uncertificated security" means a security that is not represented by a certificate. (b) The following definitions in IC 26-1-8.1 and in IC 26-1 apply to this article: "Appropriate person". IC 26-1-8.1-107. "Control". IC 26-1-8.1-106. "Controllable account". IC 26-1-9.1-102. "Controllable electronic record". IC 26-1-12-102. "Controllable payment intangible". IC 26-1-9.1-102. "Delivery". IC 26-1-8.1-301. "Investment company security". IC 26-1-8.1-103. "Issuer". IC 26-1-8.1-201. "Overissue". IC 26-1-8.1-210. "Protected purchaser". IC 26-1-8.1-303. "Securities account". IC 26-1-8.1-501. (c) In addition, IC 26-1-1 contains general definitions and principles of construction and interpretation applicable throughout IC 26-1-8.1. (d) The characterization of a person, business, or transaction for purposes of IC 26-1-8.1 does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule. As added by P.L.247-1995, SEC.10. Amended by P.L.199-2023, SEC.35.

Ind. Code § 26-1-8.1-103 Classification as security or financial asset

Sec. 103. (a) A share or similar equity interest issued by a corporation, business trust, joint stock company, or similar entity is a security. (b) An "investment company security" is a security. "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face amount certificate issued by a face amount certificate company that is so registered. Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company. (c) An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by IC 26-1-8.1, or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account. (d) A writing that is a security certificate is governed by IC 26-1-8.1 and not by IC 26-1-3.1, even though it also meets the requirements of that article. However, a negotiable instrument governed by IC 26-1-3.1 is a financial asset if it is held in a securities account. (e) An option or a similar obligation issued by a clearing corporation to its participants is not a security, but it is a financial asset. (f) A commodity contract (as defined in IC 26-1-9.1-102(a)(15)) is not a security or a financial asset. (g) A document of title is not a financial asset unless section 102(a)(9)(iii) of this chapter applies. (h) A controllable account, a controllable electronic record, or a controllable payment intangible is not a financial asset unless section 102(a)(9)(iii) of this chapter applies. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.38; P.L.143-2007, SEC.64; P.L.199-2023, SEC.36.

Ind. Code § 26-1-8.1-104 Acquisition of a security or financial asset

Sec. 104. (a) A person acquires a security or an interest therein, under IC 26-1-8.1, if: (1) the person is a purchaser to whom a security is delivered under IC 26-1-8.1-301; or (2) the person acquires a security entitlement to the security under IC 26-1-8.1-501. (b) A person acquires a financial asset, other than a security, or an interest therein, under IC 26-1-8.1, if the person acquires a security entitlement to the financial asset. (c) A person who acquires a security entitlement to a security or other financial asset has the rights specified in IC 26-1-8.1-501 through IC 26-1-8.1-511, but is a purchaser of any security, security entitlement, or other financial asset held by the securities intermediary only to the extent provided in IC 26-1-8.1-503. (d) Unless the context shows that a different meaning is intended, a person who is required by other law, regulation, rule, or agreement to transfer, deliver, present, surrender, exchange, or otherwise put in the possession of another person a security or financial asset satisfies that requirement by causing the other person to acquire an interest in the security or financial asset under subsection (a) or (b). As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-105 Notice of adverse claim

Sec. 105. (a) A person has notice of an adverse claim if: (1) the person knows of the adverse claim; (2) the person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or (3) the person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim. (b) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim. (c) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than: (1) one (1) year after a date set for presentment or surrender for redemption or exchange; or (2) six (6) months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date. (d) A purchaser of a certificated security has notice of an adverse claim if the security certificate: (1) whether in bearer or registered form, has been endorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or (2) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement. (e) Filing of a financing statement under IC 26-1-9.1 is not notice of an adverse claim to a financial asset. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.39.

Ind. Code § 26-1-8.1-106 Control by purchaser; certificated security, uncertificated security, or security entitlement; agreement by issuer or securities intermediary to comply with purchaser's orders or instructions

Sec. 106. (a) A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser. (b) A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser, and: (1) the certificate is endorsed to the purchaser or in blank by an effective endorsement; or (2) the certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer. (c) A purchaser has "control" of an uncertificated security if: (1) the uncertificated security is delivered to the purchaser; or (2) the issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner. (d) A purchaser has "control" of a security entitlement if: (1) the purchaser becomes the entitlement holder; (2) the securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or (3) another person, other than the transferor to the purchaser of an interest in the security entitlement: (A) has control of the security entitlement and acknowledges that it has control on behalf of the purchaser; or (B) obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser. (e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control. (f) A purchaser who has satisfied the requirements of subsection (c) or (d) has control even if the registered owner in the case of subsection (c) or the entitlement holder in the case of subsection (d) retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or a securities intermediary, or otherwise to deal with the uncertificated security or security entitlement. (g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder. (h) A person that has control under this section is not required to acknowledge that it has control on behalf of a purchaser. (i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees, or law other than this chapter or IC 26-1-9.1 otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.40; P.L.199-2023, SEC.37.

Ind. Code § 26-1-8.1-107 Effectiveness of endorsement, instruction, or entitlement order

Sec. 107. (a) "Appropriate person" means: (1) with respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security; (2) with respect to an instruction, the registered owner of an uncertificated security; (3) with respect to an entitlement order, the entitlement holder; (4) if the person designated in subdivision (1), (2), or (3) is deceased, the designated person's successor taking under other law or the designated person's personal representative acting for the estate of the decedent; or (5) if the person designated in subdivision (1), (2), or (3) lacks capacity, the designated person's guardian, conservator, or other similar representative who has power under other law to transfer the security or financial asset. (b) An endorsement, instruction, or entitlement order is effective if: (1) it is made by the appropriate person; (2) it is made by a person who has power under the law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under IC 26-1-8.1-106(c)(2) or IC 26-1-8.1-106(d)(2); or (3) the appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness. (c) An endorsement, instruction, or entitlement order made by a representative is effective even if: (1) the representative has failed to comply with a controlling instrument or with the law of the state having jurisdiction of the representative relationship, including any law requiring the representative to obtain court approval of the transaction; or (2) the representative's action in making the endorsement, instruction, or entitlement order or using the proceeds of the transaction is otherwise a breach of duty. (d) If a security is registered in the name of or specially endorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an endorsement, instruction, or entitlement order made by the person is effective even though the person is no longer serving in the described capacity. (e) Effectiveness of an endorsement, instruction, or entitlement order is determined as of the date the endorsement, instruction, or entitlement order is made, and an endorsement, instruction, or entitlement order does not become ineffective by reason of any later change of circumstances. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-108 Warranties upon purchase or transfer of security

Sec. 108. (a) A person who transfers a certificated security to a purchaser for value warrants to the purchaser, and an endorser, if the transfer is by endorsement, warrants to any subsequent purchaser, that: (1) the certificate is genuine and has not been materially altered; (2) the transferor or endorser does not know of any fact that might impair the validity of the security; (3) there is no adverse claim to the security; (4) the transfer does not violate any restriction on transfer; (5) if the transfer is by endorsement, the endorsement is made by an appropriate person, or if the endorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and (6) the transfer is otherwise effective and rightful. (b) A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that: (1) the instruction is made by an appropriate person, or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person; (2) the security is valid; (3) there is no adverse claim to the security; and (4) at the time the instruction is presented to the issuer: (i) the purchaser will be entitled to the registration of transfer; (ii) the transfer will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction; (iii) the transfer will not violate any restriction on transfer; and (iv) the requested transfer will otherwise be effective and rightful. (c) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants that: (1) the uncertificated security is valid; (2) there is no adverse claim to the security; (3) the transfer does not violate any restriction on transfer; and (4) the transfer is otherwise effective and rightful. (d) A person who endorses a security certificate warrants to the issuer that: (1) there is no adverse claim to the security; and (2) the endorsement is effective. (e) A person who originates an instruction for registration of transfer of an uncertificated security warrants to the issuer that: (1) the instruction is effective; and (2) at the time the instruction is presented to the issuer the purchaser will be entitled to the registration of transfer. (f) A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment, or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants only that the person has no knowledge of any unauthorized signature in a necessary endorsement. (g) If a person acts as agent of another in delivering a certificated security to a purchaser, the identity of the principal was known to the person to whom the certificate was delivered, and the certificate delivered by the agent was received by the agent from the principal or received by the agent from another person at the direction of the principal, the person delivering the security certificate warrants only that the delivering person has authority to act for the principal and does not know of any adverse claim to the certificated security. (h) A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent under subsection (g). (i) Except as otherwise provided in subsection (g), a broker acting for a customer makes to the issuer and a purchaser the warranties provided in subsections (a) through (f). A broker that delivers a security certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security, makes to the customer the warranties provided in subsection (a) or (b), and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of the customer. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-109 Warranties made by and to a securities intermediary

Sec. 109. (a) A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that: (1) the entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and (2) there is no adverse claim to the security entitlement. (b) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in IC 26-1-8.1-108(a) or IC 26-1-8.1-108(b). (c) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in IC 26-1-8.1-108(a) or IC 26-1-8.1-108(b). As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-110 Governing local law; determination of jurisdiction of issuer or securities intermediary

Sec. 110. (a) The local law of the issuer's jurisdiction, as specified in subsection (d), governs: (1) the validity of a security; (2) the rights and duties of the issuer with respect to registration of transfer; (3) the effectiveness of registration of transfer by the issuer; (4) whether the issuer owes any duties to an adverse claimant to a security; and (5) whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security. (b) The local law of the securities intermediary's jurisdiction, as specified in subsection (e), governs: (1) acquisition of a security entitlement from the securities intermediary; (2) the rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement; (3) whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and (4) whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder. (c) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered. (d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in subsection (a)(2) through (a)(5). (e) The following rules determine a "securities intermediary's jurisdiction" for purposes of this section: (1) If an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of IC 26-1-8.1-101 through IC 26-1-8.1-116, that jurisdiction is the securities intermediary's jurisdiction. (2) If subdivision (1) does not apply, and an agreement between the securities intermediary and its entitlement holder expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction. (3) If neither subdivision (1) nor subdivision (2) applies, and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction. (4) If none of the preceding subdivisions apply, the securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located. (5) If none of the preceding subdivisions apply, the securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located. (f) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account. (g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction governs a matter or transaction specified in subsection (a) or (b) even if the matter or transaction does not bear any relation to the jurisdiction. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.41; P.L.199-2023, SEC.38.

Ind. Code § 26-1-8.1-111 Applicability of rules adopted by clearing corporations

Sec. 111. A rule adopted by a clearing corporation governing rights and obligations among the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with IC 26-1-8.1 and affects another party who does not consent to the rule. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-112 Creditor access to debtor's interest in a security

Sec. 112. (a) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in subsection (d). However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer. (b) The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in subsection (d). (c) The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor's securities account is maintained, except as otherwise provided in subsection (d). (d) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party, or in an uncertificated security registered in the name of a secured party, or a security entitlement maintained in the name of a secured party, may be reached by a creditor by legal process upon the secured party. (e) A creditor whose debtor is the owner of a certificated security, uncertificated security, or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security, or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-113 Enforceability of contracts for sale or purchase of a security

Sec. 113. A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one (1) year of its making. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-114 Special rules in actions against issuers of a certificated security

Sec. 114. 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. (4) If it is shown that a defense or defect exists, the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-115 Liability of securities intermediary, broker, or other agent or bailee

Sec. 115. A securities intermediary that has transferred a financial asset under 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; (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. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-116 Determination of securities intermediary as purchaser for value

Sec. 116. 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. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-201 "Issuer" defined

Sec. 201. (a) With respect to an obligation on or a defense to a security, an "issuer" includes a person that: (1) places or authorizes the placing of its name on a security certificate, other than as authenticating trustee, registrar, transfer agent, or the like, to evidence a share, participation, or other interest in its property or in an enterprise, or to evidence its duty to perform an obligation represented by the certificate; (2) creates a share, participation, or other interest in its property or in an enterprise, or undertakes an obligation, that is an uncertificated security; (3) directly or indirectly creates a fractional interest in its rights or property, if the fractional interest is represented by a security certificate; or (4) becomes responsible for, or is in place of, another person described as an issuer in this section. (b) With respect to an obligation on or defense to a security, a guarantor is an issuer to the extent of its guaranty, whether or not its obligation is noted on a security certificate. (c) With respect to a registration of a transfer, issuer means a person on whose behalf transfer books are maintained. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-202 Terms of security; rules on validity; issuer's defenses; cancellation of contracts

Sec. 202. (a) Even against a purchaser for value and without notice, the terms of a certificated security include terms stated on the certificate and terms made part of the security by reference on the certificate to another instrument, indenture, or document or to a constitution, a statute, an ordinance, a rule, a regulation, an order, or the like, to the extent the terms referred to do not conflict with terms stated on the certificate. A reference under this subsection does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even if the certificate expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in any instrument, indenture, or document or in a constitution, a statute, an ordinance, a rule, a regulation, an order, or the like, under which the security is issued. (b) The following rules apply if an issuer asserts that a security is not valid: (1) A security other than a security issued by a government or governmental subdivision, agency, or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue. (2) Subdivision (1) applies to an issuer that is a government or governmental subdivision, agency, or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security. (c) Except as otherwise provided in IC 26-1-8.1-205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice. (d) All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense. (e) This section does not affect the right of a party to cancel a contract for a security "when, as, and if issued" or "when distributed" in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement under which the security is to be issued or distributed. (f) If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert any defense that the issuer could not assert if the entitlement holder held the security directly. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-203 Notice of defects

Sec. 203. After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer, if the act or event: (1) requires the payment of money, the delivery of a certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one (1) year after that date; or (2) is not covered by subdivision (1) and the purchaser takes the security more than two (2) years after the date set for surrender or presentation or the date on which performance became due. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-204 Restrictions on transfer

Sec. 204. 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. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-205 Effect of unauthorized signature or certificate

Sec. 205. 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, a registrar, a 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 subdivision (1), entrusted with responsible handling of the security certificate. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-206 Enforceability of incomplete or incorrect certificate

Sec. 206. (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. (b) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-207 Registered owner to exercise all rights and powers of owner absent appropriate notice of transfer

Sec. 207. (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 powers of an owner. (b) IC 26-1-8.1 does not affect the liability of the registered owner of a security for a call, an assessment, or the like. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-208 Warranties by security certificate authenticating signatory

Sec. 208. (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. (b) Unless otherwise agreed, a person signing under subsection (a) does not assume responsibility for the validity of the security in other respects. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-209 Issuer's lien

Sec. 209. A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-210 Overissue of security; refund in the event of unavailability of security

Sec. 210. (a) In this section, "overissue" means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue. (b) Except as otherwise provided in subsections (c) and (d), the provisions of IC 26-1-8.1 which validate a security or compel its issue or reissue do not apply to the extent that validation, issue, or reissue would result in overissue. (c) If an identical security not constituting an overissue is reasonably available for purchase, a person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds. (d) If a security is not reasonably available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person's demand. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-301 Delivery of security

Sec. 301. (a) Delivery of a certificated security to a purchaser occurs when: (1) the purchaser acquires possession of the security certificate; (2) another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or (3) a securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and is (i) registered in the name of the purchaser, (ii) payable to the order of the purchaser, or (iii) specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank. (b) Delivery of an uncertificated security to a purchaser occurs when: (1) the issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or (2) another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.42.

Ind. Code § 26-1-8.1-302 Rights acquired by purchaser

Sec. 302. (a) Except as otherwise provided in subsections (b) and (c), a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer. (b) A purchaser of a limited interest acquires rights only to the extent of the interest purchased. (c) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.43.

Ind. Code § 26-1-8.1-303 "Protected purchaser" defined; acquisition of interest free of adverse claims

Sec. 303. (a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest therein, who: (1) gives value; (2) does not have notice of any adverse claim to the security; and (3) obtains control of the certificated or uncertificated security. (b) A protected purchaser also acquires its interest in the security free of any adverse claim. As added by P.L.247-1995, SEC.10. Amended by P.L.199-2023, SEC.39.

Ind. Code § 26-1-8.1-304 Endorsement of securities

Sec. 304. (a) An endorsement may be in blank or special. An endorsement in blank includes an endorsement to bearer. A special endorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank endorsement to a special endorsement. (b) An endorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement. (c) An endorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the endorsement is on a separate document, until delivery of both the document and the certificate. (d) If a security certificate in registered form has been delivered to a purchaser without a necessary endorsement, the purchaser may become a protected purchaser only when the endorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied. (e) An endorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses. (f) Unless otherwise agreed, a person making an endorsement assumes only the obligations provided in IC 26-1-8.1-108 and not an obligation that the security will be honored by the issuer. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-305 Incomplete instructions; obligations imposed on person initiating instructions

Sec. 305. (a) If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly. (b) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by IC 26-1-8.1-108 and not an obligation that the security will be honored by the issuer. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-306 Warranties by guarantor

Sec. 306. (a) A person who guarantees a signature of an endorser of a security certificate warrants that at the time of signing: (1) the signature was genuine; (2) the signer was an appropriate person to endorse, 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 makes the warranties of a signature guarantor under subsection (b) 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) or a special guarantor under subsection (c) does not otherwise warrant the rightfulness of the transfer. (e) A person who guarantees an endorsement of a security certificate makes the warranties of a signature guarantor under subsection (a) 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) 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 endorsement, 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 endorser or originator of an instruction whose signature, endorsement, 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. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-307 Duties of transferor of security

Sec. 307. Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the transfer of the security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the purchaser may reject or rescind the transfer. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-401 Issuer's duty to register transfer

Sec. 401. (a) 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, the issuer shall register the transfer as requested if: (1) under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name; (2) the endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person; (3) reasonable assurance is given that the endorsement or instruction is genuine and authorized (IC 26-1-8.1-402); (4) any applicable law relating to the collection of taxes has been complied with; (5) the transfer does not violate any restriction on transfer imposed by the issuer in accordance with IC 26-1-8.1-204; (6) a demand that the issuer not register transfer has not become effective under IC 26-1-8.1-403, or the issuer has complied with IC 26-1-8.1-403(b) but no legal process or indemnity bond is obtained as provided in IC 26-1-8.1-403(d); and (7) the transfer is in fact rightful or is to a protected purchaser. (b) If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person's principal for loss resulting from unreasonable delay in registration or failure or refusal to register the transfer. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-402 Issuer's right to assurances

Sec. 402. (a) An issuer may require the following assurance that each necessary endorsement or each instruction is genuine and authorized: (1) in all cases, a guaranty of the signature of the person making an endorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity; (2) if the endorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign; (3) if the endorsement is made or the instruction is originated by a fiduciary under IC 26-1-8.1-107(a)(4) or IC 26-1-8.1-107(a)(5), appropriate evidence of appointment or incumbency; (4) if there is more than one (1) fiduciary, reasonable assurance that all who are required to sign have done so; and (5) if the endorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection. (b) An issuer may elect to require reasonable assurance beyond that specified in this section. (c) In this section: (1) "Guaranty of the signature" means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable. (2) "Appropriate evidence of appointment or incumbency" means: (i) in the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within sixty (60) days before the date of presentation for transfer; or (ii) in any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considers appropriate. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-403 Demand that transfer not be registered; notice; contents; liability

Sec. 403. (a) A person who is an appropriate person to make an endorsement 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 (i) the person who initiated the demand at the address provided in the demand and (ii) 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 thirty (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 under an effective endorsement 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 under an endorsement or instruction that was not effective. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-404 Issuer liability for wrongful registration of transfer

Sec. 404. (a) Except as otherwise provided in IC 26-1-8.1-406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered: (1) under an ineffective endorsement or instruction; (2) after a demand that the issuer not register transfer became effective under IC 26-1-8.1-403(a) and the issuer did not comply with IC 26-1-8.1-403(b); (3) after the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or (4) by an issuer acting in collusion with the wrongdoer. (b) An issuer that is liable for wrongful registration of transfer under subsection (a) on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer's liability to provide the person with a like security is governed by IC 26-1-8.1-210. (c) Except as otherwise provided in subsection (a) or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made under an effective endorsement or instruction. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-405 Issuance of new certificates; protected purchasers

Sec. 405. (a) If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificate if the owner: (1) so requests before the issuer has notice that the certificate has been acquired by a protected purchaser; (2) files with the issuer a sufficient indemnity bond; and (3) satisfies other reasonable requirements imposed by the issuer. (b) If, after the issue of a new security certificate, a protected purchaser of the original certificate presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer's liability is governed by IC 26-1-8.1-210. In addition to any rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or any person taking under that person, except a protected purchaser. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-406 Failure to notify issuer of lost, destroyed, or wrongfully taken certificates

Sec. 406. If a security certificate has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under IC 26-1-8.1-404 or a claim to a new security certificate under IC 26-1-8.1-405. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-407 Obligations of agents acting on behalf of issuer

Sec. 407. A person acting as authenticating trustee, a transfer agent, a registrar, or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates, has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-501 Acquisition of security entitlements

Sec. 501. (a) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. (b) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary: (1) indicates by book entry that a financial asset has been credited to the person's securities account; (2) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person's securities account; or (3) becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account. (c) If a condition of subsection (b) has been met, a person has a security entitlement even though the securities intermediary does not itself hold the financial asset. (d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset. (e) Issuance of a security is not establishment of a security entitlement. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-502 Adverse claims against person holding a security entitlement

Sec. 502. An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who acquires a security entitlement under IC 26-1-8.1-501 for value and without notice of the adverse claim. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-503 Property interests in financial assets; enforcement of property rights; purchasers for value

Sec. 503. (a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of the securities intermediary, except as otherwise provided in IC 26-1-8.1-511. (b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to the time the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in that financial asset. (c) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced against the securities intermediary only by exercise of the entitlement holder's rights under IC 26-1-8.1-505 through IC 26-1-8.1-508. (d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced against a purchaser of the financial asset or interest therein only if: (1) insolvency proceedings have been initiated by or against the securities intermediary; (2) the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset; (3) the securities intermediary violated its obligations under IC 26-1-8.1-504 by transferring the financial asset or interest therein to the purchaser; and (4) the purchaser is not protected under subsection (e). The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the purchaser. (e) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection (a), whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with the securities intermediary in violating the securities intermediary's obligations under IC 26-1-8.1-504. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-504 Maintenance of financial assets by securities intermediary; exempted entity

Sec. 504. (a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one (1) or more other securities intermediaries. (b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain under subsection (a). (c) A securities intermediary satisfies the duty in subsection (a) if: (1) the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or (2) in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset. (d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-505 Duty of securities intermediary to obtain and pay distributions on financial assets

Sec. 505. (a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if: (1) the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or (2) in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution. (b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-506 Duty of securities intermediary to exercise rights as directed by entitlement holder

Sec. 506. A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder. A securities intermediary satisfies the duty if: (1) the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or (2) in the absence of agreement, the securities intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-507 Duty of securities intermediary to comply with entitlement order; liability for wrongful transfer

Sec. 507. (a) A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and the securities intermediary has had reasonable opportunity to comply with the entitlement order. A securities intermediary satisfies the duty if: (1) the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or (2) in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order. (b) If a securities intermediary transfers a financial asset under an ineffective entitlement order, the securities intermediary shall reestablish a security entitlement in favor of the person entitled to it, and pay or credit any payments or distributions that the person did not receive as a result of the wrongful transfer. If the securities intermediary does not reestablish a security entitlement, the securities intermediary is liable to the entitlement holder for damages. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-508 Duty of securities intermediary to act at direction of entitlement holder

Sec. 508. A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies the duty if: (1) the securities intermediary acts as agreed upon by the entitlement holder and the securities intermediary; or (2) in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-509 Standards for performance of duties by securities intermediary

Sec. 509. (a) If the substance of a duty imposed upon a securities intermediary by IC 26-1-8.1-504 through IC 26-1-8.1-508 is the subject of other statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty. (b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall exercise its rights in a commercially reasonable manner. (c) The obligation of a securities intermediary to perform the duties imposed by IC 26-1-8.1-504 through IC 26-1-8.1-508 is subject to: (1) rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise; and (2) rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary. (d) IC 26-1-8.1-504 through IC 26-1-8.1-508 do not require a securities intermediary to take any action that is prohibited by other statute, regulation, or rule. As added by P.L.247-1995, SEC.10.

Ind. Code § 26-1-8.1-510 Purchaser for value of financial asset or security entitlement; adverse claims

Sec. 510. (a) In a case not covered by the priority rules in IC 26-1-9.1 or the rules stated in subsection (c), an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control. (b) If an adverse claim could not have been asserted against an entitlement holder under IC 26-1-8.1-502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder. (c) In a case not covered by the priority rules in IC 26-1-9.1, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. Except as otherwise provided in subsection (d), purchasers who have control rank according to priority in time of: (1) the purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under IC 26-1-8.1-106(d)(1); (2) the securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under IC 26-1-8.1-106(d)(2); or (3) if the purchaser obtained control through another person under IC 26-1-8.1-106(d)(3), the time on which priority would be based under this subsection if the other person were the secured party. (d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary. As added by P.L.247-1995, SEC.10. Amended by P.L.57-2000, SEC.44.

Ind. Code § 26-1-8.1-511 Priority of claims in financial asset

Sec. 511. (a) Except as otherwise provided in subsections (b) and (c), if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor. (b) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary's entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset. (c) If a clearing corporation does not have sufficient financial assets to satisfy both its obligations to entitlement holders who have security entitlements with respect to a financial asset and its obligation to a creditor of the clearing corporation who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders. As added by P.L.247-1995, SEC.10.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/26Fetched: 10/17/2026