ORS 78.2020
Terms of security

  • issuer’s responsibility and defenses
  • notice of defect or defense

(1)

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, statute, ordinance, rule, regulation, order or the like, to the extent that 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, statute, ordinance, rule, regulation, order or the like, pursuant to which the security is issued.

(2)

The following rules apply if an issuer asserts that a security is not valid:

(a)

A security other than one 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.

(b)

Paragraph (a) of this subsection 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.

(3)

Except as otherwise provided in ORS 78.2050 (Effect of unauthorized signature on security certificate), lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.

(4)

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.

(5)

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 pursuant to which the security is to be issued or distributed.

(6)

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. [1961 c.726 §78.2020 (Terms of security); 1985 c.676 §78.2020 (Terms of security); 1995 c.328 §18]

Source: Section 78.2020 — Terms of security; issuer’s responsibility and defenses; notice of defect or defense, https://www.­oregonlegislature.­gov/bills_laws/ors/ors078.­html.

78.1010
Short title
78.1020
Definitions and index of definitions
78.1030
Rules for determining whether certain obligations and interests are securities or financial assets
78.1040
Acquisition of security or financial asset or interest therein
78.1050
Notice of adverse claim
78.1060
Control
78.1070
Whether indorsement, instruction or entitlement order is effective
78.1080
Warranties in direct holding
78.1090
Warranties in indirect holding
78.1100
Applicability
78.1110
Clearing corporation rules
78.1120
Creditor’s legal process
78.1130
Statute of frauds inapplicable
78.1140
Evidentiary rules concerning certificated securities
78.1150
Securities intermediary and others not liable to adverse claimant
78.1160
Securities intermediary as purchaser for value
78.2010
“Issuer.”
78.2020
Terms of security
78.2030
Staleness as notice of defects or defenses
78.2040
Effect of issuer’s restriction on transfer
78.2050
Effect of unauthorized signature on security certificate
78.2060
Completion or alteration of security certificate
78.2070
Rights of issuer with respect to registered owners
78.2080
Effect of signature of authenticating trustee, registrar or transfer agent
78.2090
Issuer’s lien
78.2100
Overissue
78.3010
Delivery
78.3020
Rights of purchaser
78.3030
“Protected purchaser.”
78.3040
Indorsement
78.3050
Instruction
78.3060
Effect of guaranteeing signature, indorsement or instruction
78.3070
Purchaser’s rights to requisites for registration of transfer
78.4010
Duty of issuer to register transfer
78.4020
Assurance that indorsement or instruction is effective
78.4030
Demand that issuer not register transfer
78.4040
Wrongful registration
78.4050
Replacement of lost, destroyed or wrongfully taken security certificate
78.4060
Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate
78.4070
Authenticating trustee, transfer agent and registrar
78.5010
Securities account
78.5020
Assertion of adverse claim against entitlement holder
78.5030
Property interest of entitlement holder in financial asset held by securities intermediary
78.5040
Duty of securities intermediary to maintain financial asset
78.5050
Duty of securities intermediary with respect to payments and distributions
78.5060
Duty of securities intermediary to exercise rights as directed by entitlement holder
78.5070
Duty of securities intermediary to comply with entitlement order
78.5080
Duty of securities intermediary to change entitlement holder’s position to other form of security holding
78.5090
Specification of duties of securities intermediary by other statute or regulation
78.5100
Rights of purchaser of security entitlement from entitlement holder
78.5110
Priority among security interests and entitlement holders
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