Chap. 482.—An ACT to make uniform the law of transfer of shares of stock in
corporations. [S B 88]
Approved March 25, 1924.

Be it enacted by the general assembly of Virginia as follows:

Section 1. How titles to certificates and shares transferred.—Title
to i certificate and to the shares represented thereby can be transferred
only:

(a) By delivery of the certificate endorsed either in blank or to a
specified person by the person appearing by the certificate to be the
owner of the shares represented thereby; or
(b) By delivery of the certificate and a separate document contain-
ing a written assignment of the certificate or a power of attorney to
sell, assign or transfer the same or the shares represented thereby, signed
by the person appearing by the certificate to be the owner of the shares
represented thereby. Such assignment or power of attorney may be
either in blank or to a specified person.

The provisions of this section shall be applicable, although the charter
or articles of incorporation or code of regulations or by-laws of the cor-
poration issuing the certificate and the certificate itself provide that the
shares represented thereby shall be transferable only on the books of
the corporation or shall be registered by a registrar or transferred by a
transfer agent.

Section 2. Powers of those lacking full legal capacity and of fiduci-
aries not enlarged.—Nothing in this act shall be construed as enlarging
the powers of an infant or other person lacking full legal capacity, or of
a trustee, executor or administrator, or other fiduciary, to make a valid
endorsement, assignment or power of attorney.

Section 3. Corporation not forbidden to treat registered holder as
owner.—Nothing in this act shall be construed as forbidding a corpora-
tion:

(a) To recognize the exclusive right of.a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner; or

(b) To hold liable for calls and assessments a person registered on
its books as the owner of shares.

Section 4. Title derived from certificate extinguishes title derived
from a separate document.—The title of a transferee of a certificate
under a power of attorney or assignment not written upon the certificate
and the title of any person claiming under such transferee, shall cease
and determine if, at any time prior to the surrender of the certificate to
the corporation issuing it, another person, for value in good faith, and
without notice of the prior transfer, shall purchase and obtain delivery
of such certificate with the endorsement of the person appearing by the
certificate to be the owner thereof, or shall purchase and obtain delivery
of such certificate and the written assignment or power of attorney of
such person, though contained in a separate document.

Section 5. Who may deliver a certificate-—The delivery of a cer-
tificate to transfer title in accordance with the provisions of section one,
is effectual, except as provided in section seven, though made by one
having no right of possession and having no authority from the owner
of the certificate or from the person purporting to transfer the title.

Section .6. Indorsement effectual in spite of fraud, duress, mistake,
revocation, death, incapacity, or lack of consideration or authority.—
The endorsement of a certificate by the person appearing by the certifi-
cate to be the owner of the shares represented thereby is effectual, ex-
cept as provided in section seven, though the endorser or transferor:

(a) Was induced by fraud, duress or mistake to make the endorse-
ment or delivery; or

(b) Has revoked the delivery of the certificate, or the authority
given by the endorsement or delivery of the certificate; or

(c) Has died or become legally incapacitated after the endorse-
ment, whether before or after the delivery of the certificate; or
(d) Has received no consideration.

Section 7. Rescission of transfer.—If the endorsement or delivery
of a certificate:

(a) Was procured by fraud or duress; or

(b) Was made under such mistake as to make the endorsement or
delivery inequitable; or

If the delivery of a certificate was made?

(c) Without authority from the owner or

(d) After the owner’s death or legal incapacity the possession of the
certificate may be reclaimed and the transfer thereof rescinded, unless:

(1) The certificate has been transferred to a purchaser for value in
good faith without notice of any facts making the transfer wrongful, or

(2) The injured person has elected to waive the injury, or has been
guilty of laches in endeavoring to enforce his rights.

Any court of appropriate jurisdiction may enforce specifically such
right to reclaim the possession of the certificate or to rescind the transfer
thereof and, pending litigation, may enjoin the further transfer of the
certificate or impound it.

Section 8. cission of transfer of certificate does not invalidate
subsequent transfer by transferee in possession.—Although the transfer
of a certificate or of shares represented thereby has been rescinded or
set aside, nevertheless, if the transferee has possession of the certifi-
cate or of a new certificate representing part of the whole of the same
shares of stock, a subsequent transfer of such certificate by the trans-
feree, mediately or immediately, to a purchaser for value in good faith,
without notice of any facts making the transfer wrongful, shall give
such purchaser an indefeasible right to the certificate and the shares
represented thereby.

Section 9. Delivery of unindorsed certificate imposes obligation to
indorse.—The delivery of a certificate by the person appearing by the
certificate to be the owner thereof without the endorsement requisite
for the transfer of the certificate and the shares represented thereby,
but with intent to transfer such certificate or shares, shall impose an
obligation, in the absence of an agreement to the contrary, upon the
person so delivering, to complete the transfer by making the necessary
endorsement. The transfer shall take effect as of the time when the
qnaorscinenh is actually made. This obligation may be specifically en-

orced. ;

Section 10. Ineffectual attempt to transfer amounts to a promise
to transfer.—An attempted transfer of title to a certificate or to the
shares represented thereby without delivery of the certificate shall have
the effect of a promise to transfer and the obligation, if any, imposed
by such promise shall be determined by the law governing the formation
and performance of contracts.

Section 11. Warranties on sale of certificate——A person who for
value transfers a certificate, including one who assigns for value a claim
secured by a certificate, unless a contrary intention appears, warrants:

(a) That the certificate is genuine.

(b) That he has a legal right to transfer it, and

(c) That he has no knowledge of any fact which would impair the
validity of the certificate.
In the case of an assignment of:a claim secured by a certificate, the
liability of the assignor upon such warranty shall not exceed the amount
of the claim.

Section 12. No warranty implied from accepting payment of a
debt.—A mortgagee, pledgee or other holder for security of a certificate
who in good faith demands or receives payment of the debt for which
such certificate is security, whether from a party to a draft drawn for
such debt, or from any other person, shall not by so doing be deemed to
represent or to warrant the genuineness of such certificate, or the value
of the shares represented thereby.

Section 13. No attachment or levy upon shares unless certificate
surrendered or transfer enjoined.—No attachment or levy upon shares
of stock for which a certificate is outstanding shall be valid until such
certificate be actually seized by the officer making the attachment or
levy, or be surrendered to the corporation which issued it, or its transfer
by the holder be enjoined. Except where a certificate is lost or de-
stroyed, such corporation shall not be compelled to issue a new certifi-
cate for the stock until the old certificate is surrendered to it.

Section 14. Creditor’s remedies to reach certificate.—A creditor
whose debtor is the owner of a certificate shall be entitled to such aid
from courts of appropriate jurisdiction, by injunction and otherwise, in
attaching such certificate or in satisfying the claim by means thereof as
is allowed at law or in equity, in regard to property which cannot readily
be attached or levied upon by ordinary legal process.

Section 15. There shall be no lien restriction unless indicated on
certificate.—There shall be no lien in favor of a corporation upon the
shares represented by a certificate issued by such corporation and there
shall be no restriction upon the transfer of shares so represented by vir-
tue of any by-laws of such corporation, or otherwise, unless. the right of
the corporation to such lien or the restriction is stated upon the certifi-
cate.
Section 16. Alteration of certifi cate does not divest title to shares.
—The alteration of a certificate, whether fraudulent or not and by
whomsoever made, shall not deprive the owner of his title to the certifi-
cate and the shares originally represented thereby, and the transfer of
such certificate shall convey to the transferee a good title to such certifi-
cate and to the shares originally represented thereby.

Section 17. Lost or destroyed certificate—Where a certificate has
been lost or destroyed, a court of competent jurisdiction may order the
issue of a new certificate therefor on service of process, upon the corpo-
ration and on reasonable notice by publication, and in any other way
which the court may direct, to all persons interested, and upon satis-
factory proof of such loss or destruction and upon the giving of a bond
with sufficient surety to be approved by the court to protect the corpora-
tion or any person injured by the issue of the new certificate from any
liability or expense, which it or they may incur by reason of the original
certificate remaining outstanding. The court may also in its discretion
order the payment of the corporation’s reasonable costs and counsel fees.

The issue of a new certificate under an order of the court as provided
in this section shall not relieve the corporation from liability in damages
to a person to whom the original certificate has been or shall be trans-
ferred for value without notice of the proceedings or of the issuance of
the new certificate.

Section 18. Rules for cases not provided for by this act.—In any
case not provided for by this act, the rules of law and equity, including
the law merchant, and in particular the rules relating to the law of
principal and agent, executors, administrators and trustees, and to the
effect of fraud, misrepresentation, duress or coercion, mistake, bank-
ruptcy, or other invalidating cause, shall govern.

Section 19. Interpretation shall give effect to purpose of uniform-
ity.—This act shall be so interpreted and construed as to effectuate its
general purpose to make uniform the law of those States which enact it.

Section 20. Definition of indorsement.—A certificate is endorsed
when an assignment or a power of attorney to sell, assign, or transfer
the certificate or the shares represented thereby is written on the certifi-
cate and signed by the person appearing by the certificate to be the
owner of the shares represented thereby, or when the signature of such
person is written without more upon the back of the certificate. In
any of such cases a certificate is endorsed though it has not been de-
ivered.

Section 21. Definition of person appearing to be the owner of cer-
tificate—The person to whom a certificate was originally issued is the
person appearing by the certificate to be the owner thereof, and of the
shares represented thereby, until and unless he endorses the certificate
to another specified person, and thereupon such other specified person
is the person appearing by the certificate to be the owner thereof until
and unless he also endorses the certificate to another specified person.
Subsequent special endorsements may be made with like effect.

Section 22. Other definitions.—(1) In this act, unless the context
or subject matter otherwise requires:

“‘Certificate’’ means a certificate of stock in a corporation organized
under the laws of this State or of another State whose laws are consistent
with this act.

“Delivery’’ means voluntary transfer of possession from one person to
another.

“Person” includes a corporation or partnership or two or more per-
sons having a joint or common interest.

To “purchase” includes to take as mortgages or as pledgee.

“Purchaser” includes mortgagee and pledgee.

“Shares” means a share or shares of stock in a corporation organized
under the laws of this State or of another State whose laws are consistent
with this act.

“State” includes State, territory, district and insular possession of
the United States.

‘Transfer’? means transfer of legal title.

“Title” means legal title and does not include a merely equitable or
beneficial ownership or interest.

“Value” is any consideration sufficient to support a simple contract.
An antecedent or pre-existing obligation, whether for money or not,
constitutes value where a certificate is taken either in satisfaction thereof
or as security therefor.

(2) A thing is done “in good faith” within the meaning of this act,
when it is, in fact, done honestly, whether it be done negligently or not.
Section 23. Act does not apply to existing certificates.—The pro-
visions of this act apply only to certificates issued after the taking effect
of this act. ,

Section 24. Inconsistent legislation repealed.—All acts or parts of
acts inconsistent with this act are hereby repealed.

Section 25. Time when the act takes effect.—This act shall take
effect on the first day of July,-nineteen hundred and twenty-four.

Section 26. Name of act.—This act may be cited as the Uniform
Stock Transfer act. |