CHAPTER 159 - UNIFORM STOCK TRANSFER ACT
AN ACT TO AMEND CHAPTER 65 OF THE REVISED CODE OF DELAWARE OF 1935, RELATING TO CORPORATIONS, BY PROVIDING FOR THE METHOD OF TRANSFERRING SHARES OR CERTIFICATES OF STOCK.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General' Assembly met (two-thirds of all the members elected to each branch thereof concurring therein):
Section 1. That said Chapter 65 of the Revised Code of Delaware of 1935 be and the same is hereby amended by striking out 2048. Sec. 16 thereof and inserting in lieu thereof a new 2048. Sec. 16, reading as follows:-
"2048. Sec. 16. Stock, Personal Property; How Transferred; When Not Taxed:--The shares of stock in every corporation shall be deemed personal property and transferable as hereinafter provided, provided, however, that no stock or bonds issued by any corporation organized under this Chapter shall be taxed by this State when the same shall be owned by non-residents of this State, or by foreign corporations. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer."
Section 2. That said Chapter 65 be and the same is hereby amended by adding immediately after 2048. Sec. 16 thereof twenty-three new paragraphs, designated as 2048A. Sec. 16A, 2048B. Sec. 16B, 2048C. Sec. 16C, 2048D. Sec. 16D, 2048E, Sec. 16E, 2048F. Sec. 16F, 2048G. Sec. 16G, 2048H. Sec. 16H, 20481. Sec. 161, 2048J. Sec. 16J, 2048K. Sec. 16K, 2048L. Sec. 16L, 2048M. Sec. 16M, 2048N. Sec. 16N, 2048P. Sec. 16P, 2048Q. Sec. 16Q, 2048R. Sec. 16R, 2048S. Sec. 16S, 2048T. Sec. 16T, 20481.7. Sec. 161J, 2048V. Sec. 16V, 2048W. Sec. 16W, and 2048X. Sec. 16X, as follows:
"2048A. Sec. 16A. How Title to Certificates and Shares May be Transferred:--Title to a certificate and to the shares represented thereby can be transferred only,
(a) By delivery of the certificate indorsed 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 containing 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 specific 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 corporation 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.
2048B. Sec. 16B. Powers of Those Lacking Full Legal Capacity and of Fiduciaries Not Enlarged:--Nothing in 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, 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.
2048C. Sec. 16C. Corporation Not Forbidden to Treat Registered Holder as Owner:--Nothing in 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, shall be construed as forbidding a corporation,
(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.
2048D. Sec. 16D. 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.
2048E. Sec. 16E. Who May Deliver a Certificate:--The delivery of a certificate to transfer title in accordance with the provisions of 2048A. Sec. 16A is effectual, except as provided in 2048G. Sec. 16G, 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.
2048F. Sec. 16F. Endorsement 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 certificate to be the owner of the shares represented thereby is effectual, except as provided in 2048G. Sec. 16G, though the endorser or transferor,
(a) was induced by fraud, duress or mistake, to make the endorsement 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 endorsement, whether before or after the delivery of the certificate, Or
(d) has received no consideration.
2048G. Sec. 16G. 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.
2048H. Sec. 16H. Rescission 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 certificate or of a new certificate, representing part or the whole of the same shares of stock, a subsequent transfer of such certificate by the transferee, 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.
2048I. Sec. 161. Delivery of Unendorsed 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 endorsement is actually made. This obligation may be specifically enforced.
2048J. Sec. 16J. 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.
2048K. Sec. 16K. 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.
2048L. Sec. 16L. 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.
2048M. Sec. 16M. 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 destroyed, such corporation shall not be compelled to issue a new certificate for the stock until the old certificate is surrendered to it.
2048N. Sec. 16N. 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.
2048P. Sec. 16P. There Shall be No Lien or 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 virtue 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 certificate.
2048Q. Sec. 16Q. Alteration of Certificate 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 certificate and the shares originally represented thereby, and the transfer of such a certificate shall convey to the transferee a good title to such certificate and to the shares originally represented thereby.
2048R. Sec. 16R. Rule for Cases Not Provided for by 2048A. Sec. 16A. to 2048X. Sec. 16X, Both Inclusive:--In any case not provided for by 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, 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, bankruptcy, or other invalidating cause, shall govern.
2048S. Sec. 16S. Interpretation Shall Give Effect to Purpose of Uniformity:-2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, of this Chapter, shall be so interpreted and construed as to effectuate their general purpose to make uniform the law of those States which have enacted similar provisions.
2048T. Sec. 16T. Definition of Endorsement:--A certificate is indorsed when an assignment or a power of attorney to sell, assign, or transfer the certificate or the shares represented thereby is written on the certificate 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 indorsed though it has not been delivered.
2048U. Sec. 16U. Definition of Person Appearing to be the Owner of Certificate:--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 indorses 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 indorses the certificate to another specified person. Subsequent special endorsements may be made with like effect.
2048V. Sec. 16V. Other Definitions:--(1) In 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, 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 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive.
"Delivery" means voluntary transfer of possession from one person to another.
"Person" includes a corporation or partnership or two or more persons having a joint or common interest.
"To purchase" includes to take as mortgagee 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 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive.
"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 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, of this Chapter, when it is in fact done honestly, whether it be done negligently or not.
2048W. Sec. 16W. Not Applicable to Existing Certificates: - The provisions of 2048A Sec. 16A to 2048X, both inclusive, of this Chapter apply only to certificates issued after 2048A. Sec. 16A to 2048X. Sec. 16X, both inclusive, became laws.
2048X. Sec. 16X. Inconsistent Legislation Repealed:--All statutes or parts of, statutes of this. State and all other provisions of this Chapter that are inconsistent with said 2048A. Sec. 16A. to 2048X. Sec. 16X, both inclusive, are hereby repealed to the extent of such inconsistency only."
Section 3. That said Chapter 65 be and the same is further hereby amended by adding to and at the end of 2125. Sec. 93 thereof the fallowing sentence:-
"Provided, however, that such attachment shall not have been sufficiently completed to be valid until the provisions of 2048M. Sec. 16M of this Chapter shall have been complied with."
Approved May 10, 1945.