Printable Format84-8-106. Control. (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 indorsed to the purchaser or in blank by an effective indorsement; 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 has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control 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 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.
History: L. 1996, ch. 202, § 33; L. 2000, ch. 142, § 149; July 1, 2001.
KANSAS COMMENT, 1996
This section is new. Control is the analog to possession for the pledgee, notification to the bailee, permitting the "purchaser" (84-1-201(32) and (33)) to deal with the property without the further consent of the "owner." Under subsections (a) and (b), ownership and the rights of a certificated security are reified in the certificate, and the purchaser has control if it has possession of the security in bearer form, or, if it is in registered name, the purchaser has possession and the security has been indorsed in blank or registered in the purchaser's name.
With uncertificated securities, subsection (c) provides the purchaser has control if the security is delivered (84-8-301(b) defines this as registered) to the purchaser or the issuer has agreed to be bound by the purchaser's directions.
Subsections (d) and (e) deal with security entitlements. Subsection (d) parallels (c) and gives the purchaser control if the entitlement is registered in the purchaser's name or the intermediary is bound by the purchaser's directions. If the purchaser is the security intermediary, the intermediary has control.
Under subsections (f) and (g), if the issuer or security intermediary has agreed to follow the directions of the purchaser, the owner may still make substitutions and otherwise deal with the uncertificated security or the security entitlement. In both cases, the owner must consent to the purchaser's control, and the issuer or intermediary is not required to enter into these agreements.
Revisor's Note:
Former section 84-8-106 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.