KANSAS OFFICE of
  REVISOR of STATUTES

  

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84-8-405. Replacement of lost, destroyed or wrongfully taken security certificate. (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 K.S.A. 84-8-210. 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.

History: L. 1996, ch. 202, § 65; July 1.

KANSAS COMMENT, 1996

This section is a modification of the former 84-8-405 and 84-8-406. It is identical to the Official Text.

Subsection (a) states the circumstances under which the issuer must issue a new certificated security in place of a lost, destroyed or stolen certificate. This section changes the rule of § 17 of the Uniform Stock Transfer Act, which allowed the issuer to require a court order before issuing a new security. This subsection recognizes the current corporate practice of voluntarily issuing replacement securities if the issuer is adequately indemnified. Since Kansas did not adopt § 17 of the Uniform Stock Transfer Act, there was no change in Kansas statutory law.

Under subsection (b), when the original security has reached a protected purchaser, the registered owner who now has the new replacement may not recover his original certificated security, and the issuer can recover the replacement certificated security from the original registered owner or a transferee from the registered owner who is not a protected purchaser. If both the original and the new security have reached protected purchasers, the issuer is required to honor both of them unless an overissue would result. In that case, liability is governed by 84-8-210, and if a substitute security is not available, the protected purchaser of the original security is relegated to damages. The issuer, of course, may recover on the indemnity bond. For an illustration, see Hollywood Nat'l Bank v. International Business Machines Corp., 38 Cal. App.3d 607, 113 Cal. Rptr. 494 (1974).

Revisor's Note:

Former section 84-8-405 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.

Cross References to Related Sections:

Decedents, bond requirement exception, see 59-1108.


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