- Alaska Statutes.
- Title 45. Trade and Commerce
- Chapter 8. Investment Securities
- Section 202. Issuer's Responsibility and Defenses; Notice of Defect or Defense.
previous: Section 201
next: Section 203
. Staleness as Notice of Defects or Defenses.
AS 45.08.202. Issuer's Responsibility and Defenses; Notice of Defect or Defense.
- (a) 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 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 an instrument, indenture, or document or in a constitution, statute, ordinance, rule, regulation, order, or the
like, under which the security is issued.
- (b) The following rules apply if an issuer asserts that a security is not valid:
- (1) 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
- (2) paragraph (1) 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.
- (c) Except as otherwise provided in AS 45.08.205
, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without
- (d) 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
- (e) This section does not affect the right of a party to cancel a contract for a security "when, as, and if issued" or a
"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 under which the security is to be issued or distributed.
- (f) 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 a defense that the issuer could not assert if the entitlement holder
held the security directly.
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