1. (a) Except as otherwise provided in subsections (b) and (c), a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.
2. (b) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.
3. (c) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

Uniform Commercial Code Comment

“Uncertificated security”. Section 8-102(a)(18).

“Purchaser”. Sections 1-201(33) and 8-116.

“Protected purchaser”. Section 8-303.

“Notice of adverse claim”. Section 8-105.

“Delivery”. Section 8-301.

Definitional Cross References “Certificated security”. Section 8-102(a)(4).

Similarly, Article 8 does not determine whether a property interest in certificated or uncertificated security is acquired under other law, such as the law of gifts, trusts, or equitable remedies. Nor does Article 8 deal with transfers by operation of law. For example, transfers from decedent to administrator, from ward to guardian, and from bankrupt to trustee in bankruptcy are governed by other law as to both the time they occur and the substance of the transfer. The Article 8 rules do, however, determine whether the issuer is obligated to recognize the rights that a third party, such as a transferee, may acquire under other law. See Sections 8-207, 8-401, and 8-404.

2. Although this section provides that a purchaser acquires a property interest in a certificated or uncertificated security, it does not state that a person can acquire an interest in a security only by purchase. Article 8 also is not a comprehensive codification of all of the law governing the creation or transfer of interests in securities. For example, the grant of a security interest is a transfer of a property interest, but the formal steps necessary to effectuate such a transfer are governed by Article 9, not by Article 8. Under the Article 9 rules, a security interest in a certificated or uncertificated security can be created by execution of a security agreement under Section 9-203 and can be perfected by filing. A transfer of an Article 9 security interest can be implemented by an Article 8 delivery, but need not be.

1. Subsection (a) provides that a purchaser of a certificated or uncertificated security acquires all rights that the transferor had or had power to transfer. This statement of the familiar “shelter” principle is qualified by the exceptions that a purchaser of a limited interest acquires only that interest, subsection (b), and that a person who does not qualify as a protected purchaser cannot improve its position by taking from a subsequent protected purchaser, subsection (c).

History

Dec. 30, 1963, 77 Stat. 736, Pub. L. 88-243, § 1

Mar. 16, 1993, D.C. Law 9-196, § 4, 39 DCR 9165

renumbered and amended, Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087

Oct. 26, 2000, D.C. Law 13-201, § 201(i)(5), 47 DCR 7576

Effect of Amendments

D.C. Law 13-201, enacting a new Article 9 of the Uniform Commercial Code applicable July 1, 2001, made conforming amendments to this section applicable upon the same date.

Prior Codifications

1973 Ed., § 28:8-302.

1981 Ed., § 28:8-302.