The Securities Transfer Act, C.C.S.M. c. S60 (Assented to June 12, 2008) bilingual version (HTML) Table of Contents Section PART 1 INTERPRETATION AND GENERAL PROVISIONS 1 Definitions 2 Meaning of valid security 3 Notice 4 Obligation of good faith 5 Variation of Act by agreement 6 Principles of law and equity apply 7 Clearing agency rules prevail 8 Application to Crown 9 Existing proceedings PART 2 GENERAL MATTERS CONCERNING SECURITIES AND OTHER FINANCIAL ASSETS DIVISION 1 — CLASSIFICATION OF OBLIGATIONS AND INTERESTS 10 Equity interest 11 Mutual fund security 12 Interest in partnership, limited liability company 13 Bill of exchange, promissory note 14 Depository bill, depository note 15 Clearing house option 16 Futures contract DIVISION 2 — ACQUISITION OF FINANCIAL ASSETS OR INTERESTS IN THEM 17 Acquisition of financial assets DIVISION 3 — NOTICE OF ADVERSE CLAIMS 18 What constitutes notice of adverse claim 19 Notice of transfer 20 Delay 21 Statement on security certificate 22 Registration of financing statement DIVISION 4 — CONTROL OF FINANCIAL ASSETS 23 Purchaser's control of certificated security 24 Purchaser's control of uncertificated security 25 Purchaser's control of security entitlement 26 Securities intermediary's control of security entitlement 27 Agreement re control of uncertificated security 28 Agreement re control of security entitlement DIVISION 5 — ENDORSEMENTS, INSTRUCTIONS AND ENTITLEMENT ORDERS 29 Effectiveness of endorsement instruction or entitlement order 30 Effectiveness of endorsement, instruction or entitlement order made by representative 31 Endorsement, instruction or entitlement order remains effective 32 Date when effectiveness is determined DIVISION 6 — WARRANTIES APPLICABLE TO DIRECT HOLDINGS 33 Warranties on transfer of certificated security 34 Warranties on transfer of uncertificated security 35 Warranties on endorsement of security certificate 36 Warranties on instruction re uncertificated security 37 Warranty on presentation of security certificate 38 Warranties by agent delivering certificated security 39 Warranties on redelivery of security certificate 40 Broker's warranties DIVISION 7 — WARRANTIES APPLICABLE TO INDIRECT HOLDINGS 41 Warranties on entitlement order 42 Warranties on security credited to securities account 43 Securities intermediary's warranties DIVISION 8 — CONFLICT OF LAWS 44 Law governing validity of security 45 Matters governed by law of securities intermediary's jurisdiction 46 Adverse claim governed by law of jurisdiction of security certificate DIVISION 9 — SEIZURE 47 Seizure governed by laws re civil enforcement of judgments 48 Seizure of interest in certificated security 49 Seizure of interest in uncertificated security 50 Seizure of interest in security entitlement 51 Notice of seizure to secured party DIVISION 10 — ENFORCEABILITY OF CONTRACTS AND RULES OF EVIDENCE 52 Enforceability of contracts 53 Rules of evidence re certificated security DIVISION 11 — SECURITIES INTERMEDIARIES — LIABILITY AND STATUS AS PURCHASERS FOR VALUE 54 Securities intermediary's liability to adverse claimant 55 Securities intermediary as purchaser for value PART 3 ISSUE AND ISSUER 56 Terms of a security 57 Enforcement of security: unauthorized signature 58 Lack of genuineness of certificated security 59 Other defences 60 Right to cancel contract 61 Staleness as notice of defect or defence 62 Effect of issuer's restriction on transfer 63 Completion of security certificate 64 Rights and duties of issuer re registered owners 65 Warranties by person signing security certificate 66 Issuer's lien 67 Overissue PART 4 TRANSFER OF CERTIFICATED AND UNCERTIFICATED SECURITIES DIVISION 1 — DELIVERY AND RIGHTS OF PURCHASER 68 Delivery 69 Rights of purchaser 70 Protected purchaser DIVISION 2 — ENDORSEMENTS AND INSTRUCTIONS 71 Form of endorsement 72 Endorsement of part of a security certificate 73 When endorsement constitutes transfer of security 74 Endorsement missing 75 Notice of adverse claim on endorsement 76 Obligations of endorser 77 Completion of instruction 78 Obligations of person originating an instruction DIVISION 3 — SIGNATURE GUARANTEES AND OTHER REQUISITES FOR REGISTRATION OF TRANSFER 79 Warranties by guarantor of endorser's signature 80 Warranties by guarantor of signature of originator of instruction 81 Warranties by special guarantor of signature of originator of instruction 82 Warranty re rightfulness of transfer by guarantor 83 Guarantee may not be condition to registration of transfer 84 Liability of guarantor, endorser or originator 85 Purchaser's right to requisites for registration of transfer PART 5 REGISTRATION 86 Duty of issuer to register transfer 87 Assurances re endorsement or instruction 88 Demand that issuer not register transfer 89 Duty of issuer re demand to not register transfer 90 Liability of issuer re demand to not register transfer 91 Wrongful registration of transfer 92 Replacement of lost, destroyed or wrongfully taken security certificate 93 Obligation to notify issuer of lost, destroyed or wrongfully taken security certificate 94 Obligation of authenticating trustee, registrar, transfer agent or other agent PART 6 SECURITY ENTITLEMENTS 95 Acquisition of security entitlement 96 Protection of entitlement holders from adverse claim 97 Property interest of entitlement holders in financial asset 98 Duty of securities intermediary re financial asset 99 Duty of securities intermediary re payments and distributions 100 Duty of securities intermediary to exercise rights 101 Duty of securities intermediary to comply with entitlement order 102 Duty of securities intermediary re entitlement holder's direction 103 Duties of securities intermediary — general 104 Rights of purchaser re adverse claim 105 Priority of entitlement holders to financial asset PART 7 CONSEQUENTIAL AMENDMENTS TO THE PERSONAL PROPERTY SECURITY ACT 106-134 Consequential amendments PART 8 CONSEQUENTIAL AMENDMENTS TO OTHER ACTS 135-137 Consequential amendments PART 9 C.C.S.M. REFERENCE AND COMING INTO FORCE 138 C.C.S.M. reference 139 Coming into force HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows: PART 1 INTERPRETATION AND GENERAL PROVISIONS Definitions 1(1) The following definitions apply in this Act. "adverse claim" means a claim that (a) the claimant has a property interest in a financial asset; and (b) it is a violation of the rights of the claimant for another person to hold, transfer or deal with the financial asset. (« opposition ») "appropriate person" means (a) with respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security; (b) with respect to an instruction, the registered owner of an uncertificated security; (c) with respect to an entitlement order, the entitlement holder; (d) in the case of a person referred to in clause (a), (b) or (c) being deceased, that person's successor taking under the law, other than this Act, or that person's personal representative acting for the estate of the deceased person; or (e) in the case of a person referred to in clause (a), (b) or (c) lacking capacity, that person's guardian or other similar representative who has power under the law, other than this Act, to transfer the security or other financial asset. (« personne compétente ») "bearer form" means, in respect of a certificated security, a form in which the security is payable to the bearer of the security certificate according to the security certificate's terms but not by reason of an endorsement. (« au porteur ») "broker" means a person or company who trades in securities in the capacity of principal or agent. (« courtier ») "certificated security" means a security that is represented by a certificate. (« valeur mobilière avec certificat ») "clearing agency" means a person (a) that carries on a business or activity as a clearing agency or clearing house within the meaning of The Securities Act or the securities regulatory law of another province or territory in Canada; (b) that is recognized or otherwise regulated as a clearing agency or clearing house by the Manitoba Securities Commission or by a securities regulatory authority of another province or territory in Canada; and (c) that is a securities and derivatives clearing house for the purposes of section 13.1 of the Payment Clearing and Settlement Act (Canada) or whose clearing and settlement system is designated under Part I of that Act. (« agence de compensation ») "communicate" means (a) send a signed writing; or (b) transmit information by any other means agreed to by the person transmitting the information and the person receiving the information; and "communication" has a corresponding meaning. (« communiquer ») "control" has the meaning set out in sections 23 to 26. (« maîtrise ») "corporation" means any body corporate whether or not it is incorporated under the laws of Manitoba. (« société ») "delivery" , with respect to a certificated or uncertificated security, has the meaning set out in section 68, and "deliver" has a corresponding meaning. (« livraison ») "effective" , in relation to an endorsement, instruction or entitlement order, has the meaning set out in sections 29 to 32, and "effectiveness" , "ineffective" and "ineffectiveness" have corresponding meanings. (« valide ») "endorsement" means a signature that, alone or accompanied by other words, is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring or redeeming the security or granting a power to assign, transfer or redeem the security. (« endossement ») "entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary and includes a person who acquires a security entitlement by virtue of clause 95(1)⁠(b) or (c). (« titulaire du droit ») "entitlement order" means a notice communicated to a securities intermediary directing the transfer or redemption of a financial asset to which the entitlement holder has a security entitlement. (« ordre relatif à un droit ») "financial asset" means, except as otherwise provided in sections 10 to 16, (a) a security; (b) an obligation of a person that (i) is, or is of a type, dealt in or traded on financial markets, or (ii) is recognized in any other market or area in which it is issued or dealt in as a medium for investment; (c) a share, participation or other interest in a person, or in property or an enterprise of a person, that (i) is, or is of a type, dealt in or traded on financial markets, or (ii) is recognized in any other market or area in which it is issued or dealt in as a medium for investment; (d) any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Act; or (e) a credit balance in a securities account, unless the securities intermediary has expressly agreed with the person for whom the account is maintained that the credit balance is not to be treated as a financial asset under this Act. (« actif financier ») "genuine" means free of forgery or counterfeiting. (« authentique ») "government" means (a) the Crown in right of Canada or in right of Manitoba or another province of Canada; (b) the government of a territory in Canada; (c) a municipality in Canada; or (d) the government of a foreign country or of any political subdivision of it. (« gouvernement ») "in collusion" means in concert, by conspiratorial arrangement or by agreement for the purpose of violating a person's rights in respect of a financial asset. (« collusion ») "instruction" means a notice communicated to the issuer of an uncertificated security that directs that the transfer of the security be registered or that the security be redeemed. (« instructions ») "issuer" (a) with respect to a registration of a transfer of a security, means a person on whose behalf transfer books are maintained; and (b) with respect to an obligation on or a defence to a security, includes (i) a person who places or authorizes the placing of the person's name on a security certificate, other than as authenticating trustee, registrar, transfer agent or the like, to evidence (A) a share, participation or other interest in the person's property or in an enterprise, or (B) the person's duty to perform an obligation represented by the security certificate, (ii) a person who creates a share, participation or other interest in the person's property or in an enterprise, or undertakes an obligation, that is an uncertificated security, (iii) a person who directly or indirectly creates a fractional interest in the person's rights or property, if the fractional interest is represented by a security certificate, (iv) a guarantor, to the extent of the guarantor's guarantee, whether or not the guarantor's obligation is noted on a security certificate, and (v) a person that becomes responsible for, or in place of, another person described as an issuer in this definition. (« émetteur ») "knowledge" means actual knowledge and "know" and "known" have corresponding meanings. (« connaissance ») "overissue" means the issue of securities in excess of the amount that the issuer is authorized to issue. (« émission excédentaire ») "person" means an individual, including an individual in his or her capacity as trustee, executor, administrator or other representative, a sole proprietorship, a partnership, an unincorporated association, an unincorporated syndicate, an unincorporated organization, a trust, including a business trust, a corporation, a government or agency of a government or any other legal or commercial entity. (« personne ») "protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest in the security, who (a) gives value; (b) does not have notice of any adverse claim to the security; and (c) obtains control of the security. (« acquéreur protégé ») "purchase" means a taking by sale, discount, negotiation, mortgage, hypothec, pledge, security interest, issue or reissue, gift or any other voluntary transaction that creates an interest in property. (« acquisition ») "purchaser" means a person who takes by purchase. (« acquéreur ») "registered form" means, in respect of a certificated security, a form in which (a) the security certificate specifies a person entitled to the security; and (b) a transfer of the security may be registered on books maintained for that purpose by or on behalf of the issuer, or the security certificate states that it may be so registered. (« nominatif ») "representative" means any person empowered to act for another, including an agent, an officer of a corporation or association and a trustee, executor or administrator of an estate. (« représentant ») "secured party" means a secured party as defined in The Personal Property Security Act . (« créancier garanti ») "securities account" means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that constitute the financial asset. (« compte de titres ») "securities intermediary" means (a) a clearing agency; or (b) a person, including a broker, bank or trust company, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. (« intermédiaire en valeurs mobilières ») "security" means, except as otherwise provided in sections 10 to 16, an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer (a) that is represented by a security certificate in bearer form or registered form, or the transfer of which may be registered on books maintained for that purpose by or on behalf of the issuer; (b) that is one of a class or series, or by its terms is divisible into a class or series, of shares, participations, interests or obligations; and (c) that (i) is, or is of a type, dealt in or traded on securities exchanges or securities markets, or (ii) is a medium for investment and by its terms expressly provides that it is a security for the purposes of this Act. (« valeur mobilière ») "security certificate" means a certificate representing a security, but does not include a certificate in electronic form. (« certificat de valeur mobilière ») "security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset that are specified in Part 6. (« droit intermédié ») "security interest" means a security interest as defined in The Personal Property Security Act . (« sûreté ») "unauthorized" means, when used with reference to a signature or endorsement, a signature or endorsement that is made without actual, implied or apparent authority or that is forged. (« non autorisé ») "uncertificated security" means a security that is not represented by a certificate. (« valeur mobilière sans certificat ») "value" means any consideration sufficient to support a simple contract and includes an antecedent debt or liability. (« contrepartie ») Interpretation — financial asset 1(2) As the context requires, " financial asset " means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate and a security entitlement. Interpretation limited to this Act 1(3) The characterization of a person, business or transaction for the purposes of this Act does not determine the characterization of the person, business or transaction for the purposes of any other statute, law, regulation or rule. Meaning of valid security 2 A security is valid if it is issued in accordance with the applicable law described in subsection 44(1) and the constating provisions governing the issuer. Notice 3(1) For the purposes of this Act, a person has notice of a fact if (a) the person has knowledge of it; (b) the person has received a notice of it; or (c) information comes to the person's attention under circumstances in which a reasonable person would take cognizance of it. Giving a notice 3(2) A person gives a notice to another person by taking such steps as may be reasonably required to inform the other person in the ordinary course, whether or not the other person comes to know of it. Receiving a notice 3(3) A person receives a notice when (a) the notice comes to the person's attention; (b) in the case of a notice under a contract, the notice is duly delivered to the place of business through which the contract was made; or (c) the notice is duly delivered to any other place held out by that person as the place for receipt of those notices. When notice is effective for a transaction 3(4) Notice, knowledge or a notice received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting the transaction and, in any event, from the time when it would have been brought to the attention of that individual if the organization had exercised due diligence. What constitutes due diligence: organization 3(5) For the purpose of subsection (4), an organization exercises due diligence if it maintains reasonable routines for communicating significant information to the individual conducting the transaction and there is reasonable compliance with those routines. What constitutes due diligence: individual 3(6) For the purpose of subsection (4), due diligence does not require an individual acting for the organization to communicate information unless (a) that communication is part of the individual's regular duties; or (b) the individual has reason to know of the transaction and that the transaction would be materially affected by the information. Obligation of good faith 4(1) Every contract to which this Act applies and every duty imposed by this Act imposes an obligation of good faith in its performance or enforcement. Definition of "good faith" 4(2) In this section, "good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing. Variation of Act by agreement 5(1) Subject to subsection (2), the effect of provisions of this Act may be varied by agreement. Variation of obligations of good faith, diligence, reasonableness and care 5(2) The obligations of good faith, diligence, reasonableness and care imposed by this Act may not be disclaimed by agreement, but the parties may by agreement determine the standards by which the performance of such obligations is to be measured so long as such standards are not manifestly unreasonable. Principles of law and equity apply 6 Except in so far as they are inconsistent with this Act, the principles of law and equity supplement this Act and continue to apply, including (a) the law merchant; (b) the law relating to the capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion and mistake; and (c) other validating or invalidating rules of law. Clearing agency rules prevail 7 A rule adopted by a clearing agency governing rights and obligations between the clearing agency and its participants or between participants in the clearing agency is effective even if the rule conflicts with this Act or The Personal Property Security Act and affects another person who does not consent to the rule. Application to Crown 8(1) Subject to subsection (2), this Act applies to the Crown. Application of Proceedings Against the Crown Act 8(2) Nothing in this Act limits the application of The Proceedings Against the Crown Act . Existing proceedings 9 This Act does not affect a legal proceeding that was commenced before this section comes into force. PART 2 GENERAL MATTERS CONCERNING SECURITIES AND OTHER FINANCIAL ASSETS DIVISION 1 CLASSIFICATION OF OBLIGATIONS AND INTERESTS Equity interest 10 A share or similar equity interest issued by a corporation, business trust or similar entity is a security. Mutual fund security 11(1) A mutual fund security is a security. Definitions 11(2) The following definitions apply in this section. "mutual fund security" means a share, unit or similar equity interest issued by an open-end mutual fund, but does not include an insurance policy, endowment policy or annuity contract issued by an insurance company. (« titre de fonds commun de placement ») "open-end mutual fund" means an entity that makes a distribution to the public of its shares, units or similar equity interests and that carries on the business of investing the consideration it receives for the shares, units or similar equity interests it issues, all or substantially all of which shares, units or similar equity interests are redeemable on the demand of their holders or owners. (« fonds commun de placement à capital variable ») Interest in partnership, limited liability company: security 12(1) An interest in a partnership or limited liability company is not a security unless (a) that interest is dealt in or traded on securities exchanges or in securities markets; (b) the terms of that interest expressly provide that the interest is a security for the purposes of this Act; or (c) that interest is a mutual fund security within the meaning of section 11. Interest in partnership, limited liability company: financial asset 12(2) An interest in a partnership or limited liability company is a financial asset if it is held in a securities account. Definition 12(3) In this section, "limited liability company" means an unincorporated association, other than a partnership, formed under the laws of another jurisdiction, that grants to each of its members limited liability with respect to the liabilities of the association. Bill of exchange, promissory note 13 A bill of exchange or promissory note to which the Bills of Exchange Act (Canada) applies is not a security, but is a financial asset if it is held in a securities account. Depository bill, depository note 14 A depository bill or depository note to which the Depository Bills and Notes Act (Canada) applies is not a security, but is a financial asset if it is held in a securities account. Clearing house option 15(1) A clearing house option or similar obligation is not a security, but is a financial asset. Definition 15(2) In this section, "clearing house option" means a clearing house option as defined in The Personal Property Security Act . Futures contract 16(1) A futures contract is not a security or a financial asset. Definition 16(2) In this section, "futures contract" means a futures contract as defined in The Personal Property Security Act . DIVISION 2 ACQUISITION OF FINANCIAL ASSETS OR INTERESTS IN THEM Acquisition of financial assets 17(1) A person acquires a security or an interest in a security under this Act if (a) the person is a purchaser to whom a security is delivered under section 68; or (b) the person acquires a security entitlement to the security under section 95. Acquiring other financial assets 17(2) A person acquires a financial asset, other than a security, or an interest in such a financial asset under this Act if the person acquires a security entitlement to the financial asset. Rights on acquisition of security entitlement 17(3) A person who acquires a security entitlement to a security or other financial asset has the rights specified in Part 6, but is a purchaser of any security, security entitlement or other financial asset held by a securities intermediary only to the extent provided in section 97. Operation of Act re other laws 17(4) Unless the context of another statute, law, regulation, rule or agreement shows that a different meaning is intended, a person who is required by that statute, law, regulation, rule or agreement to transfer, deliver, present, surrender, exchange or otherwise put in the possession of another person a security or other financial asset satisfies that requirement by causing the other person to acquire an interest in the security or other financial asset as set out in subsection (1) or (2). DIVISION 3 NOTICE OF ADVERSE CLAIMS What constitutes notice of adverse claim 18 A person has notice of an adverse claim if (a) the person knows of the adverse claim; (b) the person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or (c) the person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists and the investigation, if carried out, would establish the existence of the adverse claim. Notice of transfer 19(1) Having knowledge that a financial asset, or an interest in a financial asset, is being or has been transferred by a representative does not impose any duty of inquiry into the rightfulness of the transaction and is not notice of an adverse claim. Exception 19(2) Despite subsection (1), a person has notice of an adverse claim if that person knows that (a) a representative has transferred a financial asset, or an interest in a financial asset, in a transaction; and (b) the transaction is, or the proceeds of the transaction are being used, (i) for the individual benefit of the representative, or (ii) otherwise in breach of a duty owed by the representative. Delay 20 An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate, or that sets a date on or after which a security certificate is to be presented or surrendered for redemption or exchange, does not by itself constitute notice of an adverse claim except in the case of a transfer that takes place more than (a) one year after a date set for presentation or surrender for redemption or exchange; or (b) six months after a date set for payment of money against presentation or surrender of the security certificate, if money was available for payment on that date. Statement on security certificate 21(1) A purchaser of a certificated security has notice of an adverse claim if the security certificate (a) whether in bearer form or registered form, has been endorsed "for collection" or "for surrender" or for some other purpose not involving a transfer; or (b) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor. Name on security certificate 21(2) For the purposes of clause (1)⁠(b), the mere writing of a name on a security certificate does not by itself constitute an unambiguous statement that the security certificate is the property of a person other than the transferor. Registration of financing statement 22 The registration of a financing statement under The Personal Property Security Act is not notice of an adverse claim. DIVISION 4 CONTROL OF FINANCIAL ASSETS Purchaser's control of certificated security in bearer form 23(1) A purchaser has control of a certificated security that is in bearer form if the certificated security is delivered to the purchaser. Purchaser's control of certificated security in registered form 23(2) A purchaser has control of a certificated security that is in registered form if the certificated security is delivered to the purchaser and (a) the security certificate is endorsed to the purchaser or in blank by an effective endorsement; or (b) the security certificate is registered in the name of the purchaser at the time of the original issue or registration of transfer by the issuer. Purchaser's control of uncertificated security 24(1) A purchaser has control of an uncertificated security if (a) the uncertificated security is delivered to the purchaser; or (b) the issuer has agreed that the issuer will comply with instructions that are originated by the purchaser without the further consent of the registered owner. Purchaser's control where registered owner retains certain rights 24(2) A purchaser to whom subsection (1) applies in relation to an uncertificated security has control of the uncertificated security even if the registered owner retains the right (a) to make substitutions for the uncertificated security; (b) to originate instructions to the issuer; or (c) to otherwise deal with the uncertificated security. Purchaser's control of security entitlement 25(1) A purchaser has control of a security entitlement if (a) the purchaser becomes the entitlement holder; (b) the securities intermediary has agreed that it will comply with entitlement orders that are originated by the purchaser without the further consent of the entitlement holder; or (c) another person has control of the security entitlement on behalf of the purchaser or, having previously obtained control of the security entitlement, acknowledges that the person has control on behalf of the purchaser. Purchaser's control where entitlement holder retains certain rights 25(2) A purchaser to whom subsection (1) applies in relation to a security entitlement has control of the security entitlement even if the entitlement holder retains the right (a) to make substitutions for the security entitlement; (b) to originate entitlement orders to the securities intermediary; or (c) to otherwise deal with the security entitlement. Securities intermediary's control of security entitlement 26 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 of the security entitlement. Agreement re control of uncertificated security 27(1) An issuer must not enter into an agreement of the kind referred to in clause 24(1)⁠(b) without the consent of the registered owner. Confirmation of agreement by issuer 27(2) An issuer that has entered into an agreement of the kind referred to in clause 24(1)⁠(b) is not required to confirm the existence of the agreement to another person unless requested to do so by the registered owner. Issuer not required to enter into agreement 27(3) An issuer is not required to enter into an agreement of the kind referred to in clause 24(1)⁠(b) even if the registered owner so requests. Agreement re control of security entitlement 28(1) A securities intermediary must not enter into an agreement of the kind referred to in clause 25(1)⁠(b) without the consent of the entitlement holder. Confirmation of agreement by securities intermediary 28(2) A securities intermediary that has entered into an agreement of the kind referred to in clause 25(1)⁠(b) is not required to confirm the existence of the agreement to another person unless requested to do so by the entitlement holder. Securities intermediary not required to enter into agreement 28(3) A securities intermediary is not required to enter into an agreement of the kind referred to in clause 25(1)⁠(b) even if the entitlement holder so requests. DIVISION 5 ENDORSEMENTS, INSTRUCTIONS AND ENTITLEMENT ORDERS Effectiveness of endorsement instruction or entitlement order 29 An endorsement, instruction or entitlement order is effective if (a) it is made by the appropriate person; (b) it is made by a person who, in the case of an endorsement or instruction, has the power under the law of agency to transfer the security, or in the case of an entitlement order, has the power under the law of agency to transfer the financial asset, on behalf of the appropriate person, including, (i) in the case of an instruction referred to in clause 24(1)⁠(b), the person who has control of the uncertificated security, or (ii) in the case of an entitlement order referred to in clause 25(1)⁠(b), the person who has control of the security entitlement; or (c) the appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness. Effectiveness of endorsement, instruction or entitlement order made by representative 30 An endorsement, instruction or entitlement order made by a representative is effective even if (a) the representative has failed to comply with a controlling instrument or with the law of the jurisdiction governing the representative's rights and duties, including any law requiring the representative to obtain court approval of the transaction; or (b) the representative's action in making the endorsement, instruction or entitlement order or using the proceeds of the transaction is otherwise a breach of duty owed by the representative. Endorsement, instruction or entitlement order remains effective 31 If a security is registered in the name of or specially endorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an endorsement, instruction or entitlement order made by the person is effective even if the person is no longer serving in that capacity. Date when effectiveness is determined 32(1) The effectiveness of an endorsement, instruction or entitlement order is determined as of the date that the endorsement, instruction or entitlement order is made. Not made ineffective by change of circumstances 32(2) An endorsement, instruction or entitlement order does not become ineffective by reason of any later change of circumstances. DIVISION 6 WARRANTIES APPLICABLE TO DIRECT HOLDINGS Warranties on transfer of certificated security 33 A person who transfers a certificated security to a purchaser for value warrants to the purchaser and, if the transfer is by endorsement, also warrants to any subsequent purchaser, that (a) the security certificate is genuine and has not been materially altered; (b) the transferor does not know of any fact that might impair the validity of the security; (c) there is no adverse claim to the security; (d) the transfer does not violate any restriction on transfer; (e) if the transfer is by endorsement, the endorsement is made by the appropriate person or, if the endorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and (f) the transfer is otherwise effective and rightful. Warranties on transfer of uncertificated security 34(1) A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that (a) the instruction is made by the appropriate person or, if the instruction is made by an agent, the agent has actual authority to act on behalf of the appropriate person; (b) the security is valid; (c) there is no adverse claim to the security; and (d) at the time that the instruction is presented to the issuer, (i) the purchaser will be entitled to the registration of transfer, (ii) the transfer will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction, (iii) the transfer will not violate any restriction on transfer, and (iv) the transfer will otherwise be effective and rightful. Warranties on transfer of uncertificated security where no instruction originated for transfer 34(2) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants to the purchaser that (a) the security is valid; (b) there is no adverse claim to the security; (c) the transfer does not violate any restriction on transfer; and (d) the transfer is otherwise effective and rightful. Warranties on endorsement of security certificate 35 A person who endorses a security certificate warrants to the issuer that (a) there is no adverse claim to the security; and (b) the endorsement is effective. Warranties on instruction re uncertificated security 36 A person who originates an instruction for the registration of transfer of an uncertificated security warrants to the issuer that (a) the instruction is effective; and (b) at the time that the instruction is presented to the issuer, the purchaser will be entitled to the registration of transfer. Warranty on presentation of security certificate 37 A person who presents a certificated security for the registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants to the issuer only that the person has no knowledge of any unauthorized signature in a necessary endorsement. Warranties by agent delivering certificated security 38 If (a) a person acts as agent of another person in delivering a certificated security to a purchaser; (b) the identity of the principal was known to the person to whom the security certificate was delivered; and (c) the security certificate delivered by the agent was received by the agent from the principal or from another person at the direction of the principal; the person delivering the security certificate warrants, to the purchaser, only that the delivering person has authority to act for the principal and does not know of any adverse claim to the certificated security. Warranties on redelivery of security certificate 39 A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent set out in section 38. Broker's warranties to issuer and purchaser 40(1) Except as otherwise provided in section 38, a broker acting for a customer makes to the issuer and a purchaser the warranties set out in sections 33 to 37. Broker's warranties to customer on delivery of security certificate 40(2) A broker that delivers a security certificate to the broker's customer makes to the customer the warranties set out in section 33 and has the rights and privileges of a purchaser provided under sections 33, 38 and 39. Broker's warranties to registered owner of uncertificated security 40(3) A broker that causes the broker's customer to be registered as the owner of an uncertificated security makes to the customer the warranties set out in section 34 and has the rights and privileges of a purchaser provided under section 34. Additional warranties 40(4) The warranties of and in favour of the broker acting as an agent are in addition to applicable warranties given by and in favour of the customer. DIVISION 7 WARRANTIES APPLICABLE TO INDIRECT HOLDINGS Warranties on entitlement order 41 A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary (a) that the entitlement order is made by the appropriate person or, if the entitlement order is made by an agent, that the agent has actual authority to act on behalf of the appropriate person; and (b) that there is no adverse claim to the security entitlement. Warranties on security credited to securities account 42(1) A person who delivers a security certificate to a securities intermediary for credit to a securities account makes to the securities intermediary the warranties set out in section 33. Warranties on uncertificated security credited to securities account 42(2) A person who originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties set out in section 34. Securities intermediary's warranties re security certificate 43(1) If a securities intermediary delivers a security certificate to its entitlement holder, the securities intermediary makes to the entitlement holder the warranties set out in section 33. Securities intermediary's warranties re uncertificated security 43(2) If a securities intermediary causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties set out in section 34. DIVISION 8 CONFLICT OF LAWS Law governing validity of security 44(1) The validity of a security is governed by the following laws: (a) if the issuer is incorporated under a law of Canada, the law, other than the conflict of law rules, of Canada; (b) if the issuer is the Crown in right of Canada, the law, other than the conflict of law rules, of Canada; (c) if the issuer is the Crown in right of a province in Canada, the law, other than the conflict of law rules, of the province; (d) if the issuer is the Commissioner of a territory in Canada, the law, other than the conflict of law rules, of the territory; (e) in any other case, the law, other than the conflict of law rules, of the jurisdiction under which the issuer is incorporated or otherwise organized. Law governing other matters re securities 44(2) The law, other than the conflict of law rules, of the issuer's jurisdiction governs (a) the rights and duties of the issuer with respect to the registration of transfer; (b) the effectiveness of the registration of transfer by the issuer; (c) whether the issuer owes any duties to an adverse claimant to a security; and (d) whether an adverse claim can be asserted against a person (i) to whom the transfer of a certificated or uncertificated security is registered, or (ii) who obtains control of an uncertificated security. Issuer may specify law of another jurisdiction 44(3) The following issuers may specify the law of another jurisdiction as the law governing the matters referred to in clauses (2)⁠(a) to (d): (a) an issuer incorporated or otherwise organized under the law of Manitoba; (b) the Crown in right of Manitoba. Law governing enforceability of security 44(4) Whether a security is enforceable against an issuer despite a defence or defect described in sections 57 to 59 is governed by the following laws: (a) if the issuer is incorporated under a law of Canada, the law, other than the conflict of law rules, of the province or territory in Canada in which the issuer has its registered or head office; (b) if the issuer is the Crown in right of Canada, the law, other than the conflict of law rules, of the issuer's jurisdiction; (c) if the issuer is the Crown in right of a province in Canada, the law, other than the conflict of law rules, of the province; (d) if the issuer is the Commissioner of a territory in Canada, the law, other than the conflict of law rules, of the territory; (e) in any other case, the law, other than the conflict of law rules, of the jurisdiction under which the issuer is incorporated or otherwise organized. Definition 44(5) In this section, " issuer's jurisdiction " means the jurisdiction determined in accordance with the following rules: (a) if the issuer is incorporated under a law of Canada, the province or territory in Canada in which the issuer has its registered or head office or, if permitted by the law of Canada, another jurisdiction specified by the issuer; (b) if the issuer is the Crown in right of Canada, the jurisdiction specified by the issuer; (c) if the issuer is the Crown in right of a province in Canada, the province or, if permitted by the law of that province, another jurisdiction specified by the issuer; (d) if the issuer is the Commissioner of a territory in Canada, the territory or, if permitted by the law of that territory, another jurisdiction specified by the issuer; (e) in any other case, the jurisdiction under which the issuer is incorporated or otherwise organized or, if permitted by the law of that jurisdiction, another jurisdiction specified by the issuer. Matters governed by law of securities intermediary's jurisdiction 45(1) The law, other than the conflict of law rules, of the securities intermediary's jurisdiction governs (a) acquisition of a security entitlement from the securities intermediary; (b) the rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement; (c) whether the securities intermediary owes any duty to a person who has an adverse claim to a security entitlement; and (d) whether an adverse claim may be asserted against a person who (i) acquires a security entitlement from the securities intermediary, or (ii) purchases a security entitlement, or interest in it, from an entitlement holder. Definition 45(2) In this section, "securities intermediary's jurisdiction" means the jurisdiction determined in accordance with the following rules: (a) if an agreement between a securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for the purposes of the law of that jurisdiction, this Act or any provision of this Act, the jurisdiction expressly provided for is the securities intermediary's jurisdiction; (b) if clause (a) does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;
