§ 554.8202

554.8202 Issuer’s responsibility and defenses — notice of defect or defense. 1. 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 securityby reference on the certificate to another instrument, indenture, or document or to aconstitution, statute, ordinance, rule, regulation, order, or the like, to the extent the termsreferred 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 tothe validity of the security, even if the certificate expressly states that a person accepting itadmits notice. The terms of an uncertificated security include those stated in any instrument,indenture, or document or in a constitution, statute, ordinance, rule, regulation, order, or thelike, pursuant to which the security is issued. 2. The following rules apply if an issuer asserts that a security is not valid:a. 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

security is not valid:a. 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 handsof a purchaser for value and without notice of the particular defect unless the defect involvesa violation of a constitutional provision. In that case, the security is valid in the hands of apurchaser for value and without notice of the defect, other than one who takes by originalissue. b. Paragraph 'a' applies to an issuer that is a government or governmental subdivision, agency, or instrumentality only if there has been substantial compliance with the legalrequirements governing the issue or the issuer has received a substantial consideration forthe issue as a whole or for the particular security and a stated purpose of the issue is one forwhich the issuer has power to borrow money or issue the security. 3. Except as otherwise provided in section 554.8205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice. 4.

ssue the security. 3. Except as otherwise provided in section 554.8205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice. 4. 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 takenthe certificated security without notice of the particular defense. 5. This section does not affect the right of a party to cancel a contract for a security 'when, as and if issued' or 'when distributed' in the event of a material change in the character ofthe security that is the subject of the contract or in the plan or arrangement pursuant to whichthe security is to be issued or distributed. 6. 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 any defensethat the issuer could not assert if the entitlement holder held the security directly. [S13, §3060-a16, -a23, -a28, -a56, -a57, -a60, -a61, -a62; C24, 27, 31, 35, 39, §9476, 9483, 9488, 9516, 9517, 9520 – 9522; C46, 50, 54, 58, 62,

if the entitlement holder held the security directly. [S13, §3060-a16, -a23, -a28, -a56, -a57, -a60, -a61, -a62; C24, 27, 31, 35, 39, §9476, 9483, 9488, 9516, 9517, 9520 – 9522; C46, 50, 54, 58, 62, §541.16, 541.23, 541.28, 541.56, 541.57,541.60 – 541.62; C66, 71, 73, 75, 77, 79, 81, §554.8202] 89 Acts, ch 113, §9; 96 Acts, ch 1138, §25, 84 Sat Dec 23 01:58:15 2023 Iowa Code 2024, Section 554.8202 (24, 0)