41-08-07. (8-107) Whether endorsement, instruction, or entitlement order is effective

41-08-07. (8-107) Whether endorsement, instruction, or entitlement order is effective

1. "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. If the person designated in subdivision a, b, or c is deceased, the designated

person's successor taking under other law or the designated person's personal

representative acting for the estate of the decedent; or

e. If the person designated in subdivision a, b, or c lacks capacity, the designated

person's guardian, conservator, or other similar representative who has power

under other law to transfer the security or financial asset.

2. 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 has power under the law of agency to transfer the

security or financial asset on behalf of the appropriate person, including, in the

case of an instruction or entitlement order, a person who has control under

subdivision b of subsection 3 or subdivision b of subsection 4 of section 41-08-06;

or

c. The appropriate person has ratified it or is otherwise precluded from asserting its

ineffectiveness.

3. 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 state having jurisdiction of the representative relationship, 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.

4. 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 though the person is no longer serving in the described

capacity.

5. Effectiveness of an endorsement, instruction, or entitlement order is determined as of

the date the endorsement, instruction, or entitlement order is made, and an

endorsement, instruction, or entitlement order does not become ineffective by reason

of any later change of circumstances.