Chapter 2: Formation, Administration and Dissolution of Companies
Part E: Securities registration and transfer
s55: Liability relating to uncertificated securities
- (1) A person who takes any unlawful action in consequence of which any of the following events occur in a securities register or uncertificated securities register, namely:
- (a) the name of any person remains in, is entered in, or is removed or omitted;
- (b) the number of uncertificated securities is increased, reduced, or remains unaltered; or
- (c) the description of any uncertificated securities is changed,
- is liable to any person who has suffered any direct loss or damage arising out of that action.
- (2) A person who gives an instruction to transfer uncertificated securities must:
- (a) warrant the legality and correctness of that instruction; and
- (b) indemnify the company and the participant or central securities depository required to effect the transfer in accordance with the rules of the central securities depository, against any claim and against any direct loss or damage suffered by them arising out of such a transfer by virtue of an instruction referred to in this subsection.
- (3) A participant or central securities depository who may effect the transfer of uncertificated securities in accordance with the rules of a central securities depository must indemnify:
- (a) a company against any claim made upon it and against any direct loss or damage suffered by it arising out of a transfer of any uncertificated securities; and
- (b) any other person against any direct loss or damage arising out of a transfer of any uncertificated securities,
- if that transfer was effected by the participant or central securities depository without instruction, or in accordance with an instruction that was not sent and properly authenticated in terms of the rules of a central securities depository, or in a manner inconsistent with an instruction that was sent and properly authenticated in terms of the rules of a central securities depository.
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