Older Uniform Acts

Securities Transfer Act



PART 6 - SECURITY ENTITLEMENTS

Acquisition of security entitlement from securities intermediary

106(1)    Except as otherwise provided for in subsections (3) and (4), a person acquires a security entitlement if a securities intermediary
(a)    indicates by book entry that a financial asset has been credited to the person’s securities account,
(b)    receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person’s securities account, or
(c)    becomes obligated under another statute, law, regulation or rule to credit a financial asset to the person’s securities account.
(2)    If a condition of subsection (1) has been met, a person has a security entitlement even though the securities intermediary does not itself hold the financial asset.
(3)    A person is to be treated as holding a financial asset directly rather than as having a security entitlement with respect to the financial asset if a securities intermediary holds the financial asset for that person and the financial asset
(a)    is registered in the name of, payable to the order of or specifically endorsed to that person, and
(b)    has not been endorsed to the securities intermediary or in blank.
(4)    The issuance of a security is not in itself the establishment of a security entitlement.

Assertion of adverse claim against entitlement holders

107    An action based on an adverse claim to a financial asset, however framed, may not be asserted against a person who acquires a security entitlement under section 106 for value and without notice of the adverse claim.

Property interest of entitlement holder re asset held by securities intermediary

108(1)    To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary
(a)    are held by the securities intermediary for the entitlement holders,
(b)    are not the property of the securities intermediary, and
(c)    are not subject to claims of creditors of the securities intermediary, except as otherwise provided for in section 116.
(2)    An entitlement holder’s property interest with respect to a particular financial asset under subsection (1) is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to
(a)    the time that the entitlement holder acquired the security entitlement, or
(b)    the time that the securities intermediary acquired the interest in that financial asset.
(3)    An entitlement holder’s property interest with respect to a particular financial asset under subsection (1) may be enforced against the securities intermediary only by the exercise of the entitlement holder’s rights under sections 110 to 113.
(4)    An entitlement holder’s property interest with respect to a particular financial asset under subsection (1) may be enforced against a purchaser of the financial asset, or an interest in it, only if
(a)    bankruptcy or insolvency proceedings have been initiated by or against the securities intermediary,
(b)    the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset,
(c)    the securities intermediary violated its obligations under section 109 by transferring the financial asset, or interest in it, to the purchaser, and
(d)    the purchaser is not protected under subsection (7).
(5)    For the purposes of subsection (4), a trustee or other liquidator acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset may recover the financial asset, or interest in it, from the purchaser.
(6)    If the trustee or other liquidator elects not to pursue the right provided for under subsection (5), an entitlement holder whose security entitlement remains unsatisfied has the right to recover the entitlement holder’s interest in the financial asset from the purchaser.
(7)    An action based on the entitlement holder’s property interest with respect to a particular financial asset under subsection (1), however framed, may not be asserted against any purchaser of a financial asset, or interest in it, who
(a)    gives value,
(b)    obtains control, and
(c)    does not act in collusion with the securities intermediary in violating the securities intermediary’s obligations under section 109.

Duty of securities intermediary re financial asset

109(1)    A securities intermediary must promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements that the securities intermediary has established in favour of its entitlement holders with respect to that financial asset.
(2)    The securities intermediary may maintain the financial assets referred to in subsection (1) directly or through one or more other securities intermediaries.
(3)    Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain pursuant to subsection (1).
(4)    A securities intermediary satisfies the duty imposed under subsection (1) if
(a)    the securities intermediary acts with respect to the duty as agreed on by the entitlement holder and the securities intermediary, or
(b)    in the absence of an agreement referred to in clause (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.
(5)    This section does not apply to a clearing agency that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements.

Duty of securities intermediary re payments and distributions

110(1)    A securities intermediary must take action to obtain a payment or distribution made by the issuer of a financial asset.
(2)    A securities intermediary satisfies the duty imposed under subsection (1), if
(a)    the securities intermediary acts with respect to the duty as agreed on by the entitlement holder and the securities intermediary, or
(b)    in the absence of an agreement referred to in clause (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.
(3)    A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary.

Duty of securities intermediary to exercise rights

111(1)    A securities intermediary must exercise rights with respect to a financial asset if directed to do so by an entitlement holder.
(2)    A securities intermediary satisfies the duty imposed under subsection (1) if
(a)    the securities intermediary acts with respect to the duty as agreed on by the entitlement holder and the securities intermediary, or
(b)    in the absence of an agreement referred to in paragraph (a), the securities intermediary either
  • (i)    places the entitlement holder in a position to exercise the rights directly, or
  • (ii)    exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.
Duty of securities intermediary to comply with entitlement order

112(1)    A securities intermediary must comply with an entitlement order if
(a)    the entitlement order is originated by the appropriate person,
(b)    the securities intermediary has had a reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and
(c)    the securities intermediary has had a reasonable opportunity to comply with the entitlement order.
(2)    A securities intermediary satisfies the duty imposed under subsection (1) if
(a)    the securities intermediary acts with respect to the duty as agreed on by the entitlement holder and the securities intermediary, or
(b)    in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.
(3)    If a securities intermediary transfers a financial asset pursuant to an ineffective entitlement order, the securities intermediary must
(a)    re-establish a security entitlement in favour of the person entitled to it, and
(b)    pay or credit any payments or distributions that the person did not receive as a result of the wrongful transfer.
(4)    If a securities intermediary does not re-establish a security entitlement in accordance with subsection (3), the securities intermediary is liable to the entitlement holder for damages.

Duty of securities intermediary re entitlement holder’s position

113(1) A securities intermediary must act at the direction of an entitlement holder
(a)    to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or
(b)    to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary.
(2)    A securities intermediary satisfies the duty imposed under subsection (1) if
(a)    the securities intermediary acts as agreed on by the entitlement holder and the securities intermediary, or
(b)    in the absence of an agreement referred to in paragraph (a), the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

Other statutes, etc. re securities intermediary

114(1) If the substance of a duty that is imposed on a securities intermediary under sections 109 to 113 is the subject of another statute, regulation or rule, the compliance with the requirements of that other statute, regulation or rule by the securities intermediary satisfies the duties imposed under sections 109 to 113.
(2)    To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by another statute, regulation or rule or by agreement between the securities intermediary and the entitlement holder, the securities intermediary must perform its duties under this Act and the entitlement holder must exercise its rights under this Act in a commercially reasonable manner.
(3)    The obligation of a securities intermediary to perform the duties imposed under sections 109 to 113 is subject to
(a)    the rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise, and
(b)    the rights of the securities intermediary under another statute, law, regulation, rule or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
(4)    Nothing in sections 109 to 113 is to be construed so as to require a securities intermediary to take any action that is prohibited by another statute, regulation or rule.

Rights of purchaser re security entitlement

115(1) In a case not covered by the priority rules provided for under the [Personal Property Security Act] or the rules set out in subsection (3), an action based on an adverse claim to a financial asset or a security entitlement, however framed, may not be asserted against a person who purchases a security entitlement, or an interest in it, from an entitlement holder if that purchaser
(a)    gives value,
(b)    does not have notice of the adverse claim, and
(c)    obtains control.
(2)    If an adverse claim could not have been asserted against an entitlement holder under section 107, the adverse claim may not be asserted against a person who purchases a security entitlement, or an interest in it, from the entitlement holder.
(3)    In a case not covered by the priority rules provided for under the [Personal Property Security Act], the following rules apply:
(a)    a purchaser for value of a security entitlement, or an interest in it, who obtains control has priority over a purchaser of a security entitlement, or an interest in it, who does not obtain control;
(b)    except as otherwise provided in clause (c), purchasers who have control rank according to priority in time of
  • (i)    the purchaser’s becoming the person for whom the securities account in which the securities entitlement is carried is maintained, if the purchaser obtained control under paragraph 32(1)(a),
  • (ii)    the securities intermediary’s agreement to comply with the purchaser’s entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under paragraph 32(1)(b); or
  • (iii)    if the purchaser obtained control through another person under paragraph 32(1)(c), the time on which priority would be based under this subsection if the other person were the purchaser;
(c)    a securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

Priority re security interests and entitlement holders

116(1)    Except as otherwise provided for in subsections (2) and (3), the claims of entitlement holders, other than a creditor of a securities intermediary, have priority over the claim of the creditor, if the securities intermediary does not have sufficient interests in a particular financial asset to satisfy both
(a)    the securities intermediary’s obligations to entitlement holders who have security entitlements to that financial asset, and
(b)    the securities intermediary’s obligation to the creditor who has a security interest in that financial asset.
(2)    A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary’s entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset.
(3)    The claim of a creditor of a clearing agency has priority over the claims of entitlement holders, if the clearing agency does not have sufficient financial assets to satisfy both
(a)    the clearing agency’s obligations to entitlement holders who have security entitlements with respect to a financial asset, and
(b)    the clearing agency’s obligation to the creditor who has a security interest in that financial asset.

Next Annual Meeting

2020 Annual Meeting

Place to be Announced

August 9 – 13, 2020