916                             LAWS OF MARYLAND                      [CH. 538

(a)  there were on or with the security the necessary indorsements
(Section 8—308); and

(b)  the issuer had no duty to inquire into adverse claims or has
discharged any such duty (Section 8—403).

(2) Where an issuer has registered a transfer of a security to a
person not entitled to it the issuer on demand must deliver a like
security to the true owner unless

(a)  the registration was pursuant to subsection (1); or

(b)  the owner is precluded from asserting any claim for register-
ing the transfer under subsection (1) of the following section; or

(c)  such delivery would result in overissue, in which case the
issuer's liability is governed by Section 8—104.

8—405. Lost, Destroyed and Stolen Securities.

(1)   Where a security has been lost, apparently destroyed or wrong-
fully taken and the owner fails to notify the issuer of that fact
within a reasonable time after he has notice of it and the issuer
registers a transfer of the security before receiving such a notifica-
tion, the owner is precluded from asserting against the issuer any
claim for registering the transfer under the preceding section or any
claim to a new security under this section.

(2)   Where the owner of a security claims that the security has
been lost, destroyed or wrongfully taken, the issuer must issue a
new security in place of the original security if the owner

(a)  so requests before the issuer has notice that the security has
been acquired by a bona fide purchaser; and

(b)  files with the issuer a sufficient indemnity bond; and

(c)  satisfies any other reasonable requirements imposed by the
issuer.

(3)  If, after the issue of the new security, a bona fide purchaser
of the original security presents it for registration of transfer, the
issuer must register the transfer, unless registration would result
in overissue, in which event the issuer's liability is governed by
Section 8—104. In addition to any rights on the indemnity bond,
the issuer may recover the new security from the person to whom it
was issued or any person taking under him except a bona fide pur-
chaser.

8—406. Duty of Authenticating Trustee, Transfer Agent or Regis-
trar.

(1) Where a person acts as authenticating trustee, transfer agent,
registrar, or other agent for an issuer in the registration of transfers
of its securities or in the issue of new securities or in the cancellation
of surrendered securities

(a)  he is under a duty to the issuer to exercise good faith and
due diligence in performing his functions; and

(b)  he has with regard to the particular functions he performs the
same obligation to the holder or owner of the security and has the