§12A-8-202.

§12A-8-202.
   
   Issuer's Responsibility and Defenses; Notice of Defect or Defense.
   
   (a) Even against a purchaser for value and without notice, the terms
   of a security include terms stated on the certificate and terms made
   part of the security by reference on the certificate to another
   instrument, indenture, or document or to a constitution, statute,
   ordinance, rule, regulation, order, or the like, to the extent the
   terms referred 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 to the
   validity of the security, even if the certificate expressly states
   that a person accepting it admits 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 the like, pursuant to which the security is
   issued.
   
   (b) The following rules apply if an issuer asserts that a security is
   not valid:
   
   (1) 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 hands of a purchaser for
   value and without notice of the particular defect unless the defect
   involves a violation of a constitutional provision. In that case, the
   security is valid in the hands of a purchaser for value and without
   notice of the defect, other than one who takes by original issue.
   
   (2) Paragraph (1) of this subsection applies to an issuer that is a
   government or governmental subdivision, agency, or instrumentality
   only if there has been substantial compliance with the legal
   requirements governing the issue or the issuer has received a
   substantial consideration for the issue as a whole or for the
   particular security and a stated purpose of the issue is one for which
   the issuer has power to borrow money or issue the security.
   
   (c) Except as otherwise provided in Section 8-205 of this title, lack
   of genuineness of a certificated security is a complete defense, even
   against a purchaser for value and without notice.
   
   (d) 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 taken the
   certificated security without notice of the particular defense.
   
   (e) 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 of the security
   that is the subject of the contract or in the plan or arrangement
   pursuant to which the security is to be issued or distributed.
   
   (f) 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 defense that the issuer could
   not assert if the entitlement holder held the security directly.