7.
| (1) A disposition of a security is carried out by means of debit and credit posted to the transferor's and transferee's respective securities account. ; |
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| (2) Upon a disposition, the transferee acquires rights to the extent of the interest transferred in the security that the transferor had or had the power to transfer. Where the credit for the interest acquired was posted to the transferee's securities accounts, and the transferee gave value without notice of any adverse claim, the transferee also acquires the transferor's interest in the security, free of any adverse claims. For the purposes of this subsection,-
| | (a) notice to the dealer direct participant authorized to act in the securities account of the transferee customers is not to be attributed to the customer ; and
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| | (b) notice only that the transferor acts as a trustee, an agent or in a representative capacity, or that the transfer is out of a designated securities account, is not notice of breach of trust or authority and does not amount to notice of an adverse claim. | | |
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| (3) A dealer direct participant who deals with a security under the authority of a customer, is not liable to a person who has an adverse claim to the security, unless the dealer direct participant-
| | (a) acted in collusion with any person who violated the rights of the adverse claimant; or
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| | (b) acted, after having been served with an injunction, restraining order or other creditor process issued by a Court of competent jurisdiction enjoining the dealer direct participant from so dealing, and the dealer direct participant has had an opportunity to act on the injunction, restraining order, or other creditor process as the case may be.
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| (4) In the handling of a disposition of securities and having it recorded in securities accounts, the Central Bank shall not incur any liability whatsoever to any person, including a direct participant, customer, adverse claimant or third party, unless the Central Bank acts contrary to a binding and effective injunction, restraining order or other creditor process, issued by a Court of competent jurisdiction which has been lawfully served on the Central Bank, or unless the Central Bank acts in bad faith or in collusion with any wrongdoer. |
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Sri Lanka Consolidated Acts