Draft Personal Property Law
Part 1: General
The Law may be cited as "the Personal Property Law No. I of 2003".
2. Legislative authority
The Law is made by the Chairman in accordance with the authority given to him by Dubai Law No. 3 of 2002.
3. Application of the Law
The Law applies in the jurisdiction created under Dubai Law No. 3 of 2002.
4. Date of enactment
The Law is made on [insert date of enactment].
The Law comes into force on the date that the Law is enacted.
Schedule 1 contains:(a) interpretative provisions which apply to the Law; and(b) a list of defined terms used in the Law.
Part 2: Application
This Law applies to any Property which is capable of being owned and transferred under the laws of the DIFC other than real Property, regardless of whether such Property is capable of being owned or transferred under the laws of any other jurisdiction.
Part 3: Transfers of Property
8. General rule as to transfers of title to property(1) Where there is a consensual transfer of Property, title is transferred to the transferee at such time as the transferor and the transferee mutually intend it to be transferred.(2) For the purpose of ascertaining the intention of the transferor and the transferee regard shall be had to the terms of any contract or other agreement or arrangements between the transferor and the transferee, the conduct of the transferor and the transferee and the circumstances of the case.(3) Where both the transferor and the transferee intend that title to Property should pass but intend it to pass at a different times (or, if there are multiple transferors and transferees, where there are differences of intention as to time between transferors or transferees), title passes at the last of the intended time, and until that time no title passes.(4) A purported transfer is ineffective without the consent of the transferee. Such consent may be explicit or implied, and may be given immediately or retrospectively.(5) Where a Person ("A") intends to transfer Property to another ("B") without the knowledge or consent of B, when B discovers the attempted transfer he may accept it, and if he does so title to the Property will be transferred to him as if he had intended the Property to be transferred on the same date as A. However if A has rescinded such a transfer at any time prior to B's discovery then B cannot subsequently accept the transfer.(6) Title to Property may not cease to exist, and once a Person acquires title to Property he remains the owner of it until the Property is either transferred or destroyed.(7) A Person may abandon Property if he intends that any Person who appropriates it may become owner of it at the time of appropriation. However, until such an appropriation is made he remains the owner of the Property.
Where Property is transferred by one Person to another by way of gift, it is presumed that the intention of the parties is that title to the Property should be transferred to the transferee unless a contrary intention can be proved.
10. Partially effective transfers(1) Where Property is transferred by a Person who is not its owner, and who does not sell it under the authority or with the consent of the owner, the transferee acquires no better title to the Property than the transferor had.(2) Where a transferee enters into a transfer of Property as described in Article 10 (l) in circumstances where, as a direct result of anything said or done by the owner, he believes in good faith that the transferor either is the owner or is acting under the authority or with the consent of the owner, the transferee acquires the title which he would have acquired had the transferor been so acting.(3) Where there is a contract for the sale of unascertained Property no title to the Property is transferred to the transferee unless and until the Property is ascertained.(4) Where by a contract of sale the transferor purports to effect a present sale of future Property, the contract operates as an agreement to sell the Property.
11. Transferor with voidable title
When the transferor of Property has a voidable title to it, but his title has not been avoided at the time of the sale, the transferee acquires a good title to the Property provided he buys it in good faith and without notice of the transferor's defect of title.
12. Transferor with incomplete title
Where a Person owns Property in which there is a subsisting third party Property interest and is in possession of that Property, or of documents of title to it, the delivery or transfer by that Person, or by an agent acting for him, of the Property or documents of title to it to any Person receiving the same in good faith and without notice of the existence of the third party Property interest has the same effect as if the Person making the delivery or transfer were expressly authorised by the owner of the subsisting third party Property interest to make the same.
13. Transferor with no title
Where a Person obtains, with the consent of the owner, possession of Property or documents indicating title to Property, the delivery or transfer by that Person, or by an agent acting for him, of the Property to any Person receiving the same in good faith and without notice of any third party Property interest has the same effect as if the Person making the delivery or transfer were expressly authorised by the owner of the Property to make the same.
14. Application of this Part
This Part is subject to the provisions of Parts 5, 6 and 7.
Part 4: Rights of Parties
15. Unpaid transferor defined(1) The transferor of Property is an unpaid transferor within the meaning of this Law:(a) when he has entered into a contract of sale in respect of the Property and the whole of the price has not been paid or tendered;(b) when a bill of Exchange or other negotiable Instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the Instrument or otherwise.(2) In this Part of this Law 'transferor' includes any Person who is in the position of a transferor, as, for instance, an agent of the transferor to whom a bill of lading has been endorsed, or a consignor or agent who has himself paid (or is directly responsible for) the price.
16. Unpaid transferor's rights(1) Subject to this and any other law, notwithstanding that title to the Property may have passed to the transferee, the unpaid transferor of Property, as such, has by implication of law:(a) a lien on the Property or right to retain it for the price while he is in possession of it;(b) in the case of the insolvency of the transferee, a right of stopping the Property in transit after he has parted with the possession of it; and(c) a right of re-sale as limited by this Law.(2) Where title to the Property has not passed to the transferee, the unpaid transferor has (in addition to his other remedies) a right of withholding delivery similar to and coextensive with his rights of lien or retention and stoppage in transit where title has passed to the transferee.
17. Specific performance(1) If any action for a failure to perform any legal obligation to deliver Property the Court may, if it thinks fit, on the plaintiffs application, by its judgement or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the Property on payment of damages.(2) The plaintiff s application may be made at any time before judgement or decree.(3) The judgement or decree may be unconditional, or on such terms and conditions as to damages, payment of the price and otherwise as seem just to the Court.
[18. Further orders
The Council may make such Tier 4 Legislation as it sees fit in respect of the Recognition of trusts and trust interests for the purpose of the provisions of this Law.]
Part 5: Securities Transactions - General
19. Transfer authority(1) A Person who has the necessary authority and documentation to procure a transfer of title to any Security or financial interest has transfer authority.(2) In respect of bearer Securities, any Person having physical possession of the bearer Security has transfer authority.(3) In respect of bills of Exchange and other Securities transferred by endorsement, a Person has transfer authority if he has authority to endorse the Security to a third party.(4) In respect of registered Securities, a Person has transfer authority if he is in possession of, or has authority to Execute, an instruction to the registrar to register the Securities in the name of a transferee.(5) In respect of any financial assets held in a Securities account, a Person has transfer authority if he is entitled to give the Securities intermediary an entitlement order.
20. Rules for determining whether certain obligations and interests are Securities or financial assets.(1) A share is a Security.(2) A debt Security or bill of Exchange is a Security.[(3) An Investment vehicle Security is a Security.](4) An interest in a Partnership or limited liability company is not a Security unless it is dealt in or traded on Securities Exchanges or in Securities markets, its terms expressly provide that it is a Security governed by this Law, or it is an Investment vehicle Security. However, an interest in a Partnership or limited liability company is a financial asset if it is held in a Securities account.(5) A negotiable Instrument is a Security for the purposes of this Law if it is held in a Securities account.(6) An option or similar obligation issued by a Clearing House to its participants is not a Security, but is a financial asset.(7) A commodity contract is not a Security or a financial asset.
21. Acquisition of Security or financial asset or interest therein.(1) A Person acquires a Security or an interest therein if:(a) the Person is a purchaser to whom a Security is delivered; or(b) the Person acquires a Security entitlement to the Security.(2) A Person acquires a financial asset, other than a Security, or an interest therein, under this Article, if the Person acquires a Security entitlement to the financial asset.(3) Causing a Person to acquire an interest in a Security or financial asset is equivalent in all respects to delivery of such a Security or financial asset.
22. Notice of a third party Property interest.(1) A purchaser of a certificated Security has notice of a third party Property interest if the Security certificate:(a) has been endorsed or otherwise designated for a purpose or use not involving transfer; or(b) is a bearer Security and has on it an unambiguous statement that it is the Property of a Person other than the transferor, but the mere writing of a name on the Certificate is not such a statement.(2) Registration of a Security interest under the Law of Security is not notice of a third party Property interest in a financial asset.
23. Control.(1) A Person has "control" of a bearer Security in physical form if the physical form of the Security is delivered to him, and retains such control whilst he retains possession of the physical form of the Security.(2) A Person has "control" of a Security in registered form when he is registered as the owner of the Security or has transfer authority in respect of it.(3) A Person has "control" of an uncertificated Security if:(a) the uncertificated Security is held in a Securities account in his name; or(b) the Issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.(4) A purchaser has "control" of a Security entitlement if:(a) the purchaser becomes the entitlement holder; or(b) the Securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder.(5) If an interest in a Security entitlement is granted by the entitlement holder to the entitlement holder's own Securities intermediary, the Securities intermediary has control.(6) A purchaser who has satisfied the requirements of Article 23 (3) (b) or 23 (4) (b) has control even if the registered owner in the case of Article 23 (3) (b) or the entitlement holder in the case of Article 23 (4) (b) retains the right to make substitutions for the uncertificated Security or Security entitlement, to originate instructions or entitlement orders to the Issuer or Securities intermediary, or otherwise to deal with the uncertificated Security or Security entitlement.(7) An Issuer or a Securities intermediary may not enter into an agreement of the kind described in Article 23 (3) (b) or 23 (4) (b) without the consent of the registered owner or entitlement holder, but an Issuer or a Securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An Issuer or Securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.
Part 6: Transfer of Securities
24. Efficacy of endorsement, instruction or entitlement(1) An endorsement, instruction, or entitlement order is effective if:(a) it is made by a Person having the right to transfer the Security or financial asset;(b) it is made by a Person having authority as an agent to transfer the Security or financial asset including, in the case of an instruction or entitlement order, a Person who has control under Article 23 (3) (b) or 23 (4) (b); or(c) the Person having the right to transfer the Security or financial asset is precluded from asserting its ineffectiveness.(2) An endorsement, instruction, or entitlement order is effective even if the Person making it has failed to comply with any condition or requirement relating to his power to do so, including any law requiring the obtaining of Court approval of the transaction; or the representative's action in making the endorsement, instruction, or entitlement order or using the proceeds of the Transaction is otherwise a breach of duty.(3) If a Security is registered in the name of or specially endorsed to a Person described as a representative, or if a Securities account is maintained in the name of a Person described as a representative, an endorsement, instruction, or entitlement order made by the Person is effective even though the Person is no longer serving in the described capacity.(4) Effectiveness of an endorsement, instruction, or entitlement order is determined as of the date the endorsement, instruction, or entitlement order is made, and an endorsement, instruction, or entitlement order does not become ineffective by reason of any later change of circumstances.
25. Warranties(1) The Council may make such Tier 4 Legislation as it thinks fit to set out the warranties which are implied where:(a) a Person transfers a certificated Security to a purchaser for value;(b) a Person originates an instruction for registration of transfer of an uncertificated Security to a purchaser for value;(c) a Person transfers an uncertificated Security to a purchaser for value and does not originate an instruction in connection with the transfer;(d) a Person endorses a Security certificate;(e) a Person originates an instruction for registration of transfer of an uncertificated security;(f) a Person presents a certificated Security for registration of transfer or for payment or exchange;(g) a Person acts as agent of another in delivering a certificated Security to a purchaser in circumstances where the delivery is pursuant to an agreement made between the purchaser and the agent's principal;(h) a secured party redelivers a Security Certificate received, or after payment and on order of the debtor delivers the Security Certificate to another person;(i) a broker acts for a customer, or delivers a Security Certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security;(j) a Person originates an entitlement order to a Securities intermediary or delivers a Security Certificate to a Securities intermediary for credit to a Securities account or originates an instruction with respect to an uncertificated Security directing that the uncertificated Security be credited to a Securities account.
26. No requirements for writing
A contract or modification of a contract for the sale or purchase of a Security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought.
27. Further rules relating to specific types of securities(1) The Council may make such Tier 4 Legislation as it thinks fit in relation to the creation, nature, essence and rules regarding transfers of following types of securities:(a) [bills of exchange];(b) [promissory notes];(c) [transferable securities];(d) [transferable documents of title - bills of lading, warehouse warrants];(e) [commodity contracts];[(2) The Council may make such Tier 4 Legislation as it sees fit in relation to the issuance of Securities by issuers within the DIFC. Such law may cover:(a) the effect of a creation of Securities in excess of the authority or constitution of the Issuer, and(b) the issuer's obligations as regards registration or Recognition of transfers of Securities.]
28. Effect of issuer's restriction on transfer
A restriction on transfer of a Security imposed by the Issuer shall be regarded as a third party Property interest, and shall be ineffective against any Person other than a Person who had notice of such third party Property interest unless:(a) the Security is certificated and the restriction is noted conspicuously on the Security certificate; or(b) the Security is uncertificated and the registered owner has been notified of the restriction.
Part 7: Transfer of Certificated and Uncertificated Securities
29. Rights of purchaser.(1) Upon delivery of a certificated or uncertificated Security to a purchaser, the purchaser acquires all rights in the Security that the transferor had or had power to transfer.(2) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.(3) A purchaser of a Security who has notice of a third party Property interest takes subject to that interest.
30. Purchaser's right to requisites for registration of transfer.
Unless otherwise agreed, the transferor of a Security on due demand shall supply the purchaser with proof of authority to transfer or with any transfer authority which may be necessary to obtain registration of the transfer of the Security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the transferee may reject or rescind the transfer.
Part 8: Security Entitlements
31. Securities account; acquisition of Security entitlement from Securities intermediary.(1) A Person acquires a Security entitlement to a financial asset if a Securities intermediary:(a) has credited a financial asset to the person's Securities account;(b) receives a financial asset from the Person or on his behalf and in circumstances in which he ought to credit it to the person's Securities account; or(c) is otherwise obliged by law or Regulation to credit a financial asset to the person's Securities account.(2) A Person has a Security entitlement even though the Securities intermediary does not itself hold the financial asset.(3) Where a Securities intermediary holds a financial asset but does not have the necessary transfer authority to transfer it to a third Person, the Securities intermediary will not be the owner of the asset and the owner will be treated as holding the financial asset directly rather than as having a Security entitlement with respect to the financial asset, even if the asset is recorded in a Securities account.(4) Issuance of a Security is not establishment of a Security entitlement.
32. Assertion of adverse claim against entitlement holder
An action based on an third party Property interest to a financial asset may not be asserted against a Person who acquires a Security entitlement to such financial asset under Article 31 for value and without notice of the third party Property interest.
33. Third party Property interest of entitlement holder in financial asset held by Securities intermediary(1) This Article applies where a Securities intermediary is unable to satisfy all Security entitlements with respect to a particular financial asset which the Securities intermediary is holding, whether from the asset it holds or from interests in the asset which it holds.(2) As soon as this Article applies, then with effect from the time at which the Securities intermediary was last able to satisfy Security entitlements with respect to the financial asset, and to the extent necessary to satisfy the Security entitlements with respect to the financial asset, the financial asset (and all interests in it) held by the Securities intermediary:(a) shall be deemed to be held by the Securities intermediary for the entitlement holders;(b) shall be deemed not to be Property of the Securities intermediary; and(c) shall be deemed not to be subject to claims of creditors of the Securities intermediary, except as otherwise provided in Article 35.(3) Subject to Articles 33 (4), (5), and (6), as soon as this Article applies, an entitlement holder's rights with respect to a particular financial asset are rights to a proportionate share in the financial asset and any interests in it held by the Securities intermediary, without regard to:(a) the time when the entitlement holder acquired the Security entitlement; or(b) the time when the Securities intermediary acquired the asset or any interest in it.(4) An entitlement holder's interest with respect to a particular financial asset which is or has been (or rights in which are or have been) held by a Securities intermediary may be enforced against the Securities intermediary, but only by exercise of the entitlement holder's rights under this Part.(5) An entitlement holder's interest with respect to a particular financial asset which is or has been (or rights in which are or have been) held by a Securities intermediary may, subject to Article 33 (7), be enforced against a Person to whom the financial asset or an interest therein has been transferred (whether by the Securities intermediary or by another), but only if:(a) 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 to that financial asset of all of its entitlement holders;(c) the transfer to the Person (or to a Person through whom the Person claims) by the Securities intermediary was in breach of the Securities intermediary's obligations to entitlement holders.(6) Where an office-holder is acting on behalf of all entitlement holders having Security entitlements with respect to a particular financial asset, he may, subject to Article 33 (7), recover the financial asset, or inter6t therein, from any Person mentioned in Article 33 (5); and if he elects not to pursue that right, any entitlement holder whose Security entitlement remains unsatisfied may, subject to Article 33 (7), recover its interest in the financial asset from that Person.(7) Articles 33 (5) and (6) do not apply where:(a) the transferee (or a Person through whom he claims) has purchased the financial asset or interest therein by giving value and obtaining control; and(b) neither the transferee nor any Person through whom he claims has acted in collusion with the Securities intermediary in relation to the breaching of the Securities intermediary's obligations.
34. Rights of purchaser of Security entitlement from entitlement holder.(1) An action based on an third party Property interest in a financial asset or Security entitlement may not be asserted against a Person who purchases a Security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the third party Property interest, and obtains control.(2) If a third party Property interest could not have been asserted against an entitlement holder under this Part, that third party Property interest cannot be asserted against a Person who purchases a Security entitlement, or an interest therein, from the entitlement holder.(3) In a case not covered by the priority rules in the Law of Security a purchaser for value of a Security entitlement, or an interest therein, who obtains control has priority over a purchaser of a Security entitlement, or an interest therein, who does not obtain control. Purchasers who have control rank equally, except that a Securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the Securities intermediary.
35. Priority amongst Security interests and entitlement holders.(1) Except as otherwise provided in Article 35 (2), if a Securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have Security entitlements to that financial asset and its obligation to a creditor of the Securities intermediary who has a Security interest in that financial asset, die claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.(2) If a creditor of a Securities intermediary has a Security interest in and control of a financial asset held by a Securities intermediary, his claim with respect to that financial asset has priority over claims of the Securities intermediary's entitlement holders who have Security entitlements with respect to that financial asset.
Schedule 1: Interpretation
1. Rules of interpretation(1) In the Law, a reference to:(a) a statutory provision includes a reference to the statutory provision as amended or re-enacted from time to time;(b) a Person includes a reference to a government, State, State agency, corporation, Body Corporate, association or partnership; and(c) a calendar year shall mean a year of the Gregorian calendar.(2) The headings in the Law shall not affect its interpretation.
2. Defined terms
In the Law, unless the context indicates otherwise, the defined terms listed below shall have the corresponding meanings:
Term Definition Action includes counterclaim and set-off Bearer security a Security which by its terms is payable to the bearer of the Security Certificate, and includes any Certificate which has been generally endorsed Certificated security a Security whose existence is embodied in a physical certificate Chairman the chairman of the Centre, established under Dubai Law No. 3 of 2002 Commodity contract a commodity Futures contract, an option on a commodity Futures contract, or a commodity option Communication includes any form of communication, whether written, oral or electronic Contract of sale includes an agreement to sell As well as a sale Control has the meaning given to it in Article 23 Council the Governing Body of the Financial Services Regulatory Authority of DIFC established under the Regulatory Law No. I of 2003 Debt security a Security which is not a share under which the Issuer is required to pay the holder of the Security one or more sums of Money at a future time; a Security is a debt Security regardless of whether the obligation to pay is absolute or contingent, whether the amount which will be payable is known on the date of issue of the Security, or whether the date of payment is certain on the date of issue Delivery voluntary transfer of possession from one Person to another and includes any act of separation by which Property becomes unconditionally appropriated to a contract DIFC the Dubai International Financial Centre, established under Article 3(l) of Dubai Law No. 3 of 2002 Endorsement a signature that alone or accompanied by other words is made on a Security or on a separate document for the purpose of assigning, transferring, or redeeming, the Security or underlying Property or granting a power to assign, transfer, or redeem the Security or underlying property Entitlement holder a Person identified in the records of a Securities intermediary as the Person having a Security entitlement against the Securities intermediary; if a Person acquires a Security entitlement by virtue of Article 31 (1) (b) or (c), that Person is the entitlement holder Entitlement order a notification communicated to a Securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a Security entitlement Financial asset except as otherwise provided in Article 20 means (i) a Security or an interest in or right to a security; (ii) any obligation of a type usually dealt in or traded on financial markets or an interest in or right to such an obligation; or (iii) any other Property which is held by a Securities intermediary in a Securities account where the Securities intermediary has expressly agreed with the account holder that the Property is to be treated as a financial asset under this Law or an interest in or right to such property; as the context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated Security, a Security Certificate, or a Security entitlement Instruction which directs that the transfer of the Security be registered or that the Security be redeemed [Investment vehicle security a share or similar equity interest issued by an entity that is regarded as an Security Investment vehicle [collective Investment scheme?] under the [Securities Law]; Investment vehicle Security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company, nor does it include any contract by which an amount is payable which is calculated by reference to the value of an asset or portfolio of assets] Law the Personal Property Law No. I of 2003 Law of Security the Law of Security No. I of 2003 Office-holder has the meaning set out in the Insolvency Law No. I of 2003 Property anything which is capable of being owned and transferred and as the context requires denotes either the Property itself or title to the property Purchaser a Person who has acquired or is in the process of acquiring title (whether contingent or absolute) to any Property other than as a recipient of a gift or other voluntary transfer Real property any right or interest in land Registered form as applied to a certificated Security, means a form in which a transfer of the Security may be registered upon books maintained for that purpose by or on behalf of the issuer Sale includes an agreement as well as a sale and delivery Schedule a schedule to the Law Securities account an account to which a financial asset is or may be credited in accordance with an agreement under which the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset Securities intermediary a Person who in the ordinary course of business transacts Securities or other financial assets Security except as otherwise provided in Article 20, means an obligation of or interest in an Issuer or in Property which is represented by a Security Certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer; any Instrument which satisfies these criteria, is a medium for Investment and by its terms expressly provides that it is a Security governed by this Law is a Security for the purposes of this Law Security certificate a Certificate representing a Security Security entitlement the rights of an entitlement holder with respect to a financial asset specified in Part 5 Share a Security which represents any interest in the capital of any enterprise which is characterised by the law of the place of incorporation or establishment of that enterprise as a share Third party Property interest an interest in any Property which could be asserted adversely to the interest interest of a purchaser of that property; this includes both Property rights in existence at the time of purchase and Property rights which may arise, by operation of law or judicial decision Tier 4 Legislation Regulations and Orders made by the Council Transfer in respect of Property, a transfer of title to property Transfer authority has the meaning given to it in Article 19 Transferee in respect of Property, a Person who seeks to have title to Property transferred to himself, and includes a buyer Transferor in respect of Property, a Person who seeks to transfer title to that Property to another, whether or not he owns such Property at the time of the transfer, and includes a seller Uncertificated security a Security that is not represented by a certificate
3. Good faith
A thing is deemed to be done in good faith within the meaning of this Law when it is in fact done honestly, whether it is done negligently or not.
4. Third party Property interests(1) A Person has notice of a third party Property interest if he:(a) has actual knowledge of the third party Property interest;(b) is aware of facts sufficient to indicate that there is a significant probability that the third party Property interest exists and deliberately avoids enquiring into the existence of the third party Property interest; or(c) the Person has a duty, imposed by statute or Regulation, to investigate whether a third party Property interest exists, and the investigation so required would establish the existence of the third party Property interest.(2) Having knowledge that an asset or an interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a Transaction and is not notice of a third party Property interest. However, a Person who knows that a representative has transferred a financial asset or interest therein in a Transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of a third party Property interest.