810 ILCS 5/8-202
2021 Illinois Compiled Statutes|Chapter 810 - COMMERCIAL CODE|810 ILCS 5/ - Uniform Commercial Code.|Article 8 - Investment Securities

 (from Ch. 26, par. 8-202)Sec. 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 certificated 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) 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, 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.    (Source: P.A. 89-364, eff. 1-1-96.)