41-08-02. (8-102) Definitions

41-08-02. (8-102) Definitions

1. In this chapter:

a. "Adverse claim" means a claim that a claimant has a property interest in a

financial asset and that it is a violation of the rights of the claimant for another

person to hold, transfer, or deal with the financial asset.

b. "Bearer form", as applied to a certificated security, means a form in which the

security is payable to the bearer of the security certificate according to its terms

but not by reason of an endorsement.

c. "Broker" means a person defined as a broker or dealer under the federal

securities laws, but without excluding a bank acting in that capacity.

d. "Certificated security" means a security that is represented by a certificate.

e. "Clearing corporation" means:

(1) A person registered as a "clearing agency" under the federal securities laws;

(2) A federal reserve bank; or

(3) Any other person that provides clearance or settlement services with

respect to financial assets that would require it to register as a clearing

agency under the federal securities laws but for an exclusion or exemption

from the registration requirement, if its activities as a clearing corporation,

including promulgation of rules, are subject to regulation by a federal or

state governmental authority.

f. "Communicate" means to:

(1) Send a signed record; or

(2) Transmit information by any mechanism agreed upon by the persons

transmitting and receiving the information.

g. "Endorsement" means a signature that alone or accompanied by other words is

made on a security certificate in registered form or on a separate document for

the purpose of assigning, transferring, or redeeming the security or granting a

power to assign, transfer, or redeem it.

h. "Entitlement holder" means 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 subdivision b

or c of subsection 2 of section 41-08-41, that person is the entitlement holder.

i. "Entitlement order" means a notification communicated to a securities

intermediary directing transfer or redemption of a financial asset to which the

entitlement holder has a security entitlement.

j. "Financial asset", except as otherwise provided in section 41-08-03, means:

(1) A security;

(2) An obligation of a person or a share, participation, or other interest in a

person or in property or an enterprise of a person, which is, or is of a type,

dealt in or traded on financial markets, or which is recognized in any area in

which it is issued or dealt in as a medium for investment; or

(3) Any property that is held by a securities intermediary for another person in a

securities account if the securities intermediary has expressly agreed with

the other person that the property is to be treated as a financial asset under

this chapter.

As 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.

k. "Instruction" means a notification communicated to the issuer of an uncertificated

security which directs that the transfer of the security be registered or that the

security be redeemed.

l. "Registered form", as applied to a certificated security, means a form in which:

(1) The security certificate specifies a person entitled to the security; and

(2) A transfer of the security may be registered upon books maintained for that

purpose by or on behalf of the issuer, or the security certificate so states.

m. "Securities intermediary" means:

(1) A clearing corporation; or

deemed.

l. "Registered form", as applied to a certificated security, means a form in which:

(1) The security certificate specifies a person entitled to the security; and

(2) A transfer of the security may be registered upon books maintained for that

purpose by or on behalf of the issuer, or the security certificate so states.

m. "Securities intermediary" means:

(1) A clearing corporation; or

(2) A person, including a bank or broker, that in the ordinary course of its

business maintains securities accounts for others and is acting in that

capacity.

n. "Security", except as otherwise provided in section 41-08-03, means an obligation

of an issuer or a share, participation, or other interest in an issuer or in property

or an enterprise of an issuer:

(1) 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;

(2) Which is one of a class or series or by its terms is divisible into a class or

series of shares, participations, interests, or obligations; and

(3) Which:

(a) Is, or is of a type, dealt in or traded on securities exchanges or

securities markets; or

(b) Is a medium for investment and by its terms expressly provides that it

is a security governed by this chapter.

o. "Security certificate" means a certificate representing a security.

p. "Security entitlement" means the rights and property interest of an entitlement

holder with respect to a financial asset specified in sections 41-08-41 through

41-08-51.

q. "Uncertificated security" means a security that is not represented by a certificate.

2. The following definitions in this chapter and other chapters apply to this chapter:

a. "Appropriate person". Section 41-08-07.

b. "Control". Section 41-08-06.

c. "Controllable account". Section 41-09-02.

d. "Controllable electronic record". Section 41-12-02.

e. "Controllable payment intangible". Section 41-09-02.

f. "Delivery". Section 41-08-24.

g. "Investment company security". Section 41-08-03.

h. "Issuer". Section 41-08-17.

i. "Overissue". Section 41-08-26.

j. "Protected purchaser". Section 41-08-29.

k. "Securities account". Section 41-08-41.

3. In addition, chapter 41-01 contains general definitions and principles of construction

and interpretation applicable throughout this chapter.

4. The characterization of a person, business, or transaction for purposes of this chapter

does not determine the characterization of the person, business, or transaction for

purposes of any other law, regulation, or rule.