41-08-03. (8-103) Rules for determining whether certain obligations and interests are securities or financial assets

41-08-03. (8-103) Rules for determining whether certain obligations and interests are

securities or financial assets.

In this chapter:

1. A share or similar equity interest issued by a corporation, business trust, joint stock

company, or similar entity is a security.

2. An "investment company security" is a security. "Investment company security" means

a share or similar equity interest issued by an entity that is registered as an investment

company under the federal investment company laws, an interest in a unit investment

trust that is so registered, or a face-amount certificate issued by a face-amount

certificate company that is so registered. "Investment company security" does not

include an insurance policy or endowment policy or annuity contract issued by an

insurance company.

3. 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 chapter, or it is an investment company

security. However, an interest in a partnership or limited liability company is a financial

asset if it is held in a securities account.

4. A writing that is a security certificate is governed by this chapter and not by

chapter 41-03, even though it also meets the requirements of that chapter. However, a

negotiable instrument governed by chapter 41-03 is a financial asset if it is held in a

securities account.

5. An option or similar obligation issued by a clearing corporation to its participants is not

a security but is a financial asset.

6. A commodity contract, as defined in section 41-09-02, is not a security or a financial

asset.

7. A document of title is not a financial asset unless paragraph 3 of subdivision j of

subsection 1 of section 41-08-02 applies.

8. A controllable account, controllable electronic record, or controllable payment

intangible is not a financial asset unless paragraph 3 of subdivision j of subsection 1 of

section 41-08-02 applies.