§ 8-103 — Rules for Determining Whether Certain Obligations and Interests are Securities or Financial Assets

Section 8--103. Rules for Determining Whether Certain Obligations and\n Interests are Securities or Financial Assets.\n (a) A share or similar equity interest issued by a corporation,\nbusiness trust, joint stock company, or similar entity is a security.\n (b) An "investment company security" is a security. "Investment\ncompany security" means a share or similar equity interest issued by an\nentity that is registered as an investment company under the federal\ninvestment company laws, an interest in a unit investment trust that is\nso registered, or a face-amount certificate issued by a face-amount\ncertificate company that is so registered. Investment company security\ndoes not include an insurance policy or endowment policy or annuity\ncontract issued by an insurance company.\n (c) An interest in a partnership or limited liability company is not a\nsecurity unless it is dealt in or traded on securities exchanges or in\nsecurities markets, its terms expressly provide that it is a security\ngoverned by this Article, or it is an investment company security.\nHowever, an interest in a partnership or limited liability company is a\nfinancial asset if it is held in a securities account.\n (d) A writing that is a security certificate is governed by this\nArticle and not by Article 3, even though it also meets the requirements\nof that Article. However, a negotiable instrument governed by Article 3\nis a financial asset if it is held in a securities account.\n (e) An option or similar obligation issued by a clearing corporation\nto its participants is not a security, but is a financial asset.\n (f) A commodity contract, as defined in Section 9--102(a)(15), is not\na security or a financial asset.\n (g) A document of title is not a financial asset unless Section\n8--102(a)(9)(iii) applies.\n (h) An obligation, share, participation, or interest does not satisfy\nSection 8--102(a)(13)(ii) or 8--102(a)(15)(i) merely because the issuer\nor a person acting on its behalf:\n (1) maintains records of the owner thereof for a purpose other than\nregistration of transfer; or\n (2) could, but does not, maintain books for the purpose of\nregistration of transfer.\n * (i) A controllable account, controllable electronic record, or\ncontrollable payment intangible is not a financial asset unless Section\n8--102(a)(9)(iii) applies.\n * NB Effective June 3, 2026\n