Section 41-08-02 - (8-102) Definitions1. 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: (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(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.Amended by S.L. 2023 , ch. 371( HB 1082 ), § 37, eff. 8/1/2023.