Ark. Code Ann. § 4-8-102 (2020)
Definitions
-
In this Chapter:
- “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.
- “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 indorsement.
- “Broker” means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity.
- “Certificated security” means a security that is represented by a certificate.
-
“Clearing corporation” means:
- a person that is registered as a “clearing agency” under the federal securities laws;
- a federal reserve bank; or
- 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.
-
“Communicate” means to:
- send a signed writing; or
- transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.
- “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 § 4-8-501(b)(2) or (3), that person is the entitlement holder.
- “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.
-
“Financial asset,” except as otherwise provided in § 4-8-103, means:
- a security;
- 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
- 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.
- [Reserved.]
- “Indorsement” 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.
- “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.
-
“Registered form,” as applied to a certificated security, means a form in which:
- the security certificate specifies a person entitled to the security; and
- 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.
-
“Securities intermediary” means:
- a clearing corporation; or
- 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.
-
“Security,” except as otherwise provided in § 4-8-103, 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:
- 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;
- 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
- which:
- is, or is of a type, dealt in or traded on securities exchanges or securities markets; or
- is a medium for investment and by its terms expressly provides that it is a security governed by this chapter.
- “Security certificate” means a certificate representing a security.
- “Security entitlement” means the rights and property interest of an entitlement holder with respect to a financial asset specified in Part 5 (§ 4-8-501 et seq.).
- “Uncertificated security” means a security that is not represented by a certificate.
- Other definitions applying to this chapter and the sections in which they appear are:
- In addition, Chapter 1 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
- 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.
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.
Appropriate person § 4-8-107 Control § 4-8-106 Delivery § 4-8-301 Investment company security § 4-8-103 Issuer § 4-8-201 Overissue § 4-8-210 Protected purchaser § 4-8-303 Securities account § 4-8-501
Click to view table.
History. Acts 1995, No. 425, § 1; 2005, No. 856, § 55.
Research References
U. Ark. Little Rock L.J.
Martin, An Arkansas Practitioner's Guide to Perfecting Security Interests in Securities, Brokerage Accounts, and Other Forms of Investment Property under Revised Article 8 and Amended Article 9, 19 U. Ark. Little Rock L.J. 1.
Case Notes
Indorsement.
In an action concerning a stock transfer, plaintiff's conversion and replevin claims against a bank were properly dismissed where plaintiff, who contended that he meant for his shares to be transferred to a new revocable trust, argued that the indorsement on the stock certificate did not transfer his shares to the bank in its capacity as trustee of the existing irrevocable testamentary trust that his mother had created. Plaintiff's indorsement on the stock power was a proper indorsement; moreover, when the signed stock certificate was left in the bank's possession, the transfer as between plaintiff and the bank was complete and transferred the shares to the bank in its capacity as trustee of the irrevocable testamentary trust. Ash v. First Nat'l Bank of E. Ark., 2019 Ark. App. 147, 573 S.W.3d 584 (2019).
Security.
Where a delivery debenture issued to the debtors by a cooperative and later delivered to a credit association as security for a debt owed by the debtors to the credit association conferred rights upon its holder, was in registered form, was one of a series of documents issued by the cooperative, evidenced an obligation of the issuer, was recognized in the area as a medium for investment, and was assignable, the delivery debenture was held to be a “security”. In re Glass, 692 F.2d 55 (8th Cir. 1982) (decision prior to 1985 amendment).
The fact that stock issuer did not physically deliver the stock certificate to lender did not prevent the stock from being a “security”. J.M. Prods., Inc. v. Ark. Capital Corp., 51 Ark. App. 85, 910 S.W.2d 702 (1995).