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84-8-103. Rules for determining whether certain obligations and interests are securities or financial assets. (a) A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.

(b) 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.

(c) 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 article, 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.

(d) A writing that is a security certificate is governed by this article and not by article 3, even though it also meets the requirements of that article. However, a negotiable instrument governed by article 3 is a financial asset if it is held in a securities account.

(e) An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset.

(f) A commodity contract, as defined in K.S.A. 2023 Supp. 84-9-102(a)(15), and amendments thereto, is not a security or a financial asset.

(g) A document of title is not a financial asset unless K.S.A. 84-8-102(a)(9)(iii), and amendments thereto, applies.

History: L. 1996, ch. 202, § 30; L. 2000, ch. 142, § 148; L. 2007, ch. 90, § 64; July 1, 2008.

KANSAS COMMENT, 1996

This section is new and defines the scope of Article 8 regarding securities and financial assets. If the items are securities, they will generally be covered by Parts 2, 3 and 4 of Article 8. If they are financial assets held by an intermediary, they will be security entitlements, subject to Part 5.

Subsections (a) and (b) provide that "securities" include equity shares in a corporation and shares of equity in a registered investment company or entity. Subsection (c) provides that partnerships or limited liability companies can opt into Article 8 if they so provide. Subsection (d) includes Article 3 negotiable instruments if they meet the definition in 84-1-102 (a)(15) as securities.

"Financial assets," governed by Part 5, include options and negotiable instruments, if held by securities intermediaries in securities accounts. Subsections (d) and (e).

Revisor's Note:

Former section 84-8-103 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.


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