Colorado § 4-8-102 - Definitions.

§ 4-8-102. Definitions.

(a) In this article 8:

(1) "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.

(2) "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.

(3) "Broker" means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity.

(4) "Certificated security" means a security that is represented by a certificate.

(5) "Clearing corporation" means:

(i) A person that is registered as a "clearing agency" under the federal securities laws;

(ii) A federal reserve bank; or

(iii) 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.

(6) "Communicate" means to:

(i) Send a signed record; or

(ii) Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.

(7) "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 section 4-8-501 (b)(2) or (b)(3), that person is the entitlement holder.

(8) "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.

(9) "Financial asset," except as otherwise provided in section 4-8-103, means:

(i) A security;

(ii) 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

(iii) 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 article. 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.

(10) "Good faith," for purposes of the obligation of good faith in the performance or enforcement of contracts or duties within this article, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(11) "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.

(12) "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.

(13) "Registered form," as applied to a certificated security, means a form in which:

(i) The security certificate specifies a person entitled to the security; and

(ii) 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.

(14) "Securities intermediary" means:

(i) A clearing corporation; or

(ii) 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.

(15) "Security," except as otherwise provided in section 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:

(i) 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;

(ii) 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

(iii) 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 article.

(16) "Security certificate" means a certificate representing a security.

(17) "Security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset specified in part 5 of this article.

(18) "Uncertificated security" means a security that is not represented by a certificate.

(b) The following definitions in this article 8 and other articles apply to this article 8:

Appropriate person Section 4-8-107

Control Section 4-8-106

Controllable account Section 4-9-102

Controllable electronic record Section 4-12-102

Controllable payment intangible Section 4-9-102

Delivery Section 4-8-301

Investment company security Section 4-8-103

Issuer Section 4-8-201

Overissue Section 4-8-210

Protected purchaser Section 4-8-303

Securities account Section 4-8-501

(c) In addition, article 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this article.

(d) The characterization of a person, business, or transaction for purposes of this article does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule.

Source: L. 96: Entire article R&RE, p. 202, § 2, effective July 1. L. 2023: IP(a), (a)(6)(i), and (b) amended, (SB 23-090), ch. 136, p. 538, § 37, effective August 7.

Editor's note: This section is similar to former §§ 4-8-102, 4-8-302, 4-8-303, 4-8-308, and 4-8-313 as they existed prior to 1996.

ANNOTATION

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Claim to limited tax bond rose to the level of a "property interest" sufficient to constitute an adverse claim. Meadow Homes Dev. Corp. v. Bowens, 211 P.3d 743 (Colo. App. 2009).

Absent unusual circumstances, a simple breach of contract does not itself establish a property interest required for an adverse claim to be a security. An adverse claim may, however, be based on principles of equitable remedies that give rise to property claims. Meadow Homes Dev. Corp. v. Bowens, 211 P.3d 743 (Colo. App. 2009).

Unusual circumstances entitled claimant to equitable remedies where seller of bond did more than simply breach a contract. Seller acted in a fraudulent manner intended to hinder and defraud the rights of the claimant. In addition, the bond was not a fungible investment security but rather was created as part of a land development project and ownership of the bond pivoted on which party ultimately bought and developed the land. Meadow Homes Dev. Corp. v. Bowens, 211 P.3d 743 (Colo. App. 2009).

Stocks for which certificates are created only after transfer are uncertificated securities. Atlas Biologicals, Inc. v. Kutrubes, 474 F. Supp. 3d 1188 (D. Colo. 2020), aff'd on other grounds, 50 F.4th 1307 (10th Cir. 2022).

Applied in Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).