Sec. 42a-8-102. Definitions and index of definitions.
Sec. 42a-8-110. Applicability; choice of law.
Sec. 42a-8-303. Protected purchaser.
Sec. 42a-8-102. Definitions and index of definitions. (a) In this article:
(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 endorsement.
(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:
(A) A person that is registered as a “clearing agency” under the federal securities laws;
(B) A federal reserve bank; or
(C) 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:
(A) Send a signed record; or
(B) Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.
(7) “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.
(8) “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 (2) or (3) of subsection (b) of section 42a-8-501, that person is the entitlement holder.
(9) “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.
(10) “Financial asset”, except as otherwise provided in section 42a-8-103, means: (A) A security; (B) 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 (C) 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.
(11) “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.
(12) “Registered form”, as applied to a certificated security, means a form in which:
(A) The security certificate specifies a person entitled to the security; and
(B) 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.
(13) “Securities intermediary” means:
(A) A clearing corporation; or
(B) 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.
(14) “Security”, except as otherwise provided in section 42a-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:
(A) 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;
(B) 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
(C) Which:
(i) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or
(ii) Is a medium for investment and by its terms expressly provides that it is a security governed by this article.
(15) “Security certificate” means a certificate representing a security.
(16) “Security entitlement” means the rights and property interest of an entitlement holder with respect to a financial asset specified in part 5.
(17) “Uncertificated security” means a security that is not represented by a certificate.
(b) The following definitions apply in this article and other articles apply to this article:
“Appropriate person”. Section 42a-8-107.
“Control”. Section 42a-8-106.
“Controllable account”. Section 42a-9-102.
“Controllable electronic record”. Section 42a-12-102.
“Controllable payment intangible”. Section 42a-9-102.
“Delivery”. Section 42a-8-301.
“Investment company security”. Section 42a-8-103.
“Issuer”. Section 42a-8-201.
“Overissue”. Section 42a-8-210.
“Protected purchaser”. Section 42a-8-303.
“Securities account”. Section 42a-8-501.
(c) In addition, article 1 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.
(1959, P.A. 133, S. 8-102; 1963, P.A. 526, S. 14; 1972, P.A. 169, S. 1; P.A. 79-435, S. 1; P.A. 97-182, S. 2; P.A. 05-109, S. 37; P.A. 25-145, S. 31.)
History: 1963 act deleted former Subsec. (2) defining “proper form”, renumbered former Subsec. (3) accordingly, inserted new Subsecs. (3) and (4) defining “clearing corporation” and “custodian bank”, likewise renumbering former Subsecs. (4) to (6) accordingly; 1972 act redefined “clearing corporation” which formerly was considered “a corporation all of the capital stock of which is held by or for a national securities exchange or association registered under a statute of the United States such as the Securities Exchange Act of 1934”; P.A. 79-435 replaced definition of “security” with definitions of “certificated security” and “uncertificated security” and reworded definition of “clearing corporation”; P.A. 97-182 substantially revised and restructured section by redefining or deleting definitions of existing terms and defining additional terms; P.A. 05-109 amended Subsec. (a) by deleting definition of “good faith” and making technical changes to conform to revisions made to article 1 by the same act; P.A. 25-145 amended Subsec. (a)(6)(A) to redefine “communicate” and amended Subsec. (b) by adding references to “controllable account”, “controllable electronic record” and “controllable payment intangible” and by making technical changes, effective January 1, 2026.
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Sec. 42a-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, in interest in a unit investment trust that is so registered, or 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 section 42a-9-102, is not a security or a financial asset.
(g) A document of title is not a financial asset unless subdivision (10)(C) of subsection (a) of section 42a-8-102 applies.
(h) A controllable account, controllable electronic record or controllable payment intangible is not a financial asset unless subdivision (10)(C) of subsection (a) of section 42a-8-102 applies.
(1959, P.A. 133, S. 8-103; P.A. 79-435, S. 2; P.A. 97-182, S. 3; P.A. 01-132, S. 146; P.A. 04-64, S. 59; P.A. 25-145, S. 32.)
History: P.A. 79-435 amended section to distinguish between certificated and uncertificated securities, applying former provision to certificated securities and adding provision re uncertificated securities; P.A. 97-182 entirely replaced former provisions re issuer's lien with provisions re rules for determining whether certain obligations and interests are securities or financial assets; P.A. 01-132 amended Subsec. (f) to replace Sec. 42a-9-115 with Sec. 42a-9-102(a)(15) as the statutory reference for the definition of a “commodity contract”; P.A. 04-64 added Subsec. (g) re document of title to conform to revisions made to article 7 by the same act; P.A. 25-145 amended Subsec. (f) by substituting Sec. 42a-9-102 for Sec. 42a-9-102(a)(15), amended Subsec. (g) by substituting “subdivision (10)(c)” for “subdivision (10)(iii)” and added Subsec. (h) re controllable account, controllable electronic record or controllable payment intangible not being a financial asset unless Sec. 42a-8-102(a)(10)(C) applies, effective January 1, 2026.
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Sec. 42a-8-106. Control. (a) A purchaser has “control” of a certificated security in bearer form if the certificated security is delivered to the purchaser.
(b) A purchaser has “control” of a certificated security in registered form if the certificated security is delivered to the purchaser, and:
(1) The certificate is endorsed to the purchaser or in blank by an effective endorsement; or
(2) The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.
(c) A purchaser has “control” of an uncertificated security if:
(1) The uncertificated security is delivered to the purchaser; or
(2) The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.
(d) A purchaser has “control” of a security entitlement if:
(1) The purchaser becomes the entitlement holder;
(2) The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or
(3) Another person, other than the transferor to the purchaser of an interest in the security entitlement:
(A) Has control of the security entitlement and acknowledges that it has control on behalf of the purchaser; or
(B) Obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.
(e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.
(f) A purchaser who has satisfied the requirements of subsection (c) or (d) of this section has control, even if the registered owner in the case of subsection (c) of this section or the entitlement holder in the case of subsection (d) of this section retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.
(g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subdivision (2) of subsection (c) of this section or subdivision (2) of subsection (d) of this section without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.
(h) A person that has control under this section is not required to acknowledge that it has control on behalf of a purchaser.
(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees or law other than this article or article 9 otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person.
(1959, P.A. 133, S. 8-106; P.A. 79-435, S. 5; P.A. 97-182, S. 6; P.A. 01-132, S. 147; P.A. 25-145, S. 33.)
History: P.A. 79-435 rephrased provisions and clarified applicability of law with respect to certificated and uncertificated securities; P.A. 97-182 entirely replaced former provisions re applicable law with provisions re control; P.A. 01-132 added Subsec. (d)(3) re when another person has control of the security entitlement on behalf of the purchaser and amended Subsec. (f) to replace references to Subsec. (c)(2) with Subsec. (c) and references to Subsec. (d)(2) with Subsec. (d) where appearing; P.A. 25-145 amended Subsec. (d)(3) by revising provisions re control of security entitlement by another person other than the transferor to the purchaser of interest in security entitlement, amended Subsec. (d) by making a technical change, added Subsec. (h) re person having control not being required to acknowledge that it has control on behalf of purchaser, and added Subsec. (i) re person who acknowledges control on behalf of purchaser not owing duty to purchaser nor being required to confirm acknowledgment to any other person, effective January 1, 2026.
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Sec. 42a-8-110. Applicability; choice of law. (a) The local law of the issuer's jurisdiction, as specified in subsection (d) of this section, governs:
(1) The validity of a security;
(2) The rights and duties of the issuer with respect to registration of transfer;
(3) The effectiveness of registration of transfer by the issuer;
(4) Whether the issuer owes any duties to an adverse claimant to a security; and
(5) Whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.
(b) The local law of the securities intermediary's jurisdiction, as specified in subsection (e) of this section, governs:
(1) Acquisition of a security entitlement from the securities intermediary;
(2) The rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;
(3) Whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and
(4) Whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.
(c) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.
(d) “Issuer's jurisdiction” means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in subdivisions (2) to (5), inclusive, of subsection (a) of this section.
(e) The following rules determine a “securities intermediary's jurisdiction” for purposes of this section:
(1) If an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this part, this article or article 9, that jurisdiction is the securities intermediary's jurisdiction.
(2) If subdivision (1) of this subsection does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
(3) If neither subdivision (1) nor subdivision (2) of this subsection applies and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
(4) If none of the preceding subdivisions of this subsection applies, the securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located.
(5) If none of the preceding subdivisions of this subsection applies, the securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.
(f) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.
(g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction governs a matter or transaction specified in subsection (a) or (b) of this section even if the matter or transaction does not bear any relation to the jurisdiction.
(P.A. 97-182, S. 10; P.A. 98-93, S. 3, 4, 15; P.A. 01-132, S. 148; P.A. 25-145, S. 34.)
History: P.A. 98-93 made technical changes in Subsecs. (a) and (e), effective July 1, 1998; P.A. 01-132 amended Subsec. (e) to replace in Subdiv. (1) “specifies that it is governed by the law of a particular jurisdiction” with “governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this part, this article or article 9”, add new Subdiv. (2) re the jurisdiction of the securities intermediary when the agreement governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, redesignate former Subdiv. (2) as Subdiv. (3) and amend to rephrase provisions and add provision re inapplicability of Subdiv. (2), redesignate former Subdiv. (3) as Subdiv. (4) and amend to rephrase provisions and add provision re inapplicability of all of the preceding Subdivs. rather than Subdiv. (1) or (2) and redesignate former Subdiv. (4) as Subdiv. (5) and amend to rephrase provisions and add provision re inapplicability of all of the preceding Subdivs. rather than Subdiv. (1), (2) or (3); P.A. 25-145 added Subsec. (g) re local law of issuer's jurisdiction or securities intermediary's jurisdiction governing matter or transaction specified in Subsec. (a) or (b), effective January 1, 2026.
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Sec. 42a-8-303. Protected purchaser. (a) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who:
(1) Gives value;
(2) Does not have notice of any adverse claim to the security; and
(3) Obtains control of the certificated or uncertificated security.
(b) A protected purchaser acquires its interest in the security free of any adverse claim.
(1959, P.A. 133, S. 8-303; P.A. 79-435, S. 18; P.A. 97-182, S. 29; P.A. 25-145, S. 35.)
History: P.A. 79-435 made technical corrections; P.A. 97-182 entirely replaced former provisions defining “broker” with provisions defining “protected purchaser” and specifying that the interest in a security acquired by a protected purchaser is free of any adverse claim, a restatement of Sec. 42a-8-302(1) and (3), revised to 1997; P.A. 25-145 amended Subsec. (b) by deleting “in addition to acquiring the rights of a purchaser, a” and by making technical changes, effective January 1, 2026.
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