Practice question
A corporation raises capital by issuing notes evidencing its indebtedness to investors and promising fixed interest. The notes do not give voting rights or an ownership share. The corporation argues the lack of equity alone removes them from Section3.1(a). Resolve only that classification objection.
- Notes and evidences of indebtedness are expressly listed, so lack of equity alone does not exclude them
- Every security must convey corporate ownership
- A fixed return always makes an instrument a nonsecurity
- The statutory list excludes all debts
- An issuer may decide classification solely by withholding voting rights
Legal references
- RA8799 Securities Regulation Code: https://lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html Section3.1(a),(b),(e),(g).
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