Offer and Sale Definitions Under the Uniform Securities Act

Vocabulary flashcards covering the legal definitions of offers and sales, special inclusions, exclusions, and related corporate concepts under the Uniform Securities Act.

Offer

Includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value under the Uniform Securities Act.

Sale

Includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value under the Uniform Securities Act.

Bonus Offer of Securities

An offer of securities created when a security is offered as a free bonus with the purchase of another item, treating acceptance as a sale because the security's cost is assumed to be built into the purchase price.

Assessable Stock

Stock that was originally sold at a discount to its face value, with the expectation that the issuer would later bill the shareholder for the remaining balance.

Gift of Assessable Stock

A transaction where a gift of assessable stock is legally treated as an offer of securities, and its acceptance is treated as a sale of securities, because the recipient assumes potential future liabilities.

Gift of Non-Assessable Stock

A gift of standard stock where the recipient owes nothing, which is legally NOT considered an offer or a sale of securities.

Warrants

Instruments issued as a sweetener with the sale of another security that grant the right to buy stock at a fixed price over long periods (generally 5+ years), usually issued without intrinsic value.

Rights

Instruments issued to fulfill an issuer's obligation to provide existing shareholders preemptive rights to buy new shares in follow-on offerings, issued with intrinsic value and expiring in 60-90 days.

Derivatives

A general term for investments whose value is tied to the performance of an underlying asset, such as a call option contract.

Convertibles

Preferred stock or bonds that grant the holder the option to convert their fixed-income investment into common stock of the same issuer.

Underlying Security Rule for Derivatives/Convertibles

The USA rule stating that every sale or offer of a warrant, right, derivative, or convertible security is considered to include an offer of the underlying security.

Bona Fide Pledges or Loans

The act of pledging securities as collateral for a loan (such as in a margin account), which is legally NOT considered an offer or sale of a security.

Stock Dividends

Distributions of additional shares to current stockholders that leave total investment value unchanged due to a proportional share price drop, legally NOT considered an offer or sale.

Mergers

A corporate action occurring when one company is folded into another, which is NOT legally treated as an offer or sale of a security.

Consolidations

A corporate action occurring when two companies combine to form an entirely new company, which is NOT legally treated as an offer or sale of a security.

Spinoffs

A corporate action occurring when a larger company separates one of its departments into an independent standalone company, which is NOT legally treated as an offer or sale of a security.