Non-equity securities: examples. Promissory note - non-issue security

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

If we briefly characterize non-equity securities, they are papers not subject to state registration, which are usually issued in separate series or individually.

The concept of securities and their issue

If we briefly characterize non-equity securities, they are papers not subject to state registration, which are usually issued in separate series or individually.

The concept of securities and their issue

Security is a document certifying the property rights with which the possibility of presenting this paper is associated. This definition is somewhat outdated as most securities today are in non-documentary or paperless form.

Under the issue of securities is understood the sequence of actions that the issuer must perform when placing these financial instruments. This only applies toemissive securities.

From the very name "non-issued security" it is clear that it is not subject to issue. This is due to the fact that it is not subject to mandatory state registration procedures.

Types of assets considered

Non-equity securities include most of all securities that are in circulation in our country. First of all, these are bills, savings and deposit certificates, mortgages, checks, bills of lading and others. The issuance of these securities does not imply obtaining a special license, which would significantly complicate it.

Legal framework for non-equity assets

In accordance with the definition given in the law "On the securities market", non-equity securities cannot be classified as such assets. This already follows from Art. 1 of this law, which states that the legal regulation of this law are the relations that are formed during the issuance and circulation of issue-grade securities.

To the best extent reflected in the legal framework of the bill. The issuance of these securities is regulated by the Federal Law "On a bill of exchange and a promissory note", while for other types of financial instruments under consideration, legal relations are regulated by separate provisions of the Civil Code of the Russian Federation and the regulations of the Bank of Russia.

The turnover of non-equity securities is mainly regulated by the same legal documents and acts.

The concept of bills

Primary non-equity securityis a bill. It appeared on the market not so long ago, but began to enjoy increased entrepreneurial demand.

Promissory note can serve as the subject of civil law transactions. So, in the loan agreement, this asset acts as evidence of the conclusion of this agreement.

Consider a promissory note as an example of a non-equity security.

Under it is understood the obligation of the payer to pay the loaned amount within a certain period of time. But this definition does not show the essence of the bill as a security. If you look at a number of articles of the Civil Code of the Russian Federation, then this asset can be attributed to order financial instruments, since the form is observed, the details of property rights that can be realized upon presentation of this paper.

Promissory note functions

The Civil Code of the Russian Federation gives a characteristic, from which it follows that a bill is a security. The non-issue basis of this asset is confirmed by the relevant federal law.

In this regard, the bill should be considered as a financial instrument, which has a number of functions:

1. Issuance of credit obligations.
2. Means of securing these obligations.
3. Means of payment.
4. Monetary and Refinancing Facility.

Types of bills

This non-equity security is generally subdivided into a promissory note and a bill of exchange (the so-called draft).

There is an unambiguous order in the draftthe drawer to pay the holder of a certain sum of money within a certain period of time. With the help of this document, the relations of three parties are regulated: the drawer - the drawer, the drawee - the debtor and the payee - the recipient of the payment or the holder of the bill. The drawee is a debtor in relation to the drawer, and the latter is a debtor to the payee. Responsibility for payment on this non-equity security lies with the drawer, who is also responsible for the acceptance (consent) to accept payment under the bill of exchange.

A promissory note contains an unconditional obligation that specifies that the debtor must pay a certain amount by a certain date to the holder.

Details of bills

This asset must contain the word "bill" in the title, and it must be in the language of the document.

It should be stipulated there that a certain amount will be paid on it, which is not conditional on anything.

Indicate the payer, the due date, the place where this payment must be made.

The document must identify the person to whom the money will be transferred when a certain period specified above.

At the end is the date and place where the non-equity security was drawn up.

All this is certified by the drawer's signature.

A bill of exchange is a paper of a strict form and the absence of one of the above details in most cases deprives it of a bill of exchange. The law relating to bills of exchange stipulates that this type of security must be issued only onpaper.

Other types of assets under consideration

Examples of non-equity securities other than promissory notes are mortgages, certificates of deposit and savings, bills of lading.

Let's consider their main features.

A mortgage is a registered security that gives its owner the right to receive money secured by a mortgage, and no other evidence that these obligations exist is required. In addition, the owner of the mortgage has the right to pledge the property, which has an encumbrance in the form of a mortgage.

If a mortgage is issued on real estate that was not pledged, then they say about the first mortgage. If it is issued on real estate that is pledged, then they speak of a second mortgage.

Like a promissory note, a mortgage bond contains mandatory details, and in the absence of those, it is not considered valid.

Savings and deposit certificates are issued by banks. These certificates replace the savings book, certifying the rights of their holders to receive, at the end of a specific period, which is defined in them, the principal amount provided to the bank on credit plus interest on the deposit.

The certificate refers to a deposit certificate when issued by a legal entity and savings - when issued by an individual.

These non-equity securities are issued in documentary form. This financial instrument can bebearer, and may be nominal.

Certificate requirements can be assigned to Russian residents, and a deposit certificate can be assigned to individual entrepreneurs or legal entities, and a savings certificate to an individual who is not an individual entrepreneur.

As with the previous considered assets, there are mandatory details for certificates, without which it is invalid.

With the help of the bill of lading, the conclusion of the carriage by sea is certified, as a result of which the holder is given the right to dispose of the cargo specified in this document and receive this cargo at the end of the transportation. The bill of lading can be bearer, warrant.

In closing

Non-equity securities are financial instruments that are mainly issued individually or serially. These include bills, checks, bills of lading, savings and deposit certificates, mortgages. Their issue and circulation are mainly regulated not by the law "On the RZB", but by the law concerning the types of bills, the Civil Code of the Russian Federation and the regulatory documents of the Central Bank of the Russian Federation.