California Corporations Code Section 25019 defines "security" not by saying what a security is but by providing examples of numerous types of securities. In this respect, Section 25019 is reminiscent of Section 2(a)(1) of the Securities Act of 1933. The two statutory lists, however, are not identical. Below is a brief summary of some of the differences:
Securities listed in both Section 25019 and Section 2(a)(1): Note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any interest or instrument commonly known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the items listed.
Securities listed only in Section 25019: Membership in an incorporated or unincorporated association, viatical settlement contract or a fractionalized or pooled interest therein, life settlement contract or a fractionalized or pooled interest therein, interest in a limited liability company and any class or series of those interests (including any, fractional or other interest in that interest), or any beneficial interest or other security issued in connection with a funded employees’ pension, profit sharing, stock bonus, or similar benefit plan.
Securities listed only in Section 2(a)(1): Security future or security-based swap.
Securities in both lists identified by similar language: Section 25019 lists a "certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under that title or lease" while Section 2(a)(1) lists a "fractional undivided interest in oil, gas, or other mineral rights".
Exclusions from Section 25019 not found in Section 2(a)(1): A membership interest in a limited liability company in which the person claiming this exception can prove that all of the members are actively engaged in the management of the limited liability company; provided that evidence that members vote or have the right to vote, or the right to information concerning the business and affairs of the limited liability company, or the right to participate in management, does not establish, without more, that all members are actively engaged in the management of the limited liability company.
Section 25019 also excludes from the definition of "security": Any beneficial interest in any voluntary inter vivos trust which is not created for the purpose of carrying on any business or solely for the purpose of voting; any beneficial interest in any testamentary trust; any insurance or endowment policy or annuity contract under which an insurance company admitted in California promises to pay a sum of money (whether or not based upon the investment performance of a segregated fund) either in a lump sum or periodically for life or some other specified period; or any franchise subject to registration under the California Franchise Investment Law, or exempted from registration by Corporations Code Section 31100 or 31101.
It should be noted that courts interpreting both statutes have held that these lists are not to be applied literally. Thus, it is possible that some instruments having a name appearing on the list won't be considered a security while other instruments not specifically named will constitute a security.