If a Shareholder Borrows Money and Delivers Stock as Collateral

question 5

True/False

If a shareholder borrows money and delivers stock as collateral security, the creditor has a perfected security interest in the stock without any filing by the creditor.

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Definitions:

Partnership

An association of two or more persons to carry on a business for profit.

Corporation

A legal entity recognized by law, distinct from its owners, with rights to own property, sue, and be sued.

De Jure Corporation

A corporation that is legally incorporated and recognized by the state as existing in accordance with law.

Incorporators

Individuals who sign the articles of incorporation and are involved in the legal process of forming a corporation.