§ 19-224. Bonds to be considered investment securities

   (a) Scope of section. -- This section applies only to the following governmental entities:

   (1) a county;

   (2) a municipality;

   (3) a public corporation or other political subdivision of the State; and

   (4) any instrumentality or agency of a county, municipality, public corporation, or other political subdivision of the State.

(b) Effect of compliance with Commercial Law Article. --

   (1) A bond or grant anticipation note issued under Part III of this subtitle shall be considered investment securities to the extent set forth in this section.

   (2) If a bond issued by a governmental entity otherwise complies with the requirements of the Commercial Law Article for investment securities, the bond shall be considered to be an investment security notwithstanding that:

      (i) the ordinance, resolution, or other authority under which the bond is issued subjects the bond to an indenture or agreement that is separate from the ordinance, resolution, or authority;

      (ii) the ordinance, resolution, or other authority under which the bond is issued limits payment of principal and interest to:

         1. the proceeds of limited sources of revenue; or

         2. a special fund established for that purpose;

      (iii) any law limits payment of principal and interest to a certain amount or rate of tax that may be imposed; or

      (iv) principal or interest are registrable.

(c) Attributes of bond. -- A bond that is considered to be an investment security under subsection (b) of this section has all the attributes of an investment security that are possessed by a bond that is:

   (1) issued on the full faith and credit of the governmental entity;

   (2) payable to bearer; and

   (3) secured as to the payment of principal and interest by the unlimited taxing power of the governmental entity.

HISTORY: An. Code 1957, art. 31, § 8, 12(d); 2013, ch. 119, § 2.