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LSDefine

Simple English definitions for legal terms

Security

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A quick definition of Security:

Security: Something that is given or promised to make sure that a promise or agreement is kept. It can also be a paper that shows ownership or a right to something, like a share or bond certificate.

A more thorough explanation:

Definition: Security can mean two things:

  1. Something valuable that is given or promised to make sure that someone will do what they said they would do. For example, if someone is released on bail, they might have to give their house as security to make sure they come back to court.
  2. A document that proves that someone has a right to own part of a company or to be paid back money that they have lent. For example, if you buy a share in a company, you get a share certificate that proves you own part of the company.

Both of these meanings of security are important for making sure that people keep their promises and that businesses are run fairly.

Examples:

  • If you borrow money from a bank to buy a car, the bank might ask you to give the car as security. This means that if you don't pay back the loan, the bank can take the car away from you.
  • If a company wants to raise money by selling shares, they will issue share certificates to the people who buy the shares. These certificates are a form of security because they prove that the shareholders have a right to a share of the company's profits.

These examples show how security can be used to make sure that people keep their promises. If you give something valuable as security, you are more likely to do what you said you would do because you don't want to lose the thing you gave as security. Similarly, if you have a document that proves you own part of a company, you are more likely to make sure the company is run well because you want to make a profit from your investment.

Securities law history | Security deposit

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