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SF2265 (Legislative Session 94 (2025-2026))

Uniform Commercial Code choice of law provisions modifications

AI Generated Summary

The bill, Senate File No. 2265, proposes amendments to sections of the Minnesota Uniform Commercial Code (UCC) relating to choice of law provisions and security interests in investment property, securities, and financial assets. The primary changes include:

  1. Choice of Law for Securities and Security Entitlements

    • Defines which jurisdiction's laws apply to the validity, transfer, and rights associated with securities and security entitlements.
    • Specifies that the local law of the issuer’s jurisdiction governs certain aspects of securities.
    • Establishes the securities intermediary's jurisdiction based on contractual agreements or location of account services.

  2. Entitlement Holders’ Rights in Financial Assets

    • Clarifies that entitlement holders have a pro rata property interest in financial assets held by a securities intermediary.
    • Provides priority rules in cases where financial assets are insufficient to satisfy all entitlement holders' claims.
    • Addresses enforcement rights against third-party purchasers under specific insolvency scenarios.

  3. Priority of Security Interests in Financial Assets

    • Specifies that security interests held by securities intermediaries' creditors may have priority over entitlement holders if the creditor has control over the asset.
    • Establishes priority rules for claims involving clearing corporations.

  4. Governing Law for Perfection and Priority of Security Interests in Investment Property

    • Defines the governing law for perfection and priority of security interests in security entitlements, securities accounts, and commodity accounts.
    • Determines the jurisdiction of a commodity intermediary based on contractual agreements or the location of account services.

Overall, this bill refines jurisdictional rules in commercial transactions involving securities, ensuring clarity on which state or national laws govern different aspects of security entitlements, security interests, and financial asset disputes.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 05, 2025HouseFloorActionIntroduction and first reading
March 05, 2025SenateFloorActionIntroduction and first reading
March 05, 2025HouseFloorActionReferred toCommerce and Consumer Protection
March 05, 2025SenateFloorActionReferred toJudiciary and Public Safety
March 05, 2025SenateFloorActionReferred toJudiciary and Public Safety

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on applicability of local law and issuer's jurisdiction."
      ],
      "removed": [],
      "summary": "This bill amends choice of law provisions under section 336.8110 of the Minnesota Statutes.",
      "modified": [
        "Details on securities intermediary's jurisdiction."
      ]
    },
    "citation": "336.8110",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "Clarifications on property interest structures and protections."
      ],
      "removed": [],
      "summary": "This bill amendments the property interest of entitlement holder in financial asset held by securities intermediary under section 336.8503.",
      "modified": [
        "Revisions on treatment of securities intermediary’s interests."
      ]
    },
    "citation": "336.8503",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill changes priority among security interests and entitlement holders under section 336.8511.",
      "modified": [
        "More detailed priorities in insolvency scenarios."
      ]
    },
    "citation": "336.8511",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill revises the law governing perfection and priority of security interests in investment property under section 336.9305.",
      "modified": [
        "Adjustments on laws governing perfection based on debtor's location."
      ]
    },
    "citation": "336.9305",
    "subdivision": ""
  }
]

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