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SF2278 (Legislative Session 94 (2025-2026))

Certain provisions in the Uniform Commercial Code removal regarding securities intermediaries

AI Generated Summary

This bill, Senate File No. 2278, proposes amendments to provisions of the Minnesota Uniform Commercial Code (UCC) related to securities intermediaries. The key changes involve the removal or modification of rules governing the choice of law, securities entitlements, and security interests in financial assets.

Key Amendments:

  1. Choice of Law (Section 336.8-110)

    • Specifies which jurisdiction’s laws govern transactions involving securities and security entitlements.
    • Removes references to securities intermediaries in determining governing law.
    • Clarifies how the law of the issuer’s or intermediary’s jurisdiction applies to transaction priorities.

  2. Entitlement Holders' Property Rights (Section 336.8-503)

    • Clarifies that entitlement holders have a pro rata interest in financial assets held by a securities intermediary.
    • Refines conditions under which an entitlement holder may claim a security entitlement from a third-party purchaser.

  3. Priority Among Security Interests (Section 336.8-511)

    • Revises priority rules when securities intermediaries have insufficient financial assets to satisfy all obligations.
    • Provides creditors with control over financial assets a stronger priority claim compared to entitlement holders.

  4. Governing Law for Security Interests (Section 336.9-305)

    • Removes provisions designating the law governing security interests in investment property held in a securities account.
    • Eliminates references to the securities intermediary's jurisdiction in determining perfection, priority, and enforcement of security interests.

Impact of the Bill:

  • Reduces the role of securities intermediaries in determining legal jurisdiction over security entitlements.
  • Strengthens protections for creditors who have control over investment assets.
  • Aligns Minnesota’s laws with potential reforms in the Uniform Commercial Code (UCC) at a national level.

This bill is currently in its initial stages, having been introduced and referred to the Senate Commerce and Consumer Protection Committee.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 05, 2025HouseFloorActionIntroduction and first reading
March 05, 2025SenateFloorActionIntroduction and first reading
March 05, 2025SenateFloorActionIntroduction and first reading
March 05, 2025SenateFloorActionReferred toJudiciary and Public Safety
March 05, 2025SenateFloorActionReferred toJudiciary and Public Safety
March 05, 2025HouseFloorActionReferred toCommerce and Consumer Protection
March 23, 2025SenateFloorActionWithdrawn and returned to author
March 23, 2025SenateFloorActionWithdrawn and returned to author

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on which local laws apply to securities intermediaries and entitlement holders."
      ],
      "removed": [],
      "summary": "The bill amends section 336.8110 to specify the choice of law applicable to securities transactions.",
      "modified": []
    },
    "citation": "336.8110",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill amends section 336.8503 concerning property interests of entitlement holders in financial assets.",
      "modified": [
        "Clarifies the extent of property interest and the hierarchy of claims over financial assets."
      ]
    },
    "citation": "336.8503",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill amends section 336.8511 to prioritize claims among security interests and entitlement holders.",
      "modified": [
        "Adjusts the priority of claims in situations where financial assets are insufficient to cover all entitlements."
      ]
    },
    "citation": "336.8511",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "New rules for determining applicable jurisdiction for security interests in commodity accounts."
      ],
      "removed": [],
      "summary": "The bill amends section 336.9305 concerning laws governing the perfection and priority of security interests in investment property.",
      "modified": []
    },
    "citation": "336.9305",
    "subdivision": ""
  }
]

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