Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF2265 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to commerce; modifying choice of law provisions in the Uniform
3	3	1.3 Commercial Code; amending Minnesota Statutes 2024, sections 336.8-110;
4	4	1.4 336.8-503; 336.8-511; 336.9-305.
5	5	1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
6	6	1.6 Section 1. Minnesota Statutes 2024, section 336.8-110, is amended to read:
7	7	1.7 336.8-110 APPLICABILITY; CHOICE OF LAW.
8	8	1.8 (a) The local law of the issuer's jurisdiction, as specified in subsection (d), governs:
9	9	1.9 (1) the validity of a security;
10	10	1.10 (2) the rights and duties of the issuer with respect to registration of transfer;
11	11	1.11 (3) the effectiveness of registration of transfer by the issuer;
12	12	1.12 (4) whether the issuer owes any duties to an adverse claimant to a security; and
13	13	1.13 (5) whether an adverse claim can be asserted against a person to whom transfer of a
14	14	1.14certificated or uncertificated security is registered or a person who obtains control of an
15	15	1.15uncertificated security.
16	16	1.16 (b) The local law of the securities intermediary's jurisdiction, as specified in subsection
17	17	1.17(e), this state governs:
18	18	1.18 (1) acquisition of a security entitlement from the securities intermediary;
19	19	1.19 (2) the rights and duties of the securities intermediary and entitlement holder arising out
20	20	1.20of a security entitlement;
21	21	1Section 1.
22	22	25-02572 as introduced02/12/25 REVISOR RSI/HL
23	23	SENATE
24	24	STATE OF MINNESOTA
25	25	S.F. No. 2265NINETY-FOURTH SESSION
26	26	(SENATE AUTHORS: LUCERO)
27	27	OFFICIAL STATUSD-PGDATE
28	28	Introduction and first reading03/06/2025
29	29	Referred to Commerce and Consumer Protection 2.1 (3) whether the securities intermediary owes any duties to an adverse claimant to a
30	30	2.2security entitlement; and
31	31	2.3 (4) whether an adverse claim can be asserted against a person who acquires a security
32	32	2.4entitlement from the securities intermediary or a person who purchases a security entitlement
33	33	2.5or interest therein from an entitlement holder.
34	34	2.6 (c) The local law of the jurisdiction in which a security certificate is located at the time
35	35	2.7of delivery governs whether an adverse claim can be asserted against a person to whom the
36	36	2.8security certificate is delivered.
37	37	2.9 (d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security
38	38	2.10is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction
39	39	2.11specified by the issuer. An issuer organized under the law of this state may specify the law
40	40	2.12of another jurisdiction as the law governing the matters specified in subsection (a)(2) through
41	41	2.13(5).
42	42	2.14 (e) The following rules determine a "securities intermediary's jurisdiction" for purposes
43	43	2.15of this section:
44	44	2.16 (1) If an agreement between the securities intermediary and its entitlement holder
45	45	2.17governing the securities account expressly provides that a particular jurisdiction is the
46	46	2.18securities intermediary's jurisdiction for purposes of this part, this article, or Laws 2000,
47	47	2.19chapter 399, that jurisdiction is the securities intermediary's jurisdiction.
48	48	2.20 (2) If paragraph (1) does not apply and an agreement between the securities intermediary
49	49	2.21and its entitlement holder governing the securities account expressly provides that the
50	50	2.22agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities
51	51	2.23intermediary's jurisdiction.
52	52	2.24 (3) If neither paragraph (1) nor (2) applies and an agreement between the securities
53	53	2.25intermediary and its entitlement holder governing the securities account expressly provides
54	54	2.26that the securities account is maintained at an office in a particular jurisdiction, that
55	55	2.27jurisdiction is the securities intermediary's jurisdiction.
56	56	2.28 (4) If none of the preceding paragraphs apply, the securities intermediary's jurisdiction
57	57	2.29is the jurisdiction in which the office identified in an account statement as the office serving
58	58	2.30the entitlement holder's account is located.
59	59	2.31 (5) If none of the preceding paragraphs apply, the securities intermediary's jurisdiction
60	60	2.32is the jurisdiction in which the chief executive office of the securities intermediary is located.
61	61	2Section 1.
62	62	25-02572 as introduced02/12/25 REVISOR RSI/HL 3.1 (f) A securities intermediary's jurisdiction is not determined by the physical location of
63	63	3.2certificates representing financial assets, or by the jurisdiction in which is organized the
64	64	3.3issuer of the financial asset with respect to which an entitlement holder has a security
65	65	3.4entitlement, or by the location of facilities for data processing or other record keeping
66	66	3.5concerning the account.
67	67	3.6 (g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction
68	68	3.7governs a matter or transaction specified in subsection (a) or (b) even if the matter or
69	69	3.8transaction does not bear any relation to the jurisdiction.
70	70	3.9 Sec. 2. Minnesota Statutes 2024, section 336.8-503, is amended to read:
71	71	3.10 336.8-503 PROPERTY INTEREST OF ENTITLEMENT HOLDER IN FINANCIAL
72	72	3.11ASSET HELD BY SECURITIES INTERMEDIARY.
73	73	3.12 (a) To the extent necessary for a securities intermediary to satisfy all security entitlements
74	74	3.13with respect to a particular financial asset, all interests in that financial asset held by the
75	75	3.14securities intermediary are held by the securities intermediary for the entitlement holders,
76	76	3.15are not property of the securities intermediary, and are not subject to claims of creditors of
77	77	3.16the securities intermediary, except as otherwise provided in section 336.8-511.
78	78	3.17 (b) An entitlement holder's property interest with respect to a particular financial asset
79	79	3.18under subsection (a) is a pro rata property interest in all interests in that financial asset held
80	80	3.19by the securities intermediary, without regard to the time the entitlement holder acquired
81	81	3.20the security entitlement or the time the securities intermediary acquired the interest in that
82	82	3.21financial asset.
83	83	3.22 (c) An entitlement holder's property interest with respect to a particular financial asset
84	84	3.23under subsection (a) may be enforced against the securities intermediary only by exercise
85	85	3.24of the entitlement holder's rights under sections 336.8-505 through 336.8-508.
86	86	3.25 (d) An entitlement holder's property interest with respect to a particular financial asset
87	87	3.26under subsection (a) may be enforced against a purchaser of the financial asset or interest
88	88	3.27therein only if:
89	89	3.28 (1) insolvency proceedings have been initiated by or against the securities intermediary;
90	90	3.29 (2) the securities intermediary does not have sufficient interests in the financial asset to
91	91	3.30satisfy the security entitlements of all of its entitlement holders to that financial asset;
92	92	3.31 (3) the securities intermediary violated its obligations under section 336.8-504 by
93	93	3.32transferring the financial asset or interest therein to the purchaser; and
94	94	3Sec. 2.
95	95	25-02572 as introduced02/12/25 REVISOR RSI/HL 4.1 (4) the purchaser is not protected under subsection (e).
96	96	4.2The trustee or other liquidator, acting on behalf of all entitlement holders having security
97	97	4.3entitlements with respect to a particular financial asset, may recover the financial asset, or
98	98	4.4interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue
99	99	4.5that right, an entitlement holder whose security entitlement remains unsatisfied has the right
100	100	4.6to recover its interest in the financial asset from the purchaser.
101	101	4.7 (e) An action based on the entitlement holder's property interest with respect to a
102	102	4.8particular financial asset under subsection (a), whether framed in conversion, replevin,
103	103	4.9constructive trust, equitable lien, or other theory, may not be asserted against any purchaser
104	104	4.10of a financial asset or interest therein who gives value, obtains control, and does not act in
105	105	4.11collusion with the securities intermediary in violating the securities intermediary's obligations
106	106	4.12under section 336.8-504.
107	107	4.13 Sec. 3. Minnesota Statutes 2024, section 336.8-511, is amended to read:
108	108	4.14 336.8-511 PRIORITY AMONG SECURITY INTERESTS AND ENTITLEMENT
109	109	4.15HOLDERS.
110	110	4.16 (a) Except as otherwise provided in subsections (b) and (c), If a securities intermediary
111	111	4.17does not have sufficient interests in a particular financial asset to satisfy both its obligations
112	112	4.18to entitlement holders who have security entitlements to that financial asset and its obligation
113	113	4.19to a creditor of the securities intermediary who has a security interest in that financial asset,
114	114	4.20the claims of entitlement holders, other than the creditor, have priority over the claim of the
115	115	4.21creditor.
116	116	4.22 (b) A claim of a creditor of a securities intermediary who has a security interest in a
117	117	4.23financial asset held by a securities intermediary has priority over claims of the securities
118	118	4.24intermediary's entitlement holders who have security entitlements with respect to that
119	119	4.25financial asset if the creditor has control over the financial asset.
120	120	4.26 (c) If a clearing corporation does not have sufficient financial assets to satisfy both its
121	121	4.27obligations to entitlement holders who have security entitlements with respect to a financial
122	122	4.28asset and its obligation to a creditor of the clearing corporation who has a security interest
123	123	4.29in that financial asset, the claim of the creditor has priority over the claims of entitlement
124	124	4.30holders.
125	125	4Sec. 3.
126	126	25-02572 as introduced02/12/25 REVISOR RSI/HL 5.1 Sec. 4. Minnesota Statutes 2024, section 336.9-305, is amended to read:
127	127	5.2 336.9-305 LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY
128	128	5.3INTERESTS IN INVESTMENT PROPERTY.
129	129	5.4 (a) Governing law: general rules. Except as otherwise provided in subsection (c), the
130	130	5.5following rules apply:
131	131	5.6 (1) While a security certificate is located in a jurisdiction, the local law of that jurisdiction
132	132	5.7governs perfection, the effect of perfection or nonperfection, and the priority of a security
133	133	5.8interest in the certificated security represented thereby.
134	134	5.9 (2) The local law of the issuer's jurisdiction as specified in section 336.8-110(d), governs
135	135	5.10perfection, the effect of perfection or nonperfection, and the priority of a security interest
136	136	5.11in an uncertificated security.
137	137	5.12 (3) The local law of the securities intermediary's jurisdiction as specified in section
138	138	5.13336.8-110(e), this state governs perfection, the effect of perfection or nonperfection, and
139	139	5.14the priority of a security interest in a security entitlement or securities account.
140	140	5.15 (4) The local law of the commodity intermediary's jurisdiction governs perfection, the
141	141	5.16effect of perfection or nonperfection, and the priority of a security interest in a commodity
142	142	5.17contract or commodity account.
143	143	5.18 (5) Paragraphs (2), (3), and (4) apply even if the transaction does not bear any relation
144	144	5.19to the jurisdiction.
145	145	5.20 (b) Commodity intermediary's jurisdiction. The following rules determine a commodity
146	146	5.21intermediary's jurisdiction for purposes of this part:
147	147	5.22 (1) If an agreement between the commodity intermediary and commodity customer
148	148	5.23governing the commodity account expressly provides that a particular jurisdiction is the
149	149	5.24commodity intermediary's jurisdiction for purposes of this part, this article, or this chapter,
150	150	5.25that jurisdiction is the commodity intermediary's jurisdiction.
151	151	5.26 (2) If paragraph (1) does not apply and an agreement between the commodity intermediary
152	152	5.27and commodity customer governing the commodity account expressly provides that the
153	153	5.28agreement is governed by the law of a particular jurisdiction, that jurisdiction is the
154	154	5.29commodity intermediary's jurisdiction.
155	155	5.30 (3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the
156	156	5.31commodity intermediary and commodity customer governing the commodity account
157	157	5Sec. 4.
158	158	25-02572 as introduced02/12/25 REVISOR RSI/HL 6.1expressly provides that the commodity account is maintained at an office in a particular
159	159	6.2jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
160	160	6.3 (4) If none of the preceding paragraphs applies, the commodity intermediary's jurisdiction
161	161	6.4is the jurisdiction in which the office identified in an account statement as the office serving
162	162	6.5the commodity customer's account is located.
163	163	6.6 (5) If none of the preceding paragraphs applies, the commodity intermediary's jurisdiction
164	164	6.7is the jurisdiction in which the chief executive office of the commodity intermediary is
165	165	6.8located.
166	166	6.9 (c) When perfection governed by law of jurisdiction where debtor located. The local
167	167	6.10law of the jurisdiction in which the debtor is located governs:
168	168	6.11 (1) perfection of a security interest in investment property by filing;
169	169	6.12 (2) automatic perfection of a security interest in investment property created by a broker
170	170	6.13or securities intermediary; and
171	171	6.14 (3) automatic perfection of a security interest in a commodity contract or commodity
172	172	6.15account created by a commodity intermediary.
173	173	6Sec. 4.
174	174	25-02572 as introduced02/12/25 REVISOR RSI/HL