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| 8 | 8 | | |
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| 9 | 9 | | |
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| 10 | 10 | | |
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| 11 | 11 | | |
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| 12 | 12 | | Introduced by: Representative Auch |
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| 13 | 13 | | |
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| 14 | 14 | | Underscores indicate new language. |
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| 15 | 15 | | Overstrikes indicate deleted language. |
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| 16 | 16 | | An Act to amend provisions of the Uniform Commercial Code. 1 |
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| 17 | 17 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2 |
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| 18 | 18 | | Section 1. That § 57A-8-110 be AMENDED: 3 |
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| 19 | 19 | | 57A-8-110. (a) The local law of the issuer's jurisdiction, as specified in subsection 4 |
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| 20 | 20 | | (d), governs: 5 |
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| 21 | 21 | | (1) The validity of a security; 6 |
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| 22 | 22 | | (2) The rights and duties of the issuer with respect to registration of transfer; 7 |
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| 23 | 23 | | (3) The effectiveness of registration of transfer by the issuer; 8 |
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| 24 | 24 | | (4) Whether the issuer owes any duties to an adverse claimant to a security; and 9 |
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| 25 | 25 | | (5) Whether an adverse claim can be asserted against a person to whom transfer of a 10 |
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| 26 | 26 | | certificated or uncertificated security is registered or a person who obtains control 11 |
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| 27 | 27 | | of an uncertificated security. 12 |
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| 31 | | - | (2) The rights and duties of the securities intermediary and entitlement holder arising 16 |
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| 32 | | - | out of a security entitlement; 17 |
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| 33 | | - | (3) Whether the securities intermediary owes any duties to an adverse claimant to a 18 |
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| 34 | | - | security entitlement; and 19 |
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| 35 | | - | (4) Whether an adverse claim can be asserted against a person who acquires a security 20 |
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| 36 | | - | entitlement from the securities intermediary or a person who purchases a security 21 |
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| 37 | | - | entitlement or interest therein from an entitlement holder. 22 |
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| 38 | | - | (c) The local law of the jurisdiction in which a security certificate is located at the 23 |
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| 39 | | - | time of delivery governs whether an adverse claim can be asserted against a person to 24 |
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| 40 | | - | whom the security certificate is delivered. 25 25.621.17 2 1122 |
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| 31 | + | (2) The rights and duties of the securities intermediary and entitlement holder 16 |
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| 32 | + | arising out of a security entitlement; 17 |
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| 33 | + | (3) Whether the securities intermediary owes any duties to an adverse claimant to 18 |
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| 34 | + | a security entitlement; and 19 |
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| 35 | + | (4) Whether an adverse claim can be asserted against a person who acquires a 20 |
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| 36 | + | security entitlement from the securities intermediary or a person who purchases a security 21 |
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| 37 | + | entitlement or interest therein from an entitlement holder governs the rights of the 22 |
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| 38 | + | entitlement holder to make a claim for a security entitlement. 23 |
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| 39 | + | (c) The local law of the jurisdiction in which a security certificate is located at the 24 |
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| 40 | + | time of delivery governs whether an adverse claim can be asserted against a person to 25 |
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| 41 | + | whom the security certificate is delivered. 26 25.621.16 2 1122 |
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| 41 | 42 | | Underscores indicate new language. |
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| 42 | 43 | | Overstrikes indicate deleted language. |
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| 43 | 44 | | (d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the 1 |
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| 44 | 45 | | security is organized or, if permitted by the law of that jurisdiction, the law of another 2 |
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| 45 | 46 | | jurisdiction specified by the issuer. An issuer organized under the law of this State may 3 |
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| 46 | 47 | | specify the law of another jurisdiction as the law governing the matters specified in 4 |
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| 47 | 48 | | subsection (a)(2) through (5). 5 |
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| 48 | 49 | | (e) The following rules determine a "securities intermediary's jurisdiction" for 6 |
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| 49 | 50 | | purposes of this section: 7 |
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| 50 | 51 | | (1) If an agreement between the securities intermediary and its entitlement holder 8 |
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| 51 | 52 | | governing the securities account expressly provides that a particular jurisdiction is 9 |
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| 52 | 53 | | the securities intermediary's jurisdiction for purposes of this part, this article, or 10 |
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| 53 | 54 | | this chapter, that jurisdiction is the securities intermediary's jurisdiction. 11 |
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| 54 | 55 | | (2) If paragraph (1) does not apply and an agreement between the securities 12 |
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| 55 | 56 | | intermediary and its entitlement holder governing the securities account expressly 13 |
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| 56 | 57 | | provides that the agreement is governed by the law of a particular jurisdiction, that 14 |
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| 57 | 58 | | jurisdiction is the securities intermediary's jurisdiction. 15 |
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| 58 | 59 | | (3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the 16 |
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| 59 | 60 | | securities intermediary and its entitlement holder governing the securities account 17 |
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| 60 | 61 | | expressly provides that the securities account is maintained at an office in a 18 |
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| 61 | 62 | | particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction. 19 |
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| 62 | 63 | | (4) If none of the preceding paragraphs applies, the securities intermediary's 20 |
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| 63 | 64 | | jurisdiction is the jurisdiction in which the office identified in an account statement 21 |
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| 64 | 65 | | as the office serving the entitlement holder's account is located. 22 |
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| 65 | 66 | | (5) If none of the preceding paragraphs applies, the securities intermediary's 23 |
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| 66 | 67 | | jurisdiction is the jurisdiction in which the chief executive office of the securities 24 |
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| 67 | 68 | | intermediary is located. 25 |
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| 68 | 69 | | (f) A securities intermediary's jurisdiction is not determined by the physical location 26 |
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| 69 | 70 | | of certificates representing financial assets, or by the jurisdiction in which is organized the 27 |
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| 70 | 71 | | issuer of the financial asset with respect to which an entitlement holder has a security 28 |
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| 71 | 72 | | entitlement, or by the location of facilities for data processing or other record keeping 29 |
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| 72 | 73 | | concerning the account. 30 |
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| 73 | 74 | | (g) The local law of the issuer's jurisdiction or the securities intermediary's 31 |
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| 74 | 75 | | jurisdiction governs a matter or transaction specified in subsection (a) or (b) even if the 32 |
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| 75 | 76 | | matter or transaction does not bear any relation to the jurisdiction. 33 |
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| 77 | 78 | | Underscores indicate new language. |
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| 78 | 79 | | Overstrikes indicate deleted language. |
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| 79 | 80 | | 57A-8-503. (a) To the extent necessary for a securities intermediary to satisfy all 1 |
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| 80 | 81 | | security entitlements with respect to a particular financial asset, all interests in that 2 |
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| 81 | 82 | | financial asset held by the securities intermediary are held by the securities intermediary 3 |
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| 82 | 83 | | for the entitlement holders, are not property of the securities intermediary, and are not 4 |
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| 83 | 84 | | subject to claims of creditors of the securities intermediary, except as otherwise provided 5 |
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| 84 | 85 | | in § 57A-8-511. 6 |
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| 85 | 86 | | (b) An entitlement holder's property interest with respect to a particular financial 7 |
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| 86 | 87 | | asset under subsection (a) is a pro rata property interest in all interests in that financial 8 |
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| 87 | 88 | | asset held by the securities intermediary, without regard to the time the entitlement 9 |
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| 88 | 89 | | holder acquired the security entitlement or the time the securities intermediary acquired 10 |
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| 89 | 90 | | the interest in that financial asset. 11 |
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| 90 | 91 | | (c) An entitlement holder's property interest with respect to a particular financial 12 |
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| 91 | 92 | | asset under subsection (a) may be enforced against the securities intermediary only by 13 |
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| 92 | 93 | | exercise of the entitlement holder's rights under §§ 57A-8-505 to 57A-8-508, inclusive. 14 |
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| 93 | 94 | | (d) An entitlement holder's property interest with respect to a particular financial 15 |
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| 94 | 95 | | asset under subsection (a) may be enforced against a purchaser of the financial asset or 16 |
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| 95 | 96 | | interest therein only if: 17 |
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| 96 | 97 | | (1) Insolvency proceedings have been initiated by or against the securities 18 |
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| 97 | 98 | | intermediary; 19 |
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| 98 | 99 | | (2) The securities intermediary does not have sufficient interests in the financial asset 20 |
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| 99 | 100 | | to satisfy the security entitlements of all of its entitlement holders to that financial 21 |
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| 100 | 101 | | asset; 22 |
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| 101 | 102 | | (3) The securities intermediary violated its obligations under § 57A-8-504 by 23 |
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| 102 | 103 | | transferring the financial asset or interest therein to the purchaser; and 24 |
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| 103 | 104 | | (4) The purchaser is not protected under subsection (e). 25 |
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| 104 | 105 | | The trustee or other liquidator, acting on behalf of all entitlement holders having 26 |
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| 105 | 106 | | security entitlements with respect to a particular financial asset, may recover the financial 27 |
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| 106 | 107 | | asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not 28 |
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| 107 | 108 | | to pursue that right, an entitlement holder whose security entitlement remains unsatisfied 29 |
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| 108 | 109 | | has the right to recover its interest in the financial asset from the purchaser. 30 |
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| 109 | 110 | | (e) An action based on the entitlement holder's property interest with respect to a 31 |
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| 110 | 111 | | particular financial asset under subsection (a), whether framed in conversion, replevin, 32 |
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| 111 | 112 | | constructive trust, equitable lien, or other theory, may not be asserted against any 33 |
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| 113 | 114 | | Underscores indicate new language. |
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| 114 | 115 | | Overstrikes indicate deleted language. |
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| 115 | 116 | | does not act in collusion with the securities intermediary in violating the securities 1 |
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| 116 | 117 | | intermediary's obligations under § 57A-8-504. 2 |
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| 117 | 118 | | Section 3. That § 57A-8-511 be AMENDED: 3 |
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| 118 | 119 | | 57A-8-511. (a) Except as otherwise provided in subsections (b) and (c), if If a 4 |
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| 119 | 120 | | securities intermediary does not have sufficient interests in a particular financial asset to 5 |
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| 120 | 121 | | satisfy both its obligations to entitlement holders who have security entitlements to that 6 |
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| 121 | 122 | | financial asset and its obligation to a creditor of the securities intermediary who has a 7 |
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| 122 | 123 | | security interest in that financial asset, the claims of entitlement holders, other than the 8 |
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| 123 | 124 | | creditor, have priority over the claim of the creditor. 9 |
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| 124 | 125 | | (b) A claim of a creditor of a securities intermediary who has a security interest in 10 |
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| 125 | 126 | | a financial asset held by a securities intermediary has priority over claims of the securities 11 |
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| 126 | 127 | | intermediary's entitlement holders who have security entitlements with respect to that 12 |
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| 127 | 128 | | financial asset if the creditor has control over the financial asset. 13 |
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| 128 | 129 | | (c) If a clearing corporation does not have sufficient financial assets to satisfy both 14 |
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| 129 | 130 | | its obligations to entitlement holders who have security entitlements with respect to a 15 |
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| 130 | 131 | | financial asset and its obligation to a creditor of the clearing corporation who has a security 16 |
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| 131 | 132 | | interest in that financial asset, the claim of the creditor has priority over the claims of 17 |
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| 132 | 133 | | entitlement holders. 18 |
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| 133 | 134 | | Section 4. That § 57A-9-305 be AMENDED: 19 |
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| 134 | 135 | | 57A-9-305. (a) Except as otherwise provided in subsection (c), the following rules 20 |
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| 135 | 136 | | apply: 21 |
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| 136 | 137 | | (1) While a security certificate is located in a jurisdiction, the local law of that 22 |
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| 137 | 138 | | jurisdiction governs perfection, the effect of perfection or nonperfection, and the 23 |
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| 138 | 139 | | priority of a security interest in the certificated security represented thereby. 24 |
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| 139 | 140 | | (2) The local law of the issuer's jurisdiction as specified in § 57A-8-110(d) governs 25 |
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| 140 | 141 | | perfection, the effect of perfection or nonperfection, and the priority of a security 26 |
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| 141 | 142 | | interest in an uncertificated security. 27 |
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| 142 | 143 | | (3) The local law of the securities intermediary's jurisdiction as specified in § 57A-8-28 |
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| 143 | | - | 110(e) this state governs perfection, the effect of perfection or nonperfection, and 29 |
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| 144 | | - | the priority of a security interest in a security entitlement or securities account. 30 |
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| 145 | | - | (4) The local law of the commodity intermediary's jurisdiction governs perfection, the 31 |
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| 146 | | - | effect of perfection or nonperfection, and the priority of a security interest in a 32 |
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| 147 | | - | commodity contract or commodity account. 33 25.621.17 5 1122 |
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| 144 | + | 110(e) governs perfection, the effect of perfection or nonperfection, and the 29 |
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| 145 | + | priority of a security interest in a security entitlement or securities account. 30 |
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| 146 | + | (4) The local law of the commodity intermediary's entitlement holder's jurisdiction 31 |
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| 147 | + | governs perfection, the effect of perfection or nonperfection, and the priority of a 32 |
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| 148 | + | security interest in a commodity contract or commodity account. 33 25.621.16 5 1122 |
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| 154 | 155 | | (1) If an agreement between the commodity intermediary and commodity customer 5 |
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| 155 | 156 | | governing the commodity account expressly provides that a particular jurisdiction 6 |
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| 156 | 157 | | is the commodity intermediary's jurisdiction for purposes of this part, this chapter, 7 |
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| 157 | 158 | | or the Uniform Commercial Code, that jurisdiction is the commodity intermediary's 8 |
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| 158 | 159 | | jurisdiction. 9 |
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| 159 | 160 | | (2) If paragraph (1) does not apply and an agreement between the commodity 10 |
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| 160 | 161 | | intermediary and commodity customer governing the commodity account 11 |
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| 161 | 162 | | expressly provides that the agreement is governed by the law of a particular 12 |
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| 162 | 163 | | jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction. 13 |
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| 163 | 164 | | (3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the 14 |
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| 164 | 165 | | commodity intermediary and commodity customer governing the commodity 15 |
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| 165 | 166 | | account expressly provides that the commodity account is maintained at an office 16 |
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| 166 | 167 | | in a particular jurisdiction, that jurisdiction is the commodity intermediary's 17 |
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| 167 | 168 | | jurisdiction. 18 |
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| 168 | 169 | | (4) If none of the preceding paragraphs applies, the commodity intermediary's 19 |
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| 169 | 170 | | jurisdiction is the jurisdiction in which the office identified in an account statement 20 |
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| 170 | 171 | | as the office serving the commodity customer's account is located. 21 |
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| 171 | 172 | | (5) If none of the preceding paragraphs applies, the commodity intermediary's 22 |
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| 172 | 173 | | jurisdiction is the jurisdiction in which the chief executive office of the commodity 23 |
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| 173 | 174 | | intermediary is located. 24 |
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| 174 | 175 | | (c) The local law of the jurisdiction in which the debtor is located governs: 25 |
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| 175 | 176 | | (1) perfection of a security interest in investment property by filing; 26 |
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| 176 | 177 | | (2) automatic perfection of a security interest in investment property created by a 27 |
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| 177 | 178 | | broker or securities intermediary; and 28 |
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| 178 | 179 | | (3) automatic perfection of a security interest in a commodity contract or commodity 29 |
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| 179 | 180 | | account created by a commodity intermediary. 30 |
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