Revision: May 3, 2022, 3:29 p.m.
HB 1503-FN - AS AMENDED BY THE SENATE
15Mar2022... 0828h
04/28/2022 1661s
2022 SESSION
22-2784
08/04
HOUSE BILL 1503-FN
SPONSORS: Rep. Ammon, Hills. 40; Rep. Alexander Jr., Hills. 6; Rep. Osborne, Rock. 4; Rep. Warden, Hills. 15; Rep. Edwards, Rock. 4; Rep. Berezhny, Graf. 9; Rep. Baxter, Rock. 20; Rep. White, Merr. 20; Sen. Avard, Dist 12
COMMITTEE: Commerce and Consumer Affairs
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AMENDED ANALYSIS
This bill exempts the developer, seller, or facilitator of the exchange of an open blockchain token from certain securities laws.
This bill also adopts the Uniform Commercial Code on controllable electronic records.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
15Mar2022... 0828h
04/28/2022 1661s 22-2784
08/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Two
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Uniform Securities Act; Definitions; Open Blockchain Token. Amend RSA 421-B:1-102 by inserting after paragraph (35) the following new paragraph:
(35-a) “Open blockchain token" means a digital unit which is:
(A) Created:
(i) In response to the verification or collection of a specified number of transactions relating to a digital ledger or database;
(ii) By deploying computer code to a blockchain network that allows for the creation of digital tokens or other units; or
(iii) Using any combination of the methods specified in subparagraphs (i) and (ii) of this paragraph;
(B) Recorded in a digital ledger or database which is chronological, consensus-based, decentralized and mathematically verified in nature, especially relating to the supply of units and their distribution; and
(C) Capable of being traded or transferred between persons without an intermediary or custodian of value.
2 New Paragraph; Uniform Securities Act; Exempt Transaction; Open Blockchain Token. Amend RSA 421-B:2-202 by inserting after paragraph (24) the following new paragraph:
(25) A purchase or sale of an open blockchain token if all of the following are met:
(A) The issuer or seller of the token, or the registered agent of the developer or seller, files a notice of intent with the secretary of state, as specified in subsection (D) of this section;
(B) The purpose of the token is for a consumptive purpose, which shall only be exchangeable for, or provided for the receipt of, goods, services or content, including rights of access to goods, services or content; and
(C) The issuer or seller of the token did not sell the token to the initial buyer as a financial investment. For purposes of this subsection, a developer seller of the token will be deemed not to have sold the token to the initial buyer as a financial investment if:
(i) The issuer or seller did not market the token as a financial investment; and
(ii) At least one of the following is true:
(a) The issuer or seller of the token reasonably believed that it sold the token to the initial buyer for a consumptive purpose;
(b) The token has a consumptive purpose that is available at the time of sale and can be used at or near the time of sale for use for a consumptive purpose;
(c) If the token does not have a consumptive purpose available at the time of sale, the initial buyer of the token is prevented from reselling the token until the token is available for use for a consumptive purpose; or
(d) The issuer or seller takes other reasonable precautions to prevent buyers from purchasing the token as a financial investment.
(D) The issuer, seller or person who facilitates the exchange of an open blockchain token, or the registered agent of the applicable person, files a notice of intent with the secretary of state prior to offering or selling the tokens in this state. The notice of intent shall contain the name of the person acting as an issuer, seller or facilitator, the contact information of the person or the registered agent of the person, and a statement that any marketing or advertising materials, including web sites offering or selling open blockchain tokens, will contain a disclosure that the tokens are not registered as securities pursuant to a transaction exemption under RSA 421-B, the New Hampshire Uniform Securities Act. The notice shall also specify whether the person will be acting as an issuer, seller or facilitator. A form shall be made available by the office of the secretary of state on its Internet website for this purpose. The secretary of state shall charge a fee of $100 per filing.
3 New Subparagraph; Uniform Securities Act; Broker-Dealer Registration Requirements and Exemption. Amend RSA 421-B:4-401(b) by inserting after subparagraph (2) the following new subparagraph:
(3)(A) Except as otherwise provided by RSA 421-B:5-511, a person who exclusively facilitates the exchange of an open blockchain token if all of the following are met:
(i) The person, or the registered agent of the person, files a notice of intent with the secretary of state, as specified in RSA 421-B:2-202(26)(d);
(ii) The person has a reasonable and good faith belief that a token subject to exchange conforms to the requirements of paragraphs RSA 421-B:2-202(25)(a)-(c); and
(iii) The person takes reasonably prompt action to terminate the exchange of a token that does not conform to the requirements of this subsection.
4 New Section; Uniform Securities Act; Liability of Issuers, Seller, and Others Who Facilitate Exchange of Open Blockchain Tokens. Amend RSA 421-B by inserting after section 5-510 the following new section:
421-B:5-511 Liability of Issuers, Sellers, and Others Who Facilitate Exchange of Open Blockchain Tokens. Notwithstanding any other provision of law, an issuer, seller, or a person who facilitates the exchange of an open blockchain token is subject to the provisions of RSA 421-B:5-501 through RSA 421-B:5-503 and RSA 421-B:5-505 through RSA 421-B:5-510 only to the extent necessary to carry out those sections. The secretary of state shall have the authority provided under RSA 421-B:6-601 through RSA 421-B:6-613 to determine compliance with the provisions of this section, including whether a person qualifies for the exemptions set forth in this section. The evidentiary burdens specified in RSA 421-B:5-503 shall apply in any proceeding initiated by the secretary of state pursuant to this subsection.
I. The Joint Committee on the Uniform Commercial Code and Emerging Technologies of the Uniform Law Commission has developed draft Uniform Commercial Code provisions governing certain digital assets, specifically those that fall within the definition of "controllable electronic records." The current draft has been extensively vetted by those who understand and participate in digital transactions.
II. Adoption of the Uniform Law Commission's draft by the New Hampshire general court will create a considerable advantage for New Hampshire to lead in emerging industries utilizing blockchain, digital ledger technology, virtual currencies, and other digital assets and would provide a sensible framework and legal certainty for transactions of controllable electronic records. In subsequent sessions, if necessary, the New Hampshire general court will review and adopt conforming amendments to the provisions of the Uniform Commercial Code on controllable electronic records to remain consistent with the language and intent of the final proposal of the Joint Committee on the Uniform Commercial Code and Emerging Technologies of the Uniform Law Commission.
6 New Subdivision; Uniform Commercial Code; Article 12; Controllable Electronic Records. Amend RSA 382-A by inserting after section 9-809 the following new subdivision:
ARTICLE 12
CONTROLLABLE ELECTRONIC RECORDS
382-A:12-101 Short Title. This article may be cited as Uniform Commercial Code-Controllable Electronic Records.
382-A:12-102 Definitions.
(a) In this article:
(1) "Controllable electronic record" means an electronic record that can be subjected to control under RSA 382-A:12-105. Except as otherwise provided or the context otherwise requires, the term includes a controllable account or a controllable payment intangible evidenced by a controllable electronic record. The term does not include deposit accounts, electronic chattel paper, electronic documents of title, intangible money, investment property, or "transferable records", as defined in the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7021(a)(1) or as defined in RSA 294-E:16, I.
(2) "Electronic record" means a record stored in an electronic medium.
(b) The definitions of "account debtor," "authenticate," "controllable account," "controllable payment intangible," "deposit account," "electronic chattel paper," "intangible money," "investment property," and "proceeds" in Article 9 apply to this article.
(c) "Value" has the meaning provided in RSA 382-A:3-303(a).
382-A:12-103 Scope.
(a) This article applies to controllable electronic records, controllable accounts, and controllable payment intangibles.
(b) If there is conflict between this article and Article 9, Article 9 governs.
(c) A transaction subject to this article is subject to any applicable rule of law that establishes a different rule for consumers and: (i) any other statute or regulation that regulates the rates, charges, agreements, and practices for loans, credit sales, or other extensions of credit and (ii) any consumer-protection statute or regulation.
382-A:12-104 Rights in Controllable Electronic Records.
(a) In this section, "qualifying purchaser" means a purchaser of a controllable electronic record or an interest in the controllable electronic record that obtains control of the controllable electronic record for value, in good faith, and without notice of a claim of a property right in the controllable electronic record.
(b) Except as provided in this section, law other than this article determines whether a person acquires a right in a controllable electronic record and the right, if any, the person acquires.
(c) A purchaser of a controllable electronic record acquires all rights in the controllable electronic record that the transferor had or had power to transfer.
(d) A purchaser of a limited interest in a controllable electronic record acquires rights only to the extent of the interest purchased.
(e) A qualifying purchaser acquires its rights in the controllable electronic record free of a claim of a property right in the controllable electronic record.
(f) Except as provided in subsection (e) or law other than this article, a qualifying purchaser takes a right to payment, right to performance, or interest in property evidenced by the controllable electronic record subject to a claim of a property right in the right to payment, right to performance, or other interest in property.
(g) An action based on a claim of a property right in a controllable electronic record, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a qualifying purchaser of any controllable electronic record.
(h) Filing of a financing statement under Article 9 is not notice of a claim of a property right in a controllable electronic record.
382-A:12-105 Control of Controllable Electronic Record.
(a) A person has control of a controllable electronic record if:
(1) the controllable electronic record, a record attached to or logically associated with the controllable electronic record, or the system in which the controllable electronic record is recorded, if any, gives the person:
(A) the power to avail itself of substantially all the benefit from the controllable electronic record; and
(B) subject to subsection (b), the exclusive power to:
(i) prevent others from availing themselves of substantially all the benefit from the controllable electronic record; and
(ii) transfer control of the controllable electronic record to another person or cause another person to obtain control of a controllable electronic record that is derived from the controllable electronic record; and
(2) the controllable electronic record, a record attached to or logically associated with the controllable electronic record, or the system in which the controllable electronic record is recorded, if any, enables the person to readily identify itself in any way as having the powers specified in paragraph (1), including by name, identifying number, cryptographic key, office, or account number.
(b) A power specified in subsection (a)(1) is exclusive, even if:
(1) the controllable electronic record or the system in which the controllable electronic record is recorded, if any, limits the use to which the controllable electronic record may be put or has a protocol that is programmed to result in a transfer of control; or
(2) the person has agreed to share the power with another person.
382-A:12-106 Discharge of Account Debtor on Controllable Account or Controllable Payment Intangible.
(a) Except as provided in this section, an account debtor on a controllable account or controllable payment intangible may discharge its obligation:
(1) by paying the person having control of the controllable electronic record that evidences the controllable account or controllable payment intangible; or
(2) by paying a person that formerly had control of the controllable electronic record.
(b) Subject to subsections (d) and (h), an account debtor may not discharge its obligation by paying a person that formerly had control of the controllable electronic record if the account debtor receives a notification that:
(1) is authenticated by a person that formerly had control or the person to which control was transferred;
(2) reasonably identifies the controllable account or controllable payment intangible;
(3) notifies the account debtor that control of the controllable electronic record that evidences the controllable account or controllable payment intangible was transferred;
(4) identifies the transferee, in any reasonable way, including by name, identifying number, cryptographic key, office, or account number; and
(5) provides a commercially reasonable method by which the account debtor is to pay the transferee.
(c) After receipt of a notification that complies with subsection (b), the account debtor may discharge its obligation only by paying in accordance with the notification and may not discharge the obligation by paying a person that formerly had control.
(d) Subject to subsection (h), notification is ineffective under subsection (b):
(1) unless, before the notification is sent, the account debtor and the person that at that time had control of the controllable electronic record that evidences the controllable account or controllable payment intangible agree in an authenticated record to a commercially reasonable method by which a person can furnish reasonable proof that control has been transferred;
(2) to the extent that an agreement between the account debtor and the seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this article; or
(3) at the option of the account debtor, if the notification notifies the account debtor to divide a payment, make less than the full amount of any required payment, or pay any portions of a payment by more than one method or to more than one person.
(e) Subject to subsection (h), if requested by the account debtor, the person giving the notification shall seasonably furnish reasonable proof, using the agreed method, that control of the controllable electronic record has been transferred. Unless the person complies with the request, the account debtor may discharge its obligation by paying a person that formerly had control, even if the account debtor has received a notification under subsection (b).
(f) A person furnishes reasonable proof that control has been transferred if the person demonstrates, using the agreed method, that the transferee has the power to avail itself of substantially all the benefit from the controllable electronic record, prevent others from availing themselves of substantially all the benefit from the controllable electronic record, and transfer these powers to another person.
(g) Subject to subsection (h), an account debtor may not waive or vary its option under subsection (d)(3).
(h) This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
382-A:12-107 Governing Law.
(a) Except as provided in subsection (b) and (d), the local law of a controllable electronic record's jurisdiction governs the matters covered by this article.
(b) The local law of a controllable electronic record's jurisdiction governs the matters covered by RSA 382-A:12-106 unless an agreement effective under RSA 382-A:1-301(a) determines that the local law of another jurisdiction governs such matters.
(c) The following rules determine a controllable electronic record's jurisdiction for purposes of this section:
(1) If the controllable electronic record, or a record attached to or logically associated with the controllable electronic record which is readily available for review, expressly provides that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this article or the UCC, that jurisdiction is the controllable electronic record's jurisdiction.
(2) If paragraph (1) does not apply and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this article or the UCC, that jurisdiction is the controllable electronic record's jurisdiction.
(3) If none of the preceding paragraphs applies and the controllable electronic record, or a record attached to or logically associated with the controllable electronic record which is readily available for review, expressly provides that the controllable electronic record is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.
(4) If none of the preceding paragraphs applies and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that the controllable electronic record or the system is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.
(5) If none of the preceding paragraphs applies, the controllable electronic record's jurisdiction is the jurisdiction in which the transferor is located.
(d) If paragraph (5) of subsection (c) applies and the location of the transferor cannot be readily determined, the transferor is deemed to be located in New Hampshire.
(e) Subsection (c) applies even if a transaction does not bear any relation to the controllable electronic record's jurisdiction determined under paragraphs (c)(1)-(4).
(f) Except as provided in subsection (d), the location of the transferor for purposes of paragraph (c)(5) is determined under RSA 382-A:9-307.
(g) The rights acquired by a purchaser or a qualifying purchaser under RSA 382-A:12-104 are governed by the law applicable under this section as determined at the time of that person's purchase.
7 Secured Transactions; Definitions; Account. Amend RSA 382-A:9-102(a)(2) to read as follows:
(2) "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. The term includes controllable accounts and health-care-insurance receivables. The term does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.
8 New Subparagraph; Secured Transactions; Definitions; Controllable Account; Controllable Payment Intangible. Amend RSA 382-A:9-102(a) by inserting after subparagraph (27) the following new subparagraphs:
(27A) "Controllable account" means an account evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under RSA 382-A:12-105 of the controllable electronic record.
(27B) "Controllable payment intangible" means a payment intangible evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under RSA 382-A:12-105 of the controllable electronic record.
9 Secured Transactions; Definitions; Payment Intangible. Amend RSA 382-A:9-102(a)(61) to read as follows:
(61) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation. This term includes controllable payment intangibles.
10 Secured Transactions; Control; Other Articles. Amend RSA 382-A:9-102(b) to read as follows:
(b) "Control" as provided in Section 7-106 and the following definitions in other articles apply to this article:
"Applicant" Section 5-102.
"Beneficiary" Section 5-102.
"Broker" Section 8-102.
"Certificated security" Section 8-102.
"Check" Section 3-104.
"Clearing corporation" Section 8-102.
"Contract for sale" Section 2-106.
"Controllable electronic record" Section 12-102.
"Customer" Section 4-104.
"Entitlement holder" Section 8-102.
"Financial asset" Section 8-102.
"Holder in due course" Section 3-302.
"Issuer" (with respect to a letter of credit or letter-of-credit right) Section 5-102.
"Issuer" (with respect to a security) Section 8-201.
"Issuer" (with respect to documents of title) Section 7-102.
"Lease" Section 2A-103.
"Lease agreement" Section 2A-103.
"Lease contract" Section 2A-103.
"Leasehold interest" Section 2A-103.
"Lessee" Section 2A-103.
"Lessee in ordinary course of business" Section 2A-103.
"Lessor" Section 2A-103.
"Lessor's residual interest" Section 2A-103.
"Letter of credit" Section 5-102.
"Merchant" Section 2-104.
"Negotiable instrument" Section 3-104.
"Nominated person" Section 5-102.
"Note" Section 3-104.
"Proceeds of a letter of credit" Section 5-114.
"Prove" Section 3-103.
"Qualifying purchaser" Section 12-104.
"Sale" Section 2-106.
"Securities account" Section 8-501.
"Securities intermediary" Section 8-102.
"Security" Section 8-102.
"Security certificate" Section 8-102.
"Security entitlement" Section 8-102.
"Uncertificated security" Section 8-102.
11 New Section; Secured Transactions; Control of Controllable Electronic Record. Amend RSA 382-A by inserting after section 9-107 the following new section:
382-A:9-107A Control of Controllable Electronic Record, Controllable Account, or Controllable Payment Intangible.
(a) A secured party has control of a controllable electronic record as provided in RSA 382-A:12-105.
(b) A secured party has control of a controllable account or controllable payment intangible if the secured party has control of the controllable electronic record that evidences the controllable account or controllable payment intangible.
12 Secured Transactions; Attachment and Enforceability of Security Interest. Amend the introductory paragraph of RSA 382-A:9-203(b) to read as follows:
(b) Enforceability. Except as otherwise provided in subsections (c) through [(i)] (j), a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
13 Secured Transactions; Attachment and Enforceability. Amend RSA 382-A:9-203(b)(3)(D) to read as follows:
(D) the collateral is deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights, [or electronic documents,] and the secured party has control under Section 7-106, 9-104, 9-105, 9-106, [or] 9-107, or 9-107A pursuant to the debtor's security agreement.
14 New Subparagraph; Secured Transactions; Controllable Accounts. Amend RSA 382-A:9-203 by inserting after subparagraph (i) the following new subparagraph:
(j) Controllable account or controllable payment intangible. The attachment of a security interest in a controllable electronic record that evidences a controllable account or controllable payment intangible is also attachment of a security interest in the controllable account or controllable payment intangible.
15 Secured Transactions; Rights and Duties of Secured Party Having Possession or Control of Collateral. Amend the introductory paragraph of RSA 382-A:9-207(c) to read as follows:
(c) Duties and rights when secured party in possession or control. Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-106, [or] 9-107, or 9-107A:
16 Secured Transactions; Additional Duties of Secured Part Having Control of Collateral. Amend RSA 382-A:9-208(b)(5)-(6) to read as follows:
(5) a secured party having control of a letter-of-credit right under Section 9-107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; [and]
(6) a secured party having control of an electronic document shall:
(A) give control of the electronic document to the debtor or its designated custodian;
(B) if the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and
(C) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party[.]; and
(7) a secured party having control of a controllable electronic record shall transfer control of the controllable electronic record to the debtor or to a person designated by the debtor.
17 Secured Transactions; Law Governing Perfection and Priority of Security Interests. Amend the introductory paragraph of RSA RSA 382-A:9-301 to read as follows:
Except as otherwise provided in Sections 9-303 through[ 9-306] 9-306A, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:
18 New Section; Law Governing Perfection and Priority of Security Interests in Controllable Electronic Records. Amend RSA 382-A by inserting after section 9-306 the following new section:
382-A:9-306A Law Governing Perfection and Priority of Security Interests in Controllable Electronic Records.
(a) Governing law; general rules. Except as provided in subsection (b), perfection, the effect of perfection or nonperfection, and the priority of a security interest in a controllable electronic record is governed by:
(1) the local law of the controllable electronic record's jurisdiction as specified in RSA 382-A:12-107(c)(1) through (4); or
(2) if non of those paragraphs applies, the local law of the jurisdiction in which the debtor is located.
(b) Governing law; perfection by filing. The local law of the jurisdiction in which the debtor is located governs perfection of a security interest in a controllable electronic record intangibles by filing.
(c) Location of the debtor. If the location of the debtor cannot readily be determined, the debtor is deemed to be in this state.
19 New Paragraph; Secured Transactions; When Security Interest or Agricultural Lien is Perfected. Amend RSA 382-A:9-308 by inserting after paragraph (g) the following new paragraph:
(h) Controllable account or controllable payment intangible. Perfection of a security interest in a controllable electronic record that evidences a controllable account or controllable payment intangible also perfects a security interest in the controllable account or controllable payment intangible.
20 Filing to Perfect Security Interest or Agricultural Lien. Amend RSA 382-A:9-310(b)(8) to read as follows:
(8) in controllable electronic records, deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights which is perfected by control under Section 9-314;
21 Perfection of Security Interests in Chattel Paper. Amend the section heading of RSA 382-A:312 through 9-312(a) to read as follows:
382-A:9-312 Perfection of Security Interests in Controllable Electronic Records, Chattel Paper, Deposit Accounts, Documents, Goods Covered by Documents, Instruments, Investment Property, Letter-of-Credit Rights, and Money; Perfection by Permissive Filing; Temporary Perfection Without Filing or Transfer of Possession.
(a) Perfection by filing permitted. A security interest in chattel paper, controllable electronic records, negotiable documents, instruments, or investment property may be perfected by filing.
22 Secured Transactions; Perfection by Control. Amend RSA 382-A:9-314(a)-(b) to read as follows:
(a) Perfection by control. A security interest in investment property, deposit accounts, letter-of-credit rights, controllable electronic records, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Section 7-106, 9-104, 9-105, 9-106, [or] 9-107, or 9-107A.
(b) Specified collateral: time of perfection by control; continuation of perfection. A security interest in controllable electronic records, deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents is perfected by control under Section 7-106, 9-104, 9-105, [or] 9-107, or 9-107A when the secured party obtains control and remains perfected by control only while the secured party retains control.
23 Secured Transactions; Effect of Change in Governing Law. Amend the introductory paragraph of RSA 382-A:9-316(a) to read as follows:
(a) General rule: effect on perfection of change in governing law. A security interest perfected pursuant to the law of the jurisdiction designated in Section 9-301(1), [or] 9-305(c), or 9-306A(a)(2) or (b) remains perfected until the earliest of:
24 New paragraphs; Secured Transactions; Change in Jurisdiction. Amend RSA 382-A:9-316 by inserting after paragraph (f) the following new paragraphs:
(fA) Chane in jurisdiction of controllable accounts, controllable electronic records, or controllable payment intangibles. A security interest that is perfected pursuant to the law designated in Section 9-306A(a)(1) remains perfected until the expiration of four months after a change of the applicable law to another jurisdiction.
(fB) Subsection (fA) security interest perfected or unperfected under law of new jurisdiction. If a security interest described in subsection (fA) becomes perfected under the law of the other jurisdiction before the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
25 New Section; Priority of Security Interests in Controllable Electronic Record. Amend RSA 382-A by inserting after section 9-326 the following new section:
382-A:9-326A Priority of Security Interests in Controllable Electronic Record. A security interest in a controllable electronic record held by a secured party having control of the controllable electronic record has priority over a conflicting security interest held by a secured party that does not have control.
26 Secured Transactions; Priority of Rights of Purchasers. Amend RSA 382-A:9-331 to read as follows:
382-A:9-331 Priority of Rights of Purchasers of Instruments, Documents, and Securities Under Other Articles; Priority of Interests in Financial Assets and Security Entitlements Under Article 8 and Controllable Electronic Records Under Article 12.
(a) Rights under Articles 3, 7, [and] 8, and 12 not limited. This article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, [or] a protected purchaser of a security or a qualifying purchaser as defined in section 12-104 of a controllable electronic record. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, [and] 8, and 12.
(b) Protection under Article 8 and 12. This article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8 or 12.
(c) Filing not notice. Filing under this article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b).
27 Secured Transactions; Discharge of Account Debtor. Amend RSA 382-A:9-406 to read as follows:
382-A:9-406 Discharge of Account Debtor; Notification of Assignment; Identification and Proof of Assignment; Restrictions on Assignment of Accounts, Chattel Paper, Payment Intangibles, and Promissory Notes Ineffective.
(a) Discharge of account debtor; effect of notification. Subject to subsections (b) through [(i)] (k), an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.
(b) When notification ineffective. Subject to subsection (h) and (k), notification is ineffective under subsection (a):
(1) if it does not reasonably identify the rights assigned;
(2) to the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this article; or
(3) at the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:
(A) only a portion of the account, chattel paper, or payment intangible has been assigned to that assignee;
(B) a portion has been assigned to another assignee; or
(C) the account debtor knows that the assignment to that assignee is limited.
(c) Proof of assignment. Subject to subsection (h) and (k), if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection (a).
(d) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (e) and Sections 2A-303 and 9-407, and subject to subsection (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory note; or
(2) provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account, chattel paper, payment intangible, or promissory note.
(e) Inapplicability of subsection (d) to certain sales. Subsection (d) does not apply to the sale of a payment intangible or promissory note, other than a sale of a controllable payment intangible and a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
(f) Legal restrictions on assignment generally ineffective. Except as otherwise provided in Sections 2A-303 and 9-407 and subject to subsections (h) and (i), a rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation:
(1) prohibits, restricts, or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account or chattel paper; or
(2) provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper.
(g) Subsection (b)(3) not waivable. Subject to subsection (h), an account debtor may not waive or vary its option under subsection (b)(3).
(h) Rule for individual under other law. This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(i) Inapplicability. This section does not apply to:
(1) an assignment of a health-care-insurance receivable; or
(2) an assignment or transfer of or creation of a security interest in:
(A) a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. Â section 104(a)(1) or (2), as amended from time to time; or
(B) a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. Â section 1396p(d)(4), as amended from time to time.
(j) Section prevails over inconsistent law. Except as otherwise provided in subsection (i), this section prevails over any inconsistent provision of an existing or future statute, rule, or regulation of this State unless the provision is contained in a statute of this State, refers expressly to this section, and states that the provision prevails over this section.
(k) Inapplicability of certain subsections. Subsections (a) through (c) and (g) do not apply to a controllable account or controllable payment intangible.
28 Secured Transactions; Restrictions on Assignment of Promissory Notes. Amend RSA 382-A:9-408(b) to read as follows:
(b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale of a controllable payment intangible and a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
29 Secured Transactions; Rights After Default. Amend RSA 382-A:9-601(b) to read as follows:
(b) Rights and duties of secured party in possession or control. A secured party in possession of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-106, [or] 9-107, or 9-107A has the rights and duties provided in Section 9-207.
30 Secured Transactions; Unknown Debtor or Secondary Obligor. Amend RSA 382-A:9-605 to read as follows:
382-A:9-605 Unknown Debtor or Secondary Obligor.
(a) Subject to subsection (b), A secured party does not owe a duty based on its status as secured party:
(1) to a person that is a debtor or obligor, unless the secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(b) Subsection (a) does not apply to a secured party that, at the time the secured party's security interest attaches to a controllable electronic record has notice that the nature of the collateral or the system in which the collateral is recorded, if any, would prevent the secured party from acquiring the knowledge specified in that subsection.
31 Secured Transactions; Nonliability and Limitation on Liability of a Secured Party. Amend RSA 382-A:9-628 to read as follows:
382-A:9-628 Nonliability and Limitation on Liability of Secured Party; Liability of Secondary Obligor.
(a) Limitation of liability of secured party for noncompliance with article. Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:
(1) the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this article; and
(2) the secured party's failure to comply with this article does not affect the liability of the person for a deficiency.
(b) Limitation of liability based on status as secured party. Subject to section (f), a secured party is not liable because of its status as secured party:
(1) to a person that is a debtor or obligor, unless the secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(c) Limitation of liability if reasonable belief that transaction not a consumer-goods transaction or consumer transaction. A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:
(1) a debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or
(2) an obligor's representation concerning the purpose for which a secured obligation was incurred.
(d) Limitation of liability for statutory damages. A secured party is not liable to any person under Section 9-625(c)(2) for its failure to comply with Section 9-616.
(e) Limitation of multiple liability for statutory damages. A secured party is not liable under Section 9-625(c)(2) more than once with respect to any one secured obligation.
(f) Section (b) does not apply to a secured party that, at the time the secured party's security interest attaches to a controllable electronic record has notice that the nature of the collateral or the system in which the collateral is recorded, if any, would prevent the secured party from acquiring the knowledge specified in that subsection.
32 General Provisions; Value. Amend the introductory paragraph of RSA 382-A:1-204 to read as follows:
Except as otherwise provided in Articles 3, 4, [and] 5, and 12 a person gives value for rights if the person acquires them:
33 Uniform Commercial Code; Article 12-Controllable Electronic Records; Department of State and Banking Department; Reporting Requirement. On or before November 1, 2022, the secretary of state, in consultation with the bank commissioner, shall submit a report to the general court regarding implementation of section 1 of this act and the status of Article 12 as finalized and adopted by the Uniform Law Commission. The report shall include any proposed legislation required to implement UCC article 12 in New Hampshire, including but not limited to changes to other UCC articles required by the addition. The report shall be submitted to the speaker of the house of representatives, the senate president, the chairperson of the house commerce and consumer affairs committee, the chairperson of the senate commerce committee, and the governor.
34 Effective Date. This act shall take effect January 1, 2025.
22-2784
Amended 5/2/22
HB 1503-FN- FISCAL NOTE
AS AMENDED BY THE SENATE (AMENDMENT #2022-1661s)
AN ACT exempting the developer, seller, or facilitator of the exchange of an open blockchain token from certain securities laws and adopting the Uniform Commercial Code relative to controllable electronic records.
FISCAL IMPACT:
The Legislative Budget Assistant has determined that this legislation, as amended, has a total fiscal impact of less than $10,000 in each of the fiscal years 2022 through 2025.
AGENCIES CONTACTED:
Department of State