0001| AN ACT | 0002| RELATING TO COMMERCIAL TRANSACTIONS; REVISING ARTICLE 8 OF THE UNIFORM | 0003| COMMERCIAL CODE REGARDING INVESTMENT SECURITIES; MAKING CONFORMING | 0004| AMENDMENTS TO OTHER ARTICLES OF THE UNIFORM COMMERCIAL CODE; AMENDING, | 0005| REPEALING AND ENACTING SECTIONS OF THE NMSA 1978. | 0006| | 0007| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0008| Section 1. Section 55-1-105 NMSA 1978 (being Laws 1961, Chapter | 0009| 96, Section 1-105, as amended) is amended to read: | 0010| "55-1-105. TERRITORIAL APPLICATION OF THE ACT--PARTIES' POWER TO | 0011| CHOOSE APPLICABLE LAW.-- | 0012| (1) Except as provided in this section, when a transaction | 0013| bears a reasonable relation to this state and also to another state or | 0014| nation, the parties may agree that the law either of this state or such | 0015| other state or nation shall govern their rights and duties. Failing | 0016| such agreement, the Uniform Commercial Code applies to transactions | 0017| bearing an appropriate relation to this state. | 0018| (2) Where one of the following provisions of the Uniform | 0019| Commercial Code specifies the applicable law, that provision governs and | 0020| a contrary agreement is effective only to the extent permitted by the | 0021| law (including the conflict of laws rules) so specified: | 0022| rights of creditors against sold goods. Section 55-2-402 | 0023| NMSA 1978; | 0024| applicability of the article on leases. Sections 55-2A-105 | 0025| and 55-2A-106 NMSA 1978; | 0001| applicability of the article on bank deposits and | 0002| collections. Section 55-4-102 NMSA 1978; | 0003| governing law in the article on fund transfers. Section | 0004| 55-4A-507 NMSA 1978; | 0005| applicability of the article on investment securities. | 0006| Section 55-8-110 NMSA 1978; and | 0007| perfection provisions of the article on secured transactions. | 0008| Section 55-9-103 NMSA 1978." | 0009| Section 2. Section 55-1-206 NMSA 1978 (being Laws 1961, Chapter | 0010| 96, Section 1-206) is amended to read: | 0011| "55-1-206. STATUTE OF FRAUDS FOR KINDS OF PERSONAL PROPERTY NOT | 0012| OTHERWISE COVERED.-- | 0013| (1) Except in the cases described in Subsection (2) of this | 0014| section, a contract for the sale of personal property is not enforceable | 0015| by way of action or defense beyond five thousand dollars ($5,000) in | 0016| amount or value or remedy unless there is some writing which indicates | 0017| that a contract for sale has been made between the parties at a defined | 0018| or stated price, reasonably identifies the subject matter and is signed | 0019| by the party against whom enforcement is sought or by his authorized | 0020| agent. | 0021| (2) Subsection (1) of this section does not apply to | 0022| contracts for the sale of goods (Section 55-2-201 NMSA 1978) nor of | 0023| securities (Section 55-8-313 NMSA 1978) nor to security agreements | 0024| (Section 55-9-203 NMSA 1978)." | 0025| Section 3. Section 55-4-104 NMSA 1978 (being Laws 1961, Chapter | 0001| 96, Section 4-104, as amended) is amended to read: | 0002| "55-4-104. DEFINITIONS AND INDEX OF DEFINITIONS.-- | 0003| (a) In this article, unless the context otherwise requires: | 0004| (1) "account" means any deposit or credit account with | 0005| a bank including a demand, time, savings, passbook, share draft or like | 0006| account, other than an account evidenced by a certificate of deposit; | 0007| (2) "afternoon" means the period of a day between noon | 0008| and midnight; | 0009| (3) "banking day" means the part of a day on which a | 0010| bank is open to the public for carrying on substantially all of its | 0011| banking functions; | 0012| (4) "clearing-house" means an association of banks or | 0013| other payors regularly clearing items; | 0014| (5) "customer" means a person having an account with a | 0015| bank or for whom a bank has agreed to collect items, including a bank | 0016| that maintains an account at another bank; | 0017| (6) "documentary draft" means a draft to be presented | 0018| for acceptance or payment if specified documents, certificated | 0019| securities (Section 55-8-102 NMSA 1978) or instructions for | 0020| uncertificated securities (Section 55-8-102 NMSA 1978), or other | 0021| certificates, statements or the like are to be received by the drawee or | 0022| other payor before acceptance or payment of the drafts; | 0023| (7) "draft" means a draft as defined in Section | 0024| 55-3-104 NMSA 1978 or an item, other than an instrument, that is an | 0025| order; | 0001| (8) "drawee" means a person ordered in a draft to make | 0002| payment; | 0003| (9) "item" means an instrument or a promise or order | 0004| to pay money handled by a bank for collection or payment. The term does | 0005| not include a payment order governed by Article 4A or a credit or debit | 0006| card slip; | 0007| (10) "midnight deadline" with respect to a bank is | 0008| midnight on its next banking day following the banking day on which it | 0009| receives the relevant item or notice or from which the time for taking | 0010| action commences to run, whichever is later; | 0011| (11) "settle" means to pay in cash, by clearing-house | 0012| settlement, in a charge or credit or by remittance or otherwise as | 0013| agreed. A settlement may be either provisional or final; and | 0014| (12) "suspends payments" with respect to a bank means | 0015| that it has been closed by order of the supervisory authorities, that a | 0016| public officer has been appointed to take it over or that it ceases or | 0017| refuses to make payments in the ordinary course of business. | 0018| (b) Other definitions applying to this article and the | 0019| sections in which they appear are: | 0020| "agreement for electronic presentment" | 0021| Section 55-4-110 NMSA 1978; | 0022| "bank" Section 55-4-105 NMSA 1978; | 0023| "collecting bank" Section 55-4-105 NMSA 1978; | 0024| "depositary bank" Section 55-4-105 NMSA 1978; | 0025| "intermediary bank" Section 55-4-105 NMSA 1978; | 0001| "payor bank" Section 55-4-105 NMSA 1978; | 0002| "presenting bank" Section 55-4-105 NMSA 1978; and | 0003| "presentment notice" Section 55-4-110 NMSA 1978. | 0004| (c) The following definitions in other articles apply to | 0005| this article: | 0006| "acceptance" Section 55-3-409 NMSA 1978; | 0007| "alteration" Section 55-3-407 NMSA 1978; | 0008| "cashier's check" Section 55-3-104 NMSA 1978; | 0009| "certificate of deposit" Section 55-3-104 NMSA 1978; | 0010| "certified check" Section 55-3-409 NMSA 1978; | 0011| "check" Section 55-3-104 NMSA 1978; | 0012| "good faith" Section 55-3-103 NMSA 1978; | 0013| "holder in due course" Section 55-3-302 NMSA 1978; | 0014| "instrument" Section 55-3-104 NMSA 1978; | 0015| "notice of dishonor" Section 55-3-503 NMSA 1978; | 0016| "order" Section 55-3-103 NMSA 1978; | 0017| "ordinary care" Section 55-3-103 NMSA 1978; | 0018| "person entitled to enforce" Section 55-3-301 NMSA 1978; | 0019| "presentment" Section 55-3-501 NMSA 1978; | 0020| "promise" Section 55-3-103 NMSA 1978; | 0021| "prove" Section 55-3-103 NMSA 1978; | 0022| "teller's check" Section 55-3-104 NMSA 1978; and | 0023| "unauthorized signature" Section 55-3-403 NMSA 1978. | 0024| (d) In addition, Article 1 contains general definitions and | 0025| principles of construction and interpretation applicable throughout this | 0001| article." | 0002| Section 4. Section 55-5-114 NMSA 1978 (being Laws 1961, Chapter | 0003| 96, Section 5-114, as amended) is amended to read: | 0004| "55-5-114. ISSUER'S DUTY AND PRIVILEGE TO HONOR--RIGHT TO | 0005| REIMBURSEMENT.-- | 0006| (1) An issuer must honor a draft or demand for payment which | 0007| complies with the terms of the relevant credit regardless of whether the | 0008| goods or documents conform to the underlying contract for sale or other | 0009| contract between the customer and the beneficiary. The issuer is not | 0010| excused from honor of such a draft or demand by reason of an additional | 0011| general term that all documents must be satisfactory to the issuer, but | 0012| an issuer may require that specified documents must be satisfactory to | 0013| it. | 0014| (2) Unless otherwise agreed when documents appear on their | 0015| face to comply with the terms of a credit but a required document does | 0016| not in fact conform to the warranties made on negotiation or transfer of | 0017| a document of title (Section 55-7-507 NMSA 1978) or of a certificated | 0018| security (Section | 0019| 55-8-108 NMSA 1978) or is forged or fraudulent or there is fraud in the | 0020| transaction: | 0021| (a) the issuer must honor the draft or demand for | 0022| payment if honor is demanded by a negotiating bank or other holder of | 0023| the draft or demand which has taken the draft or demand under the credit | 0024| and under circumstances which would make it a holder in due course | 0025| (Section 55-3-302 NMSA 1978) and in an appropriate case would make it a | 0001| person to whom a document of title has been duly negotiated (Section 55-7-502 NMSA 1978) or a bona fide purchaser of a certificated security | 0002| (Section 55-8-302 NMSA 1978); and | 0003| (b) in all other cases as against its customer, an | 0004| issuer acting in good faith may honor the draft or demand for payment | 0005| despite notification from the customer of fraud, forgery or other defect | 0006| not apparent on the face of the documents, but a court of appropriate | 0007| jurisdiction may enjoin such honor. | 0008| (3) Unless otherwise agreed an issuer which has duly honored | 0009| a draft or demand for payment is entitled to immediate reimbursement of | 0010| any payment made under the credit and to be put in effectively available | 0011| funds not later than the day before maturity of any acceptance made | 0012| under the credit. | 0013| (4) When a credit provides for payment by the issuer on | 0014| receipt of notice that the required documents are in the possession of a | 0015| correspondent or other agent of the issuer: | 0016| (a) any payment made on receipt of such notice is | 0017| conditional; | 0018| (b) the issuer may reject documents which do not | 0019| comply with the credit if it does so within three banking days following | 0020| its receipt of the documents; and | 0021| (c) in the event of such rejection, the issuer is | 0022| entitled by charge back or otherwise to return of the payment made. | 0023| (5) In the case covered by Subsection (4) of this section | 0024| failure to reject documents within the time specified in Subparagraph | 0025| (b) of Subsection (4) of this section constitutes acceptance of the | 0001| documents and makes the payment final in favor of the beneficiary." | 0002| Section 5. Section 55-8-101 NMSA 1978 (being Laws 1961, Chapter | 0003| 96, Section 8-101) is repealed and a new section of the Uniform | 0004| Commercial Code, Section 55-8-101 NMSA 1978, is enacted to read: | 0005| "55-8-101. SHORT TITLE.--Chapter 55, Article 8 NMSA 1978 may be | 0006| cited as the "Uniform Commercial Code--Investment Securities"." | 0007| Section 6. Section 55-8-102 NMSA 1978 (being Laws 1961, Chapter | 0008| 96, Section 8-102, as amended) is repealed and a new section of the | 0009| Uniform Commercial Code, Section 55-8-102 NMSA 1978, is enacted to read: | 0010| "55-8-102. DEFINITIONS.-- | 0011| (a) In this Article: | 0012| (1) "adverse claim" means a claim that a claimant has | 0013| a property interest in a financial asset and that it is a violation of | 0014| the rights of the claimant for another person to hold, transfer or deal | 0015| with the financial asset; | 0016| (2) "bearer form", as applied to a certificated | 0017| security, means a form in which the security is payable to the bearer of | 0018| the security certificate according to its terms but not by reason of an | 0019| indorsement; | 0020| (3) "broker" means a person defined as a broker or | 0021| dealer under the federal securities laws, but without excluding a bank | 0022| acting in that capacity; | 0023| (4) "certificated security" means a security that is | 0024| represented by a certificate; | 0025| (5) "clearing corporation" means: | 0001| (i) a person that is registered as a "clearing | 0002| agency" under the federal securities laws; | 0003| (ii) a federal reserve bank; or | 0004| (iii) any other person that provides clearance or | 0005| settlement services with respect to financial assets that would require | 0006| it to register as a clearing agency under the federal securities laws | 0007| but for an exclusion or exemption from the registration requirement, if | 0008| its activities as a clearing corporation, including promulgation of | 0009| rules, are subject to regulation by a federal or state governmental | 0010| authority; | 0011| (6) "communicate" means to: | 0012| (i) send a signed writing; or | 0013| (ii) transmit information by any mechanism agreed | 0014| upon by the persons transmitting and receiving the information; | 0015| (7) "entitlement holder" means a person identified in | 0016| the records of a securities intermediary as the person having a security | 0017| entitlement against the securities intermediary. If a person acquires a | 0018| security entitlement by virtue of Section 55-8-501(b)(2) or (3) NMSA | 0019| 1978, that person is the entitlement holder; | 0020| (8) "entitlement order" means a notification | 0021| communicated to a securities intermediary directing transfer or | 0022| redemption of a financial asset to which the entitlement holder has a | 0023| security entitlement; | 0024| (9) "financial asset", except as otherwise provided in | 0025| Section 55-8-103 NMSA 1978, means: | 0001| (i) a security; | 0002| (ii) an obligation of a person or a share, | 0003| participation or other interest in a person or in property or an | 0004| enterprise of a person, which is, or is of a type, dealt in or traded on | 0005| financial markets, or which is recognized in any area in which it is | 0006| issued or dealt in as a medium for investment; or | 0007| (iii) any property that is held by a securities | 0008| intermediary for another person in a securities account if the | 0009| securities intermediary has expressly agreed with the other person that | 0010| the property is to be treated as a financial asset under this article. | 0011| As context requires, the term means either the interest itself or the | 0012| means by which a person's claim to it is evidenced, including a | 0013| certificated or uncertificated security, a security certificate or a | 0014| security entitlement; | 0015| (10) "good faith", for purposes of the obligation of | 0016| good faith in the performance or enforcement of contracts or duties | 0017| within this article, means honesty in fact and the observance of | 0018| reasonable commercial standards of fair dealing; | 0019| (11) "indorsement" means a signature that alone or | 0020| accompanied by other words is made on a security certificate in | 0021| registered form or on a separate document for the purpose of assigning, | 0022| transferring or redeeming the security or granting a power to assign, | 0023| transfer or redeem it; | 0024| (12) "instruction" means a notification communicated | 0025| to the issuer of an uncertificated security which directs that the | 0001| transfer of the security be registered or that the security be redeemed; | 0002| (13) "registered form", as applied to a certificated | 0003| security, means a form in which: | 0004| (i) the security certificate specifies a person | 0005| entitled to the security; and | 0006| (ii) a transfer of the security may be registered | 0007| upon books maintained for that purpose by or on behalf of the issuer or | 0008| the security certificate so states; | 0009| (14) "securities intermediary" means: | 0010| (i) a clearing corporation; or | 0011| (ii) a person, including a bank or broker, that | 0012| in the ordinary course of its business maintains securities accounts for | 0013| others and is acting in that capacity; | 0014| (15) "security," except as otherwise provided in | 0015| Section 55-8-103 NMSA 1978, means an obligation of an issuer or a share, | 0016| participation or other interest in an issuer or in property or an | 0017| enterprise of an issuer: | 0018| (i) which is represented by a security | 0019| certificate in bearer or registered form or the transfer of which may be | 0020| registered upon books maintained for that purpose by or on behalf of the | 0021| issuer; | 0022| (ii) which is one of a class or series or by its | 0023| terms is divisible into a class or series of shares, participations, | 0024| interests or obligations; and | 0025| (iii) which: | 0001| (A) is, or is of a type, dealt in or traded | 0002| on securities exchanges or securities markets; or | 0003| (B) is a medium for investment and by its | 0004| terms expressly provides that it is a security governed by this article. | 0005| (16) "security certificate" means a certificate | 0006| representing a security; | 0007| (17) "security entitlement" means the rights and | 0008| property interest of an entitlement holder with respect to a financial | 0009| asset specified in Part 5 of this article; and | 0010| (18) "uncertificated security" means a security that | 0011| is not represented by a certificate. | 0012| (b) Other definitions applying to this article and the | 0013| sections in which they appear are: | 0014| appropriate person Section 55-8-107 NMSA 1978; | 0015| control Section 55-8-106 NMSA 1978; | 0016| delivery Section 55-8-301 NMSA 1978; | 0017| investment company | 0018| security Section 55-8-103 NMSA 1978; | 0019| issuer Section 55-8-201 NMSA 1978; | 0020| overissue Section 55-8-210 NMSA 1978; | 0021| protected purchaser Section 55-8-303 NMSA 1978; and | 0022| securities account Section 55-8-501 NMSA 1978. | 0023| (c) In addition, Chapter 55, Article 1 NMSA 1978 contains | 0024| general definitions and principles of construction and interpretation | 0025| applicable throughout this article. | 0001| (d) The characterization of a person, business or | 0002| transaction for purposes of this Article does not determine the | 0003| characterization of the person, business or transaction for purposes of | 0004| any other law, regulation or rule." | 0005| Section 7. Section 55-8-103 NMSA 1978 (being Laws 1961, Chapter | 0006| 96, Section 8-103, as amended) is repealed and a new section of the | 0007| Uniform Commercial Code, Section 55-8-103 NMSA 1978, is enacted to read: | 0008| "55-8-103. RULES FOR DETERMINING WHETHER CERTAIN OBLIGATIONS AND | 0009| INTERESTS ARE SECURITIES OR FINANCIAL ASSETS.-- | 0010| (a) A share or similar equity interest issued by a | 0011| corporation, business trust, joint stock company or similar entity is a | 0012| security. | 0013| (b) An "investment company security" is a security. | 0014| "Investment company security" means a share or similar equity interest | 0015| issued by an entity that is registered as an investment company under | 0016| the federal investment company laws, an interest in a unit investment | 0017| trust that is so registered or a face-amount certificate issued by a | 0018| face-amount certificate company that is so registered. Investment | 0019| company security does not include an insurance policy or endowment | 0020| policy or annuity contract issued by an insurance company. | 0021| (c) An interest in a partnership or limited liability | 0022| company is not a security unless it is dealt in or traded on securities | 0023| exchanges or in securities markets, its terms expressly provide that it | 0024| is a security governed by this article or it is an investment company | 0025| security. However, an interest in a partnership or limited liability | 0001| company is a financial asset if it is held in a securities account. | 0002| (d) A writing that is a security certificate is governed by | 0003| this Article and not by Chapter 55, Article 3 NMSA 1978, even though it | 0004| also meets the requirements of that article. However, a negotiable | 0005| instrument governed by Chapter 55, Article 3 NMSA 1978 is a financial | 0006| asset if it is held in a securities account. | 0007| (e) An option or similar obligation issued by a clearing | 0008| corporation to its participants is not a security. It is a financial | 0009| asset. | 0010| (f) A commodity contract, as defined in Section | 0011| 55-9-115 NMSA 1978, is not a security or a financial asset." | 0012| Section 8. Section 55-8-104 NMSA 1978 (being Laws 1961, Chapter | 0013| 96, Section 8-104, as amended) is repealed and a new section of the | 0014| Uniform Commercial Code, Section 55-8-104 NMSA 1978, is enacted to read: | 0015| "55-8-104. ACQUISITION OF SECURITY OR FINANCIAL ASSET OR INTEREST | 0016| THEREIN.-- | 0017| (a) A person acquires a security or an interest therein, | 0018| under this article, if: | 0019| (1) the person is a purchaser to whom a security is | 0020| delivered pursuant to Section 55-8-301 NMSA 1978; or | 0021| (2) the person acquires a security entitlement to the | 0022| security pursuant to Section 55-8-501 NMSA 1978. | 0023| (b) A person acquires a financial asset, other than a | 0024| security, or an interest therein, under this article, if the person | 0025| acquires a security entitlement to the financial asset. | 0001| (c) A person who acquires a security entitlement to a | 0002| security or other financial asset has the rights specified in Part 5 of | 0003| this article, but is a purchaser of any security, security entitlement | 0004| or other financial asset held by the securities intermediary only to the | 0005| extent provided in Section 55-8-503 NMSA 1978. | 0006| (d) Unless the context shows that a different meaning is | 0007| intended, a person who is required by other law, regulation, rule or | 0008| agreement to transfer, deliver, present, surrender, exchange or | 0009| otherwise put in the possession of another person a security or | 0010| financial asset satisfies that requirement by causing the other person | 0011| to acquire an interest in the security or financial asset pursuant to | 0012| Subsection (a) or (b)." | 0013| Section 9. Section 55-8-105 NMSA 1978 (being Laws 1961, Chapter | 0014| 96, Section 8-105, as amended) is repealed and a new section of the | 0015| Uniform Commercial Code, Section 55-8-105 NMSA 1978, is enacted to read: | 0016| "55-8-105. NOTICE OF ADVERSE CLAIM.-- | 0017| (a) A person has notice of an adverse claim if: | 0018| (1) the person knows of the adverse claim; | 0019| (2) the person is aware of facts sufficient to | 0020| indicate that there is a significant probability that the adverse claim | 0021| exists and deliberately avoids information that would establish the | 0022| existence of the adverse claim; or | 0023| (3) the person has a duty, imposed by statute or | 0024| regulation, to investigate whether an adverse claim exists and the | 0025| investigation so required would establish the existence of the adverse | 0001| claim. | 0002| (b) Having knowledge that a financial asset or interest | 0003| therein is or has been transferred by a representative imposes no duty | 0004| of inquiry into the rightfulness of a transaction and is not notice of | 0005| an adverse claim. However, a person who knows that a representative has | 0006| transferred a financial asset or interest therein in a transaction that | 0007| is, or whose proceeds are being used, for the individual benefit of the | 0008| representative or otherwise in breach of duty has notice of an adverse | 0009| claim. | 0010| (c) An act or event that creates a right to immediate | 0011| performance of the principal obligation represented by a security | 0012| certificate or sets a date on or after which the certificate is to be | 0013| presented or surrendered for redemption or exchange does not itself | 0014| constitute notice of an adverse claim except in the case of a transfer | 0015| more than: | 0016| (1) one year after a date set for presentment or | 0017| surrender for redemption or exchange; or | 0018| (2) six months after a date set for payment of money | 0019| against presentation or surrender of the certificate, if money was | 0020| available for payment on that date. | 0021| (d) A purchaser of a certificated security has notice of an | 0022| adverse claim if the security certificate: | 0023| (1) whether in bearer or registered form, has been | 0024| indorsed "for collection" or "for surrender" or for some other purpose | 0025| not involving transfer; or | 0001| (2) is in bearer form and has on it an unambiguous | 0002| statement that it is the property of a person other than the transferor, | 0003| but the mere writing of a name on the certificate is not such a | 0004| statement. | 0005| (e) Filing of a financing statement under Article 9 is not | 0006| notice of an adverse claim to a financial asset." | 0007| Section 10. Section 55-8-106 NMSA 1978 (being Laws 1961, Chapter | 0008| 96, Section 8-106, as amended) is repealed and a new section of the | 0009| Uniform Commercial Code, Section 55-8-106 NMSA 1978, is enacted to read: | 0010| "55-8-106. CONTROL.-- | 0011| (a) A purchaser has "control" of a certificated security in | 0012| bearer form if the certificated security is delivered to the purchaser. | 0013| (b) A purchaser has "control" of a certificated security in | 0014| registered form if the certificated security is delivered to the | 0015| purchaser and: | 0016| (1) the certificate is indorsed to the purchaser or in | 0017| blank by an effective indorsement; or | 0018| (2) the certificate is registered in the name of the | 0019| purchaser, upon original issue or registration of transfer by the | 0020| issuer. | 0021| (c) A purchaser has "control" of an uncertificated security | 0022| if: | 0023| (1) the uncertificated security is delivered to the | 0024| purchaser; or | 0025| (2) the issuer has agreed that it will comply with | 0001| instructions originated by the purchaser without further consent by the | 0002| registered owner. | 0003| (d) A purchaser has "control" of a security entitlement if: | 0004| (1) the purchaser becomes the entitlement holder; or | 0005| (2) the securities intermediary has agreed that it | 0006| will comply with entitlement orders originated by the purchaser without | 0007| further consent by the entitlement holder. | 0008| (e) If an interest in a security entitlement is granted by | 0009| the entitlement holder to the entitlement holder's own securities | 0010| intermediary, the securities intermediary has control. | 0011| (f) A purchaser who has satisfied the requirements of | 0012| Subsection (c)(2) or (d)(2) has control even if the registered owner in | 0013| the case of Subsection (c)(2) or the entitlement holder in the case of | 0014| Subsection (d)(2) retains the right to make substitutions for the | 0015| uncertificated security or security entitlement, to originate | 0016| instructions or entitlement orders to the issuer or securities | 0017| intermediary, or otherwise to deal with the uncertificated security or | 0018| security entitlement. | 0019| (g) An issuer or a securities intermediary may not enter | 0020| into an agreement of the kind described in Subsection (c)(2) or (d)(2) | 0021| without the consent of the registered owner or entitlement holder, but | 0022| an issuer or a securities intermediary is not required to enter into | 0023| such an agreement even though the registered owner or entitlement holder | 0024| so directs. An issuer or securities intermediary that has entered into | 0025| such an agreement is not required to confirm the existence of the | 0001| agreement to another party unless requested to do so by the registered | 0002| owner or entitlement holder." | 0003| Section 11. Section 55-8-107 NMSA 1978 (being Laws 1967, Chapter | 0004| 186, Section 2, as amended) is repealed and a new section of the Uniform | 0005| Commercial Code, Section 55-8-107 NMSA 1978, is enacted to read: | 0006| "55-8-107. WHETHER INDORSEMENT, INSTRUCTION OR ENTITLEMENT ORDER | 0007| IS EFFECTIVE.-- | 0008| (a) "Appropriate person" means: | 0009| (1) with respect to an indorsement, the person | 0010| specified by a security certificate or by an effective special | 0011| indorsement to be entitled to the security; | 0012| (2) with respect to an instruction, the registered | 0013| owner of an uncertificated security; | 0014| (3) with respect to an entitlement order, the | 0015| entitlement holder; | 0016| (4) if the person designated in Paragraph (1), (2) or | 0017| (3) is deceased, the designated person's successor taking under other | 0018| law or the designated person's personal representative acting for the | 0019| estate of the decedent; or | 0020| (5) if the person designated in Paragraph (1), (2) or | 0021| (3) lacks capacity, the designated person's guardian, conservator or | 0022| other similar representative who has power under other law to transfer | 0023| the security or financial asset. | 0024| (b) An indorsement, instruction or entitlement order is | 0025| effective if: | 0001| (1) it is made by the appropriate person; | 0002| (2) it is made by a person who has power under the law | 0003| of agency to transfer the security or financial asset on behalf of the | 0004| appropriate person, including, in the case of an instruction or | 0005| entitlement order, a person who has control under Section 55-8-106(c)(2) | 0006| or (d)(2) NMSA 1978; or | 0007| (3) the appropriate person has ratified it or is | 0008| otherwise precluded from asserting its ineffectiveness. | 0009| (c) An indorsement, instruction or entitlement order made by | 0010| a representative is effective even if: | 0011| (1) the representative has failed to comply with a | 0012| controlling instrument or with the law of the state having jurisdiction | 0013| of the representative relationship, including any law requiring the | 0014| representative to obtain court approval of the transaction; or | 0015| (2) the representative's action in making the | 0016| indorsement, instruction or entitlement order or using the proceeds of | 0017| the transaction is otherwise a breach of duty. | 0018| (d) If a security is registered in the name of or specially | 0019| indorsed to a person described as a representative, or if a securities | 0020| account is maintained in the name of a person described as a | 0021| representative, an indorsement, instruction or entitlement order made by | 0022| the person is effective even though the person is no longer serving in | 0023| the described capacity. | 0024| (e) Effectiveness of an indorsement, instruction or | 0025| entitlement order is determined as of the date the indorsement, | 0001| instruction or entitlement order is made, and an indorsement, | 0002| instruction or entitlement order does not become ineffective by reason | 0003| of any later change of circumstances." | 0004| Section 12. Section 55-8-108 NMSA 1978 (being Laws 1987, Chapter | 0005| 248, Section 9) is repealed and a new section of the Uniform Commercial | 0006| Code, Section 55-8-108 NMSA 1978, is enacted to read: | 0007| "55-8-108. WARRANTIES IN DIRECT HOLDING.-- | 0008| (a) A person who transfers a certificated security to a | 0009| purchaser for value warrants to the purchaser and an indorser, if the | 0010| transfer is by indorsement, warrants to any subsequent purchaser that: | 0011| (1) the certificate is genuine and has not been | 0012| materially altered; | 0013| (2) the transferor or indorser does not know of any | 0014| fact that might impair the validity of the security; | 0015| (3) there is no adverse claim to the security; | 0016| (4) the transfer does not violate any restriction on | 0017| transfer; | 0018| (5) if the transfer is by indorsement, the indorsement | 0019| is made by an appropriate person or if the indorsement is by an agent, | 0020| the agent has actual authority to act on behalf of the appropriate | 0021| person; and | 0022| (6) the transfer is otherwise effective and rightful. | 0023| (b) A person who originates an instruction for registration | 0024| of transfer of an uncertificated security to a purchaser for value | 0025| warrants to the purchaser that: | 0001| (1) the instruction is made by an appropriate person, | 0002| or, if the instruction is by an agent, the agent has actual authority to | 0003| act on behalf of the appropriate person; | 0004| (2) the security is valid; | 0005| (3) there is no adverse claim to the security; and | 0006| (4) at the time the instruction is presented to the | 0007| issuer: | 0008| (i) the purchaser will be entitled to the | 0009| registration of transfer; | 0010| (ii) the transfer will be registered by the | 0011| issuer free from all liens, security interests, restrictions and claims | 0012| other than those specified in the instruction; | 0013| (iii) the transfer will not violate any | 0014| restriction on transfer; and | 0015| (iv) the requested transfer will otherwise be | 0016| effective and rightful. | 0017| (c) A person who transfers an uncertificated security to a | 0018| purchaser for value and does not originate an instruction in connection | 0019| with the transfer warrants that: | 0020| (1) the uncertificated security is valid; | 0021| (2) there is no adverse claim to the security; | 0022| (3) the transfer does not violate any restriction on | 0023| transfer; and | 0024| (4) the transfer is otherwise effective and rightful. | 0025| (d) A person who indorses a security certificate warrants to | 0001| the issuer that: | 0002| (1) there is no adverse claim to the security; and | 0003| (2) the indorsement is effective. | 0004| (e) A person who originates an instruction for registration | 0005| of transfer of an uncertificated security warrants to the issuer that: | 0006| (1) the instruction is effective; and | 0007| (2) at the time the instruction is presented to the | 0008| issuer the purchaser will be entitled to the registration of transfer. | 0009| (f) A person who presents a certificated security for | 0010| registration of transfer or for payment or exchange warrants to the | 0011| issuer that the person is entitled to the registration, payment or | 0012| exchange, but a purchaser for value and without notice of adverse claims | 0013| to whom transfer is registered warrants only that the person has no | 0014| knowledge of any unauthorized signature in a necessary indorsement. | 0015| (g) If a person acts as agent of another in delivering a | 0016| certificated security to a purchaser, the identity of the principal was | 0017| known to the person to whom the certificate was delivered and the | 0018| certificate delivered by the agent was received by the agent from the | 0019| principal or received by the agent from another person at the direction | 0020| of the principal, the person delivering the security certificate | 0021| warrants only that the delivering person has authority to act for the | 0022| principal and does not know of any adverse claim to the certificated | 0023| security. | 0024| (h) A secured party who redelivers a security certificate | 0025| received, or after payment and on order of the debtor delivers the | 0001| security certificate to another person, makes only the warranties of an | 0002| agent under Subsection (g). | 0003| (i) Except as otherwise provided in Subsection (g), a broker | 0004| acting for a customer makes to the issuer and a purchaser the warranties | 0005| provided in Subsections (a) through (f). A broker that delivers a | 0006| security certificate to its customer, or causes its customer to be | 0007| registered as the owner of an uncertificated security, makes to the | 0008| customer the warranties provided in Subsection (a) or (b) and has the | 0009| rights and privileges of a purchaser under this section. The warranties | 0010| of and in favor of the broker acting as an agent are in addition to | 0011| applicable warranties given by and in favor of the customer." | 0012| Section 13. A new section of the Uniform Commercial Code, Section | 0013| 55-8-109 NMSA 1978, is enacted to read: | 0014| "55-8-109. WARRANTIES IN INDIRECT HOLDING.-- | 0015| (a) A person who originates an entitlement order to a | 0016| securities intermediary warrants to the securities intermediary that: | 0017| (1) the entitlement order is made by an appropriate | 0018| person, or if the entitlement order is by an agent, the agent has actual | 0019| authority to act on behalf of the appropriate person; and | 0020| (2) there is no adverse claim to the security | 0021| entitlement. | 0022| (b) A person who delivers a security certificate to a | 0023| securities intermediary for credit to a securities account or originates | 0024| an instruction with respect to an uncertificated security directing that | 0025| the uncertificated security be credited to a securities account makes to | 0001| the securities intermediary the warranties specified in Section 8-108(a) | 0002| or (b). | 0003| (c) If a securities intermediary delivers a security | 0004| certificate to its entitlement holder or causes its entitlement holder | 0005| to be registered as the owner of an uncertificated security, the | 0006| securities intermediary makes to the entitlement holder the warranties | 0007| specified in Section 55-8-108(a) or (b) NMSA 1978." | 0008| Section 14. A new section of the Uniform Commercial Code, Section | 0009| 55-8-110 NMSA 1978, is enacted to read: | 0010| "55-8-110. APPLICABILITY--CHOICE OF LAW.-- | 0011| (a) The local law of the issuer's jurisdiction, as specified | 0012| in Subsection (d), governs: | 0013| (1) the validity of a security; | 0014| (2) the rights and duties of the issuer with respect | 0015| to registration of transfer; | 0016| (3) the effectiveness of registration of transfer by | 0017| the issuer; | 0018| (4) whether the issuer owes any duties to an adverse | 0019| claimant to a security; and | 0020| (5) whether an adverse claim can be asserted against a | 0021| person to whom transfer of a certificated or uncertificated security is | 0022| registered or a person who obtains control of an uncertificated | 0023| security. | 0024| (b) The local law of the securities intermediary's | 0025| jurisdiction, as specified in Subsection (e), governs: | 0001| (1) acquisition of a security entitlement from the | 0002| securities intermediary; | 0003| (2) the rights and duties of the securities | 0004| intermediary and entitlement holder arising out of a security | 0005| entitlement; | 0006| (3) whether the securities intermediary owes any | 0007| duties to an adverse claimant to a security entitlement; and | 0008| (4) whether an adverse claim can be asserted against a | 0009| person who acquires a security entitlement from the securities | 0010| intermediary or a person who purchases a security entitlement or | 0011| interest therein from an entitlement holder. | 0012| (c) The local law of the jurisdiction in which a security | 0013| certificate is located at the time of delivery governs whether an | 0014| adverse claim can be asserted against a person to whom the security | 0015| certificate is delivered. | 0016| (d) "Issuer's jurisdiction" means the jurisdiction under | 0017| which the issuer of the security is organized or, if permitted by the | 0018| law of that jurisdiction, the law of another jurisdiction specified by | 0019| the issuer. An issuer organized under the law of this State may specify | 0020| the law of another jurisdiction as the law governing the matters | 0021| specified in Subsection (a)(2) through (5). | 0022| (e) The following rules determine a "securities | 0023| intermediary's jurisdiction" for purposes of this section: | 0024| (1) if an agreement between the securities | 0025| intermediary and its entitlement holder specifies that it is governed by | 0001| the law of a particular jurisdiction, that jurisdiction is the | 0002| securities intermediary's jurisdiction; | 0003| (2) if an agreement between the securities | 0004| intermediary and its entitlement holder does not specify the governing | 0005| law as provided in Paragraph (1), but expressly specifies that the | 0006| securities account is maintained at an office in a particular | 0007| jurisdiction, that jurisdiction is the securities intermediary's | 0008| jurisdiction; | 0009| (3) if an agreement between the securities | 0010| intermediary and its entitlement holder does not specify a jurisdiction | 0011| as provided in Paragraph (1) or (2), the securities intermediary's | 0012| jurisdiction is the jurisdiction in which is located the office | 0013| identified in an account statement as the office serving the entitlement | 0014| holder's account; or | 0015| (4) if an agreement between the securities | 0016| intermediary and its entitlement holder does not specify a jurisdiction | 0017| as provided in Paragraph (1) or (2) and an account statement does not | 0018| identify an office serving the entitlement holder's account as provided | 0019| in Paragraph (3), the securities intermediary's jurisdiction is the | 0020| jurisdiction in which is located the chief executive office of the | 0021| securities intermediary. | 0022| (f) A securities intermediary's jurisdiction is not | 0023| determined by the physical location of certificates representing | 0024| financial assets or by the jurisdiction in which is organized the issuer | 0025| of the financial asset with respect to which an entitlement holder has a | 0001| security entitlement or by the location of facilities for data | 0002| processing or other record keeping concerning the account." | 0003| Section 15. A new section of the Uniform Commercial Code, Section | 0004| 55-8-111 NMSA 1978, is enacted to read: | 0005| "55-8-111. CLEARING CORPORATION RULES.--A rule adopted by a | 0006| clearing corporation governing rights and obligations among the clearing | 0007| corporation and its participants in the clearing corporation is | 0008| effective even if the rule conflicts with this Act and affects another | 0009| party who does not consent to the rule." | 0010| Section 16. A new section of the Uniform Commercial Code, Section | 0011| 55-8-112 NMSA 1978, is enacted to read: | 0012| "55-8-112. CREDITOR'S LEGAL PROCESS.-- | 0013| (a) The interest of a debtor in a certificated security may | 0014| be reached by a creditor only by actual seizure of the security | 0015| certificate by the officer making the attachment or levy, except as | 0016| otherwise provided in Subsection (d). However, a certificated security | 0017| for which the certificate has been surrendered to the issuer may be | 0018| reached by a creditor by legal process upon the issuer. | 0019| (b) The interest of a debtor in an uncertificated security | 0020| may be reached by a creditor only by legal process upon the issuer at | 0021| its chief executive office in the United States, except as otherwise | 0022| provided in Subsection (d). | 0023| (c) The interest of a debtor in a security entitlement may | 0024| be reached by a creditor only by legal process upon the securities | 0025| intermediary with whom the debtor's securities account is maintained, | 0001| except as otherwise provided in Subsection (d). | 0002| (d) The interest of a debtor in a certificated security for | 0003| which the certificate is in the possession of a secured party or in an | 0004| uncertificated security registered in the name of a secured party or a | 0005| security entitlement maintained in the name of a secured party may be | 0006| reached by a creditor by legal process upon the secured party. | 0007| (e) A creditor whose debtor is the owner of a certificated | 0008| security, uncertificated security or security entitlement is entitled to | 0009| aid from a court of competent jurisdiction, by injunction or otherwise, | 0010| in reaching the certificated security, uncertificated security or | 0011| security entitlement or in satisfying the claim by means allowed at law | 0012| or in equity in regard to property that cannot readily be reached by | 0013| other legal process." | 0014| Section 17. A new section of the Uniform Commercial Code, Section | 0015| 55-8-113 NMSA 1978, is enacted to read: | 0016| "55-8-113. STATUTE OF FRAUDS INAPPLICABLE.--A contract or | 0017| modification of a contract for the sale or purchase of a security is | 0018| enforceable whether or not there is a writing signed or record | 0019| authenticated by a party against whom enforcement is sought, even if the | 0020| contract or modification is not capable of performance within one year | 0021| of its making." | 0022| Section 18. A new section of the Uniform Commercial Code, Section | 0023| 55-8-114 NMSA 1978, is enacted to read: | 0024| "55-8-114. EVIDENTIARY RULES CONCERNING CERTIFICATED SECURITIES.--The following rules apply in an action on a certificated security | 0025| against the issuer: | 0001| (1) unless specifically denied in the pleadings, each | 0002| signature on a security certificate or in a necessary indorsement is | 0003| admitted; | 0004| (2) if the effectiveness of a signature is put in issue, the | 0005| burden of establishing effectiveness is on the party claiming under the | 0006| signature, but the signature is presumed to be genuine or authorized; | 0007| (3) if signatures on a security certificate are admitted or | 0008| established, production of the certificate entitles a holder to recover | 0009| on it unless the defendant establishes a defense or a defect going to | 0010| the validity of the security; or | 0011| (4) if it is shown that a defense or defect exists, the | 0012| plaintiff has the burden of establishing that the plaintiff or some | 0013| person under whom the plaintiff claims is a person against whom the | 0014| defense or defect cannot be asserted." | 0015| Section 19. A new section of the Uniform Commercial Code, Section | 0016| 55-8-115 NMSA 1978, is enacted to read: | 0017| "55-8-115. SECURITIES INTERMEDIARY AND OTHERS NOT LIABLE TO | 0018| ADVERSE CLAIMANT.--A securities intermediary that has transferred a | 0019| financial asset pursuant to an effective entitlement order, or a broker | 0020| or other agent or bailee that has dealt with a financial asset at the | 0021| direction of its customer or principal, is not liable to a person having | 0022| an adverse claim to the financial asset, unless the securities | 0023| intermediary or broker or other agent or bailee: | 0024| (1) took the action after it had been served with an | 0025| injunction, restraining order or other legal process enjoining it from | 0001| doing so, issued by a court of competent jurisdiction and had a | 0002| reasonable opportunity to act on the injunction, restraining order or | 0003| other legal process; | 0004| (2) acted in collusion with the wrongdoer in violating the | 0005| rights of the adverse claimant; or | 0006| (3) in the case of a security certificate that has been | 0007| stolen, acted with notice of the adverse claim." | 0008| Section 20. A new section of the Uniform Commercial Code, Section | 0009| 55-8-116 NMSA 1978, is enacted to read: | 0010| "55-8-116. SECURITIES INTERMEDIARY AS PURCHASER FOR VALUE.--A | 0011| securities intermediary that receives a financial asset and establishes | 0012| a security entitlement to the financial asset in favor of an entitlement | 0013| holder is a purchaser for value of the financial asset. A securities | 0014| intermediary that acquires a security entitlement to a financial asset | 0015| from another securities intermediary acquires the security entitlement | 0016| for value if the securities intermediary acquiring the security | 0017| entitlement establishes a security entitlement to the financial asset in | 0018| favor of an entitlement holder." | 0019| Section 21. Section 55-8-201 NMSA 1978 (being Laws 1961, Chapter | 0020| 96, Section 8-201, as amended) is repealed and a new section of the | 0021| Uniform Commercial Code, Section 55-8-201 NMSA 1978, is enacted to read: | 0022| "55-8-201. ISSUER.-- | 0023| (a) With respect to an obligation on or a defense to a | 0024| security, an "issuer" includes a person that: | 0025| (1) places or authorizes the placing of its name on a | 0001| security certificate, other than as authenticating trustee, registrar, | 0002| transfer agent or the like, to evidence a share, participation or other | 0003| interest in its property or in an enterprise or to evidence its duty to | 0004| perform an obligation represented by the certificate; | 0005| (2) creates a share, participation or other interest | 0006| in its property or in an enterprise, or undertakes an obligation, that | 0007| is an uncertificated security; | 0008| (3) directly or indirectly creates a fractional | 0009| interest in its rights or property, if the fractional interest is | 0010| represented by a security certificate; or | 0011| (4) becomes responsible for, or in place of, another | 0012| person described as an issuer in this section. | 0013| (b) With respect to an obligation on or defense to a | 0014| security, a guarantor is an issuer to the extent of its guaranty, | 0015| whether or not its obligation is noted on a security certificate. | 0016| (c) With respect to a registration of a transfer, issuer | 0017| means a person on whose behalf transfer books are maintained." | 0018| Section 22. Section 55-8-202 NMSA 1978 (being Laws 1961, Chapter | 0019| 96, Section 8-202, as amended) is repealed and a new section of the | 0020| Uniform Commercial Code, Section 55-8-202 NMSA 1978, is enacted to read: | 0021| "55-8-202. ISSUER'S RESPONSIBILITY AND DEFENSES--NOTICE OF DEFECT | 0022| OR DEFENSE.-- | 0023| (a) Even against a purchaser for value and without notice, | 0024| the terms of a certificated security include terms stated on the | 0025| certificate and terms made part of the security by reference on the | 0001| certificate to another instrument, indenture or document or to a | 0002| constitution, statute, ordinance, rule, regulation, order or the like, | 0003| to the extent the terms referred to do not conflict with terms stated on | 0004| the certificate. A reference under this subsection does not of itself | 0005| charge a purchaser for value with notice of a defect going to the | 0006| validity of the security, even if the certificate expressly states that | 0007| a person accepting it admits notice. The terms of an uncertificated | 0008| security include those stated in any instrument, indenture or document | 0009| or in a constitution, statute, ordinance, rule, regulation, order or the | 0010| like, pursuant to which the security is issued. | 0011| (b) The following rules apply if an issuer asserts that a | 0012| security is not valid: | 0013| (1) a security other than one issued by a government | 0014| or governmental subdivision, agency or instrumentality, even though | 0015| issued with a defect going to its validity, is valid in the hands of a | 0016| purchaser for value and without notice of the particular defect unless | 0017| the defect involves a violation of a constitutional provision. In that | 0018| case, the security is valid in the hands of a purchaser for value and | 0019| without notice of the defect, other than one who takes by original | 0020| issue; and | 0021| (2) Paragraph (1) applies to an issuer that is a | 0022| government or governmental subdivision, agency or instrumentality only | 0023| if there has been substantial compliance with the legal requirements | 0024| governing the issue or the issuer has received a substantial | 0025| consideration for the issue as a whole or for the particular security | 0001| and a stated purpose of the issue is one for which the issuer has power | 0002| to borrow money or issue the security. | 0003| (c) Except as otherwise provided in Section | 0004| 55-8-205 NMSA 1978, lack of genuineness of a certificated security is a | 0005| complete defense, even against a purchaser for value and without notice. | 0006| (d) All other defenses of the issuer of a security, | 0007| including nondelivery and conditional delivery of a certificated | 0008| security, are ineffective against a purchaser for value who has taken | 0009| the certificated security without notice of the particular defense. | 0010| (e) This section does not affect the right of a party to | 0011| cancel a contract for a security "when, as and if issued" or "when | 0012| distributed" in the event of a material change in the character of the | 0013| security that is the subject of the contract or in the plan or | 0014| arrangement pursuant to which the security is to be issued or | 0015| distributed. | 0016| (f) If a security is held by a securities intermediary | 0017| against whom an entitlement holder has a security entitlement with | 0018| respect to the security, the issuer may not assert any defense that the | 0019| issuer could not assert if the entitlement holder held the security | 0020| directly." | 0021| Section 23. Section 55-8-203 NMSA 1978 (being Laws 1961, Chapter | 0022| 96, Section 8-203, as amended) is repealed and a new section of the | 0023| Uniform Commercial Code, Section 55-8-203 NMSA 1978, is enacted to read: | 0024| "55-8-203. STALENESS AS NOTICE OF DEFECT OR DEFENSE.--After an | 0025| act or event, other than a call that has been revoked, creating a right | 0001| to immediate performance of the principal obligation represented by a | 0002| certificated security or setting a date on or after which the security | 0003| is to be presented or surrendered for redemption or exchange, a | 0004| purchaser is charged with notice of any defect in its issue or defense | 0005| of the issuer, if the act or event: | 0006| (1) requires the payment of money, the delivery of a | 0007| certificated security, the registration of transfer of an uncertificated | 0008| security, or any of them, on presentation or surrender of the security | 0009| certificate, the money or security is available on the date set for | 0010| payment or exchange, and the purchaser takes the security more than one | 0011| year after that date; or | 0012| (2) is not covered by paragraph (1) and the purchaser takes | 0013| the security more than two years after the date set for surrender or | 0014| presentation or the date on which performance became due." | 0015| Section 24. Section 55-8-204 NMSA 1978 (being Laws 1961, Chapter | 0016| 96, Section 8-204, as amended) is repealed and a new section of the | 0017| Uniform Commercial Code, Section 55-8-204 NMSA 1978, is enacted to read: | 0018| "55-8-204. EFFECT OF ISSUER'S RESTRICTION ON TRANSFER.--A | 0019| restriction on transfer of a security imposed by the issuer, even if | 0020| otherwise lawful, is ineffective against a person without knowledge of | 0021| the restriction unless: | 0022| (1) the security is certificated and the restriction is | 0023| noted conspicuously on the security certificate; or | 0024| (2) the security is uncertificated and the registered owner | 0025| has been notified of the restriction." | 0001| Section 25. Section 55-8-205 NMSA 1978 (being Laws 1961, Chapter | 0002| 96, Section 8-205, as amended) is repealed and a new section of the | 0003| Uniform Commercial Code, Section 55-8-205 NMSA 1978, is enacted to read: | 0004| "55-8-205. EFFECT OF UNAUTHORIZED SIGNATURE ON SECURITY | 0005| CERTIFICATE.--An unauthorized signature placed on a security certificate | 0006| before or in the course of issue is ineffective, but the signature is | 0007| effective in favor of a purchaser for value of the certificated security | 0008| if the purchaser is without notice of the lack of authority and the | 0009| signing has been done by: | 0010| (1) an authenticating trustee, registrar, transfer agent or | 0011| other person entrusted by the issuer with the signing of the security | 0012| certificate or of similar security certificates or the immediate | 0013| preparation for signing of any of them; or | 0014| (2) an employee of the issuer or of any of the persons | 0015| listed in paragraph (1), entrusted with responsible handling of the | 0016| security certificate." | 0017| Section 26. Section 55-8-206 NMSA 1978 (being Laws 1961, Chapter | 0018| 96, Section 8-206, as amended) is repealed and a new section of the | 0019| Uniform Commercial Code, Section 55-8-206 NMSA 1978, is enacted to read: | 0020| "55-8-206. COMPLETION OR ALTERATION OF SECURITY CERTIFICATE.-- | 0021| (a) If a security certificate contains the signatures | 0022| necessary to its issue or transfer but is incomplete in any other | 0023| respect: | 0024| (1) any person may complete it by filling in the | 0025| blanks as authorized; and | 0001| (2) even if the blanks are incorrectly filled in, the | 0002| security certificate as completed is enforceable by a purchaser who took | 0003| it for value and without notice of the incorrectness. | 0004| (b) A complete security certificate that has been improperly | 0005| altered, even if fraudulently, remains enforceable, but only according | 0006| to its original terms." | 0007| Section 27. Section 55-8-207 (being Laws 1961, Chapter 96, | 0008| Section 8-207, as amended) is repealed and a new section of the Uniform | 0009| Commercial Code, Section 55-8-207 NMSA 1978, is enacted to read: | 0010| "55-8-207. RIGHTS AND DUTIES OF ISSUER WITH RESPECT TO REGISTERED | 0011| OWNERS.-- | 0012| (a) Before due presentment for registration of transfer of a | 0013| certificated security in registered form or of an instruction requesting | 0014| registration of transfer of an uncertificated security, the issuer or | 0015| indenture trustee may treat the registered owner as the person | 0016| exclusively entitled to vote, receive notifications and otherwise | 0017| exercise all the rights and powers of an owner. | 0018| (b) Chapter 55, Article 8 NMSA 1978 does not affect the | 0019| liability of the registered owner of a security for a call, assessment | 0020| or the like." | 0021| Section 28. Section 55-8-208 NMSA 1978 (being Laws 1961, Chapter | 0022| 96, Section 8-208, as amended) is repealed and a new section of the | 0023| Uniform Commercial Code, Section 55-8-208 NMSA 1978, is enacted to read: | 0024| "55-8-208. EFFECT OF SIGNATURE OF AUTHENTICATING TRUSTEE, | 0025| REGISTRAR OR TRANSFER AGENT.-- | 0001| (a) A person signing a security certificate as | 0002| authenticating trustee, registrar, transfer agent or the like warrants | 0003| to a purchaser for value of the certificated security, if the purchaser | 0004| is without notice of a particular defect, that: | 0005| (1) the certificate is genuine; | 0006| (2) the person's own participation in the issue of the | 0007| security is within the person's capacity and within the scope of the | 0008| authority received by the person from the issuer; and | 0009| (3) the person has reasonable grounds to believe that | 0010| the certificated security is in the form and within the amount the | 0011| issuer is authorized to issue. | 0012| (b) Unless otherwise agreed, a person signing under | 0013| subsection (a) does not assume responsibility for the validity of the | 0014| security in other respects." | 0015| Section 29. A new section of the Uniform Commercial Code, Section | 0016| 55-8-209 NMSA 1978, is enacted to read: | 0017| "55-8-209. ISSUER'S LIEN.--A lien in favor of an issuer upon a | 0018| certificated security is valid against a purchaser only if the right of | 0019| the issuer to the lien is noted conspicuously on the security | 0020| certificate." | 0021| Section 30. A new section of the Uniform Commercial Code, Section | 0022| 55-8-210 NMSA 1978, is enacted to read: | 0023| "55-8-210. OVERISSUE.-- | 0024| (a) In this section, "overissue" means the issue of | 0025| securities in excess of the amount the issuer has corporate power to | 0001| issue, but an overissue does not occur if appropriate action has cured | 0002| the overissue. | 0003| (b) Except as otherwise provided in Subsections (c) and (d), | 0004| the provisions of Chapter 55, Article 8 NMSA 1978 which validate a | 0005| security or compel its issue or reissue do not apply to the extent that | 0006| validation, issue or reissue would result in overissue. | 0007| (c) If an identical security not constituting an overissue | 0008| is reasonably available for purchase, a person entitled to issue or | 0009| validation may compel the issuer to purchase the security and deliver it | 0010| if certificated, or register its transfer if uncertificated, against | 0011| surrender of any security certificate the person holds. | 0012| (d) If a security is not reasonably available for purchase, | 0013| a person entitled to issue or validation may recover from the issuer the | 0014| price the person or the last purchaser for value paid for it with | 0015| interest from the date of the person's demand." | 0016| Section 31. Section 55-8-301 NMSA 1978 (being Laws 1961, Chapter | 0017| 96, Section 8-301, as amended) is repealed and a new section of the | 0018| Uniform Commercial Code, Section 55-8-301 NMSA 1978, is enacted to read: | 0019| "55-8-301. DELIVERY.-- | 0020| (a) Delivery of a certificated security to a purchaser | 0021| occurs when: | 0022| (1) the purchaser acquires possession of the security | 0023| certificate; | 0024| (2) another person, other than a securities | 0025| intermediary, either acquires possession of the security certificate on | 0001| behalf of the purchaser or, having previously acquired possession of the | 0002| certificate, acknowledges that it holds for the purchaser; or | 0003| (3) a securities intermediary acting on behalf of the | 0004| purchaser acquires possession of the security certificate, only if the | 0005| certificate is in registered form and has been specially indorsed to the | 0006| purchaser by an effective indorsement. | 0007| (b) Delivery of an uncertificated security to a purchaser | 0008| occurs when: | 0009| (1) the issuer registers the purchaser as the | 0010| registered owner, upon original issue or registration of transfer; or | 0011| (2) another person, other than a securities | 0012| intermediary, either becomes the registered owner of the uncertificated | 0013| security on behalf of the purchaser or, having previously become the | 0014| registered owner, acknowledges that it holds for the purchaser." | 0015| Section 32. Section 55-8-302 NMSA 1978 (being Laws 1961, Chapter | 0016| 96, Section 8-302, as amended) is repealed and a new section of the | 0017| Uniform Commercial Code, Section 55-8-302 NMSA 1978, is enacted to read: | 0018| "55-8-302. RIGHTS OF PURCHASER.-- | 0019| (a) Except as otherwise provided in Subsections (b) and (c), | 0020| upon delivery of a certificated or uncertificated security to a | 0021| purchaser, the purchaser acquires all rights in the security that the | 0022| transferor had or had power to transfer. | 0023| (b) A purchaser of a limited interest acquires rights only | 0024| to the extent of the interest purchased. | 0025| (c) A purchaser of a certificated security who as a previous | 0001| holder had notice of an adverse claim does not improve its position by | 0002| taking from a protected purchaser." | 0003| Section 33. Section 55-8-303 NMSA 1978 (being Laws 1961, Chapter | 0004| 96, Section 8-303, as amended) is repealed and a new section of the | 0005| Uniform Commercial Code, Section 55-8-303 NMSA 1978, is enacted to read: | 0006| "55-8-303. PROTECTED PURCHASER.-- | 0007| (a) "Protected purchaser" means a purchaser of a | 0008| certificated or uncertificated security, or of an interest therein, who: | 0009| (1) gives value; | 0010| (2) does not have notice of any adverse claim to the | 0011| security; and | 0012| (3) obtains control of the certificated or | 0013| uncertificated security. | 0014| (b) In addition to acquiring the rights of a purchaser, a | 0015| protected purchaser also acquires its interest in the security free of | 0016| any adverse claim." | 0017| Section 34. Section 55-8-304 NMSA 1978 (being Laws 1961, Chapter | 0018| 96, Section 8-304, as amended) is repealed and a new section of the | 0019| Uniform Commercial Code, Section 55-8-304 NMSA 1978, is enacted to read: | 0020| "55-8-304. INDORSEMENT.-- | 0021| (a) An indorsement may be in blank or special. An | 0022| indorsement in blank includes an indorsement to bearer. A special | 0023| indorsement specifies to whom a security is to be transferred or who has | 0024| power to transfer it. A holder may convert a blank indorsement to a | 0025| special indorsement. | 0001| (b) An indorsement purporting to be only of part of a | 0002| security certificate representing units intended by the issuer to be | 0003| separately transferable is effective to the extent of the indorsement. | 0004| (c) An indorsement, whether special or in blank, does not | 0005| constitute a transfer until delivery of the certificate on which it | 0006| appears or, if the indorsement is on a separate document, until delivery | 0007| of both the document and the certificate. | 0008| (d) If a security certificate in registered form has been | 0009| delivered to a purchaser without a necessary indorsement, the purchaser | 0010| may become a protected purchaser only when the indorsement is supplied. | 0011| However, against a transferor, a transfer is complete upon delivery and | 0012| the purchaser has a specifically enforceable right to have any necessary | 0013| indorsement supplied. | 0014| (e) An indorsement of a security certificate in bearer form | 0015| may give notice of an adverse claim to the certificate, but it does not | 0016| otherwise affect a right to registration that the holder possesses. | 0017| (f) Unless otherwise agreed, a person making an indorsement | 0018| assumes only the obligations provided in Section 55-8-108 NMSA 1978 and | 0019| not an obligation that the security will be honored by the issuer." | 0020| Section 35. Section 55-8-305 NMSA 1978 (being Laws 1961, Chapter | 0021| 96, Section 8-305, as amended) is repealed and a new section of the | 0022| Uniform Commercial Code, Section 55-8-305 NMSA 1978, is enacted to read: | 0023| "55-8-305. INSTRUCTION.-- | 0024| (a) If an instruction has been originated by an appropriate | 0025| person but is incomplete in any other respect, any person may complete | 0001| it as authorized and the issuer may rely on it as completed, even though | 0002| it has been completed incorrectly. | 0003| (b) Unless otherwise agreed, a person initiating an | 0004| instruction assumes only the obligations imposed by Section 55-8-108 | 0005| NMSA 1978 and not an obligation that the security will be honored by the | 0006| issuer." | 0007| Section 36. Section 55-8-306 NMSA 1978 (being Laws 1961, Chapter | 0008| 96, Section 8-306, as amended) is repealed and a new section of the | 0009| Uniform Commercial Code, Section 55-8-306 NMSA 1978, is enacted to read: | 0010| "55-8-306. EFFECT OF GUARANTEEING SIGNATURE, INDORSEMENT OR | 0011| INSTRUCTION.-- | 0012| (a) A person who guarantees a signature of an indorser of a | 0013| security certificate warrants that at the time of signing: | 0014| (1) the signature was genuine; | 0015| (2) the signer was an appropriate person to indorse | 0016| or, if the signature is by an agent, the agent had actual authority to | 0017| act on behalf of the appropriate person; and | 0018| (3) the signer had legal capacity to sign. | 0019| (b) A person who guarantees a signature of the originator of | 0020| an instruction warrants that at the time of signing: | 0021| (1) the signature was genuine; | 0022| (2) the signer was an appropriate person to originate | 0023| the instruction or, if the signature is by an agent, the agent had | 0024| actual authority to act on behalf of the appropriate person, if the | 0025| person specified in the instruction as the registered owner was, in | 0001| fact, the registered owner, as to which fact the signature guarantor | 0002| does not make a warranty; and | 0003| (3) the signer had legal capacity to sign. | 0004| (c) A person who specially guarantees the signature of an | 0005| originator of an instruction makes the warranties of a signature | 0006| guarantor under Subsection (b) and also warrants that at the time the | 0007| instruction is presented to the issuer: | 0008| (1) the person specified in the instruction as the | 0009| registered owner of the uncertificated security will be the registered | 0010| owner; and | 0011| (2) the transfer of the uncertificated security | 0012| requested in the instruction will be registered by the issuer free from | 0013| all liens, security interests, restrictions and claims other than those | 0014| specified in the instruction. | 0015| (d) A guarantor under Subsections (a) and (b) or a special | 0016| guarantor under Subsection (c) does not otherwise warrant the | 0017| rightfulness of the transfer. | 0018| (e) A person who guarantees an indorsement of a security | 0019| certificate makes the warranties of a signature guarantor under | 0020| Subsection (a) and also warrants the rightfulness of the transfer in all | 0021| respects. | 0022| (f) A person who guarantees an instruction requesting the | 0023| transfer of an uncertificated security makes the warranties of a special | 0024| signature guarantor under Subsection (c) and also warrants the | 0025| rightfulness of the transfer in all respects. | 0001| (g) An issuer may not require a special guaranty of | 0002| signature, a guaranty of indorsement or a guaranty of instruction as a | 0003| condition to registration of transfer. | 0004| (h) The warranties under this section are made to a person | 0005| taking or dealing with the security in reliance on the guaranty, and the | 0006| guarantor is liable to the person for loss resulting from their breach. | 0007| An indorser or originator of an instruction whose signature, indorsement | 0008| or instruction has been guaranteed is liable to a guarantor for any loss | 0009| suffered by the guarantor as a result of breach of the warranties of the | 0010| guarantor." | 0011| Section 37. Section 55-8-307 NMSA 1978 (being Laws 1961, Chapter | 0012| 96, Section 8-307, as amended) is repealed and a new section of the | 0013| Uniform Commercial Code, Section 55-8-307 NMSA 1978, is enacted to read: | 0014| "55-8-307. PURCHASER'S RIGHT TO REQUISITES FOR REGISTRATION OF | 0015| TRANSFER.--Unless otherwise agreed, the transferor of a security on due | 0016| demand shall supply the purchaser with proof of authority to transfer or | 0017| with any other requisite necessary to obtain registration of the | 0018| transfer of the security, but if the transfer is not for value, a | 0019| transferor need not comply unless the purchaser pays the necessary | 0020| expenses. If the transferor fails within a reasonable time to comply | 0021| with the demand, the purchaser may reject or rescind the transfer." | 0022| Section 38. Section 55-8-401 NMSA 1978 (being Laws 1961, Chapter | 0023| 96, Section 8-401, as amended) is repealed and a new section of the | 0024| Uniform Commercial Code, Section 55-8-401 NMSA 1978, is enacted to read: | 0025| "55-8-401. DUTY OF ISSUER TO REGISTER TRANSFER.-- | 0001| (a) If a certificated security in registered form is | 0002| presented to an issuer with a request to register transfer or an | 0003| instruction is presented to an issuer with a request to register | 0004| transfer of an uncertificated security, the issuer shall register the | 0005| transfer as requested if: | 0006| (1) under the terms of the security the person seeking | 0007| registration of transfer is eligible to have the security registered in | 0008| its name; | 0009| (2) the indorsement or instruction is made by the | 0010| appropriate person or by an agent who has actual authority to act on | 0011| behalf of the appropriate person; | 0012| (3) reasonable assurance is given that the indorsement | 0013| or instruction is genuine and authorized (Section 55-8-402 NMSA 1978); | 0014| (4) any applicable law relating to the collection of | 0015| taxes has been complied with; | 0016| (5) the transfer does not violate any restriction on | 0017| transfer imposed by the issuer in accordance with Section 55-8-204 NMSA | 0018| 1978; | 0019| (6) a demand that the issuer not register transfer has | 0020| not become effective under Section 55-8-403 NMSA 1978, or the issuer has | 0021| complied with Section 55-8-403(b) NMSA 1978 but no legal process or | 0022| indemnity bond is obtained as provided in Section 55-8-403(d) NMSA 1978; | 0023| and | 0024| (7) the transfer is in fact rightful or is to a | 0025| protected purchaser. | 0001| (b) If an issuer is under a duty to register a transfer of a | 0002| security, the issuer is liable to a person presenting a certificated | 0003| security or an instruction for registration or to the person's principal | 0004| for loss resulting from unreasonable delay in registration or failure or | 0005| refusal to register the transfer." | 0006| Section 39. Section 55-8-402 NMSA 1978 (being Laws 1961, Chapter | 0007| 96, Section 8-402, as amended) is repealed and a new section of the | 0008| Uniform Commercial Code, Section 55-8-402 NMSA 1978, is enacted to read: | 0009| "55-8-402. ASSURANCE THAT INDORSEMENT OR INSTRUCTION IS | 0010| EFFECTIVE.-- | 0011| (a) An issuer may require the following assurance that each | 0012| necessary indorsement or each instruction is genuine and authorized: | 0013| (1) in all cases, a guaranty of the signature of the | 0014| person making an indorsement or originating an instruction including, in | 0015| the case of an instruction, reasonable assurance of identity; | 0016| (2) if the indorsement is made or the instruction is | 0017| originated by an agent, appropriate assurance of actual authority to | 0018| sign; | 0019| (3) if the indorsement is made or the instruction is | 0020| originated by a fiduciary pursuant to Section | 0021| 55-8-107(a)(4) or (a)(5) NMSA 1978, appropriate evidence of appointment | 0022| or incumbency; | 0023| (4) if there is more than one fiduciary, reasonable | 0024| assurance that all who are required to sign have done so; and | 0025| (5) if the indorsement is made or the instruction is | 0001| originated by a person not covered by another provision of this | 0002| subsection, assurance appropriate to the case corresponding as nearly as | 0003| may be to the provisions of this subsection. | 0004| (b) An issuer may elect to require reasonable assurance | 0005| beyond that specified in this section. | 0006| (c) In this section: | 0007| (1) "guaranty of the signature" means a guaranty | 0008| signed by or on behalf of a person reasonably believed by the issuer to | 0009| be responsible. An issuer may adopt standards with respect to | 0010| responsibility if they are not manifestly unreasonable; and | 0011| (2) "appropriate evidence of appointment or | 0012| incumbency" means: | 0013| (i) in the case of a fiduciary appointed or | 0014| qualified by a court, a certificate issued by or under the direction or | 0015| supervision of the court or an officer thereof and dated within 60 days | 0016| before the date of presentation for transfer; or | 0017| (ii) in any other case, a copy of a document | 0018| showing the appointment or a certificate issued by or on behalf of a | 0019| person reasonably believed by an issuer to be responsible or, in the | 0020| absence of that document or certificate, other evidence the issuer | 0021| reasonably considered appropriate." | 0022| Section 40. Section 55-8-403 NMSA 1978 (being Laws 1961, Chapter | 0023| 96, Section 8-403, as amended) is repealed and a new section of the | 0024| Uniform Commercial Code, Section 55-8-403 NMSA 1978, is enacted to read: | 0025| "55-8-403. DEMAND THAT ISSUER NOT REGISTER TRANSFER.-- | 0001| (a) A person who is an appropriate person to make an | 0002| indorsement or originate an instruction may demand that the issuer not | 0003| register transfer of a security by communicating to the issuer a | 0004| notification that identifies the registered owner and the issue of which | 0005| the security is a part and provides an address for communications | 0006| directed to the person making the demand. The demand is effective only | 0007| if it is received by the issuer at a time and in a manner affording the | 0008| issuer reasonable opportunity to act on it. | 0009| (b) If a certificated security in registered form is | 0010| presented to an issuer with a request to register transfer or an | 0011| instruction is presented to an issuer with a request to register | 0012| transfer of an uncertificated security after a demand that the issuer | 0013| not register transfer has become effective, the issuer shall promptly | 0014| communicate to (i) the person who initiated the demand at the address | 0015| provided in the demand and (ii) the person who presented the security | 0016| for registration of transfer or initiated the instruction requesting | 0017| registration of transfer a notification stating that: | 0018| (1) the certificated security has been presented for | 0019| registration of transfer or instruction for registration of transfer of | 0020| uncertificated security has been received; | 0021| (2) a demand that the issuer not register transfer had | 0022| previously been received; and | 0023| (3) the issuer will withhold registration of transfer | 0024| for a period of time stated in the notification in order to provide the | 0025| person who initiated the demand an opportunity to obtain legal process | 0001| or an indemnity bond. | 0002| (c) The period described in Subsection (b)(3) may not exceed | 0003| 30 days after the date of communication of the notification. A shorter | 0004| period may be specified by the issuer if it is not manifestly | 0005| unreasonable. | 0006| (d) An issuer is not liable to a person who initiated a | 0007| demand that the issuer not register transfer for any loss the person | 0008| suffers as a result of registration of a transfer pursuant to an | 0009| effective indorsement or instruction if the person who initiated the | 0010| demand does not, within the time stated in the issuer's communication, | 0011| either: | 0012| (1) obtain an appropriate restraining order, | 0013| injunction or other process from a court of competent jurisdiction | 0014| enjoining the issuer from registering the transfer; or | 0015| (2) file with the issuer an indemnity bond, sufficient | 0016| in the issuer's judgment to protect the issuer and any transfer agent, | 0017| registrar or other agent of the issuer involved from any loss it or they | 0018| may suffer by refusing to register the transfer. | 0019| (e) This section does not relieve an issuer from liability | 0020| for registering transfer pursuant to an indorsement or instruction that | 0021| was not effective." | 0022| Section 41. Section 55-8-404 NMSA 1978 (being Laws 1961, Chapter | 0023| 96, Section 8-404, as amended) is repealed and a new section of the | 0024| Uniform Commercial Code, Section 55-8-404 NMSA 1978, is enacted to read: | 0025| "55-8-404. WRONGFUL REGISTRATION.-- | 0001| (a) Except as otherwise provided in Section | 0002| 55-8-406 NMSA 1978, an issuer is liable for wrongful registration of | 0003| transfer if the issuer has registered a transfer of a security to a | 0004| person not entitled to it and the transfer was registered: | 0005| (1) pursuant to an ineffective indorsement or | 0006| instruction; | 0007| (2) after a demand that the issuer not register | 0008| transfer became effective under Section 55-8-403(a) NMSA 1978, and the | 0009| issuer did not comply with Section 55-8-403(b) NMSA 1978; | 0010| (3) after the issuer had been served with an | 0011| injunction, restraining order or other legal process enjoining it from | 0012| registering the transfer, issued by a court of competent jurisdiction, | 0013| and the issuer had a reasonable opportunity to act on the injunction, | 0014| restraining order or other legal process; or | 0015| (4) by an issuer acting in collusion with the | 0016| wrongdoer. | 0017| (b) An issuer that is liable for wrongful registration of | 0018| transfer under Subsection (a) on demand shall provide the person | 0019| entitled to the security with a like certificated or uncertificated | 0020| security and any payments or distributions that the person did not | 0021| receive as a result of the wrongful registration. If an overissue would | 0022| result, the issuer's liability to provide the person with a like | 0023| security is governed by Section 55-8-210 NMSA 1978. | 0024| (c) Except as otherwise provided in Subsection (a) or in a | 0025| law relating to the collection of taxes, an issuer is not liable to an | 0001| owner or other person suffering loss as a result of the registration of | 0002| a transfer of a security if registration was made pursuant to an | 0003| effective indorsement or instruction." | 0004| Section 42. Section 55-8-405 NMSA 1978 (being Laws 1961, Chapter | 0005| 96, Section 8-405, as amended) is repealed and a new section of the | 0006| Uniform Commercial Code, Section 55-8-405 NMSA 1978, is enacted to read: | 0007| "55-8-405. REPLACEMENT OF LOST, DESTROYED OR WRONGFULLY TAKEN | 0008| SECURITY CERTIFICATE.-- | 0009| (a) If an owner of a certificated security, whether in | 0010| registered or bearer form, claims that the certificate has been lost, | 0011| destroyed or wrongfully taken, the issuer shall issue a new certificate | 0012| if the owner: | 0013| (1) so requests before the issuer has notice that the | 0014| certificate has been acquired by a protected purchaser; | 0015| (2) files with the issuer a sufficient indemnity bond; | 0016| and | 0017| (3) satisfies other reasonable requirements imposed by | 0018| the issuer. | 0019| (b) If, after the issue of a new security certificate, a | 0020| protected purchaser of the original certificate presents it for | 0021| registration of transfer, the issuer shall register the transfer unless | 0022| an overissue would result. In that case, the issuer's liability is | 0023| governed by Section | 0024| 55-8-210 NMSA 1978. In addition to any rights on the indemnity bond, an | 0025| issuer may recover the new certificate from a person to whom it was | 0001| issued or any person taking under that person, except a protected | 0002| purchaser." | 0003| Section 43. Section 55-8-406 NMSA 1978 (being Laws 1961, Chapter | 0004| 96, Section 8-406, as amended) is repealed and a new section of the | 0005| Uniform Commercial Code, Section 55-8-406 NMSA 1978, is enacted to read: | 0006| "55-8-406. OBLIGATION TO NOTIFY ISSUER OF LOST, DESTROYED OR | 0007| WRONGFULLY TAKEN SECURITY CERTIFICATE.--If a security certificate has | 0008| been lost, apparently destroyed or wrongfully taken, and the owner fails | 0009| to notify the issuer of that fact within a reasonable time after the | 0010| owner has notice of it and the issuer registers a transfer of the | 0011| security before receiving notification, the owner may not assert against | 0012| the issuer a claim for registering the transfer under Section 55-8-404 | 0013| NMSA 1978 or a claim to a new security certificate under Section 55-8-405 NMSA 1978." | 0014| Section 44. Section 55-8-407 NMSA 1978 (being Laws 1987, Chapter | 0015| 248, Section 45) is repealed and a new section of the Uniform Commercial | 0016| Code, Section 55-8-407 NMSA 1978, is enacted to read: | 0017| "55-8-407. AUTHENTICATING TRUSTEE, TRANSFER AGENT AND REGISTRAR.--A person acting as authenticating trustee, transfer agent, registrar or | 0018| other agent for an issuer in the registration of a transfer of its | 0019| securities, in the issue of new security certificates or uncertificated | 0020| securities or in the cancellation of surrendered security certificates | 0021| has the same obligation to the holder or owner of a certificated or | 0022| uncertificated security with regard to the particular functions | 0023| performed as the issuer has in regard to those functions." | 0024| Section 45. A new section of the Uniform Commercial Code, Section | 0025| 55-8-501 NMSA 1978, is enacted to read: | 0001| "55-8-501. SECURITIES ACCOUNT-- ACQUISITION OF SECURITY | 0002| ENTITLEMENT FROM SECURITIES INTERMEDIARY.-- | 0003| (a) "Securities account" means an account to which a | 0004| financial asset is or may be credited in accordance with an agreement | 0005| under which the person maintaining the account undertakes to treat the | 0006| person for whom the account is maintained as entitled to exercise the | 0007| rights that comprise the financial asset. | 0008| (b) Except as otherwise provided in Subsections (d) and (e), | 0009| a person acquires a security entitlement if a securities intermediary: | 0010| (1) indicates by book entry that a financial asset has | 0011| been credited to the person's securities account; | 0012| (2) receives a financial asset from the person or | 0013| acquires a financial asset for the person and, in either case, accepts | 0014| it for credit to the person's securities account; or | 0015| (3) becomes obligated under other law, regulation or | 0016| rule to credit a financial asset to the person's securities account. | 0017| (c) If a condition of subsection (b) has been met, a person | 0018| has a security entitlement even though the securities intermediary does | 0019| not itself hold the financial asset. | 0020| (d) If a securities intermediary holds a financial asset for | 0021| another person and the financial asset is registered in the name of | 0022| payable to the order of, or specially indorsed to the other person and | 0023| has not been indorsed to the securities intermediary or in blank, the | 0024| other person is treated as holding the financial asset directly rather | 0025| than as having a security entitlement with respect to the financial | 0001| asset. | 0002| (e) Issuance of a security is not establishment of a | 0003| security entitlement." | 0004| Section 46. A new section of the Uniform Commercial Code, Section | 0005| 55-8-502 NMSA 1978, is enacted to read: | 0006| "55-8-502. ASSERTION OF ADVERSE CLAIM AGAINST ENTITLEMENT | 0007| HOLDER.--An action based on an adverse claim to a financial asset, | 0008| whether framed in conversion, replevin, constructive trust, equitable | 0009| lien or other theory, may not be asserted against a person who acquires | 0010| a security entitlement under Section 55-8-501 NMSA 1978 for value and | 0011| without notice of the adverse claim." | 0012| Section 47. A new section of the Uniform Commercial Code, Section | 0013| 55-8-503 NMSA 1978, is enacted to read: | 0014| "55-8-503. PROPERTY INTEREST OF ENTITLEMENT HOLDER IN FINANCIAL | 0015| ASSET HELD BY SECURITIES INTERMEDIARY.-- | 0016| (a) To the extent necessary for a securities intermediary to | 0017| satisfy all security entitlements with respect to a particular financial | 0018| asset, all interests in that financial asset held by the securities | 0019| intermediary are held by the securities intermediary for the entitlement | 0020| holders, are not property of the securities intermediary and are not | 0021| subject to claims of creditors of the securities intermediary, except as | 0022| otherwise provided in Section 55-8-511 NMSA 1978. | 0023| (b) An entitlement holder's property interest with respect | 0024| to a particular financial asset under Subsection (a) is a pro rata | 0025| property interest in all interests in that financial asset held by the | 0001| securities intermediary, without regard to the time the entitlement | 0002| holder acquired the security entitlement or the time the securities | 0003| intermediary acquired the interest in that financial asset. | 0004| (c) An entitlement holder's property interest with respect | 0005| to a particular financial asset under Subsection (a) may be enforced | 0006| against the securities intermediary only by exercise of the entitlement | 0007| holder's rights under Sections | 0008| 55-8-505 through 55-8-508 NMSA 1978. | 0009| (d) An entitlement holder's property interest with respect | 0010| to a particular financial asset under Subsection (a) may be enforced | 0011| against a purchaser of the financial asset or interest therein only if: | 0012| (1) insolvency proceedings have been initiated by or | 0013| against the securities intermediary; | 0014| (2) the securities intermediary does not have | 0015| sufficient interests in the financial asset to satisfy the security | 0016| entitlements of all of its entitlement holders to that financial asset; | 0017| (3) the securities intermediary violated its | 0018| obligations under Section 55-8-504 NMSA 1978 by transferring the | 0019| financial asset or interest therein to the purchaser; and | 0020| (4) the purchaser is not protected under Subsection | 0021| (e). The trustee or other liquidator, acting on behalf of all | 0022| entitlement holders having security entitlements with respect to a | 0023| particular financial asset, may recover the financial asset or interest | 0024| therein from the purchaser. If the trustee or other liquidator elects | 0025| not to pursue that right, an entitlement holder whose security | 0001| entitlement remains unsatisfied has the right to recover its interest in | 0002| the financial asset from the purchaser. | 0003| (e) An action based on the entitlement holder's property | 0004| interest with respect to a particular financial asset under Subsection | 0005| (a), whether framed in conversion, replevin, constructive trust, | 0006| equitable lien or other theory, may not be asserted against any | 0007| purchaser of a financial asset or interest therein who gives value, | 0008| obtains control and does not act in collusion with the securities | 0009| intermediary in violating the securities intermediary's obligations | 0010| under Section | 0011| 55-8-504 NMSA 1978." | 0012| Section 48. A new section of the Uniform Commercial Code, Section | 0013| 55-8-504 NMSA 1978, is enacted to read: | 0014| "55-8-504. DUTY OF SECURITIES INTERMEDIARY TO MAINTAIN FINANCIAL | 0015| ASSET.-- | 0016| (a) A securities intermediary shall promptly obtain and | 0017| thereafter maintain a financial asset in a quantity corresponding to the | 0018| aggregate of all security entitlements it has established in favor of | 0019| its entitlement holders with respect to that financial asset. The | 0020| securities intermediary may maintain those financial assets directly or | 0021| through one or more other securities intermediaries. | 0022| (b) Except to the extent otherwise agreed by its entitlement | 0023| holder, a securities intermediary may not grant any security interests | 0024| in a financial asset it is obligated to maintain pursuant to Subsection | 0025| (a). | 0001| (c) A securities intermediary satisfies the duty in | 0002| Subsection (a) if: | 0003| (1) the securities intermediary acts with respect to | 0004| the duty as agreed upon by the entitlement holder and the securities | 0005| intermediary; or | 0006| (2) in the absence of agreement, the securities | 0007| intermediary exercises due care in accordance with reasonable commercial | 0008| standards to obtain and maintain the financial asset. | 0009| (d) This section does not apply to a clearing corporation | 0010| that is itself the obligor of an option or similar obligation to which | 0011| its entitlement holders have security entitlements." | 0012| Section 49. A new section of the Uniform Commercial Code, Section | 0013| 55-8-505 NMSA 1978, is enacted to read: | 0014| "55-8-505. DUTY OF SECURITIES INTERMEDIARY WITH RESPECT TO | 0015| PAYMENTS AND DISTRIBUTIONS.-- | 0016| (a) A securities intermediary shall take action to obtain a | 0017| payment or distribution made by the issuer of a financial asset. A | 0018| securities intermediary satisfies the duty if: | 0019| (1) the securities intermediary acts with respect to | 0020| the duty as agreed upon by the entitlement holder and the securities | 0021| intermediary; or | 0022| (2) in the absence of agreement, the securities | 0023| intermediary exercises due care in accordance with reasonable commercial | 0024| standards to attempt to obtain the payment or distribution. | 0025| (b) A securities intermediary is obligated to its | 0001| entitlement holder for a payment or distribution made by the issuer of a | 0002| financial asset if the payment or distribution is received by the | 0003| securities intermediary." | 0004| Section 50. A new section of the Uniform Commercial Code, Section | 0005| 55-8-506 NMSA 1978, is enacted to read: | 0006| "55-8-506. DUTY OF SECURITIES INTERMEDIARY TO EXERCISE RIGHTS AS | 0007| DIRECTED BY ENTITLEMENT HOLDER.--A securities intermediary shall | 0008| exercise rights with respect to a financial asset if directed to do so | 0009| by an entitlement holder. A securities intermediary satisfies the duty | 0010| if: | 0011| (1) the securities intermediary acts with respect to | 0012| the duty as agreed upon by the entitlement holder and the securities | 0013| intermediary; or | 0014| (2) in the absence of agreement, the securities | 0015| intermediary either places the entitlement holder in a position to | 0016| exercise the rights directly or exercises due care in accordance with | 0017| reasonable commercial standards to follow the direction of the | 0018| entitlement holder." | 0019| Section 51. A new section of the Uniform Commercial Code, Section | 0020| 55-8-507 NMSA 1978, is enacted to read: | 0021| "55-8-507. DUTY OF SECURITIES INTERMEDIARY TO COMPLY WITH | 0022| ENTITLEMENT ORDER.-- | 0023| (a) A securities intermediary shall comply with an | 0024| entitlement order if the entitlement order is originated by the | 0025| appropriate person, the securities intermediary has had reasonable | 0001| opportunity to assure itself that the entitlement order is genuine and | 0002| authorized, and the securities intermediary has had reasonable | 0003| opportunity to comply with the entitlement order. A securities | 0004| intermediary satisfies the duty if: | 0005| (1) the securities intermediary acts with respect to | 0006| the duty as agreed upon by the entitlement holder and the securities | 0007| intermediary; or | 0008| (2) in the absence of agreement, the securities | 0009| intermediary exercises due care in accordance with reasonable commercial | 0010| standards to comply with the entitlement order. | 0011| (b) If a securities intermediary transfers a financial asset | 0012| pursuant to an ineffective entitlement order, the securities | 0013| intermediary shall reestablish a security entitlement in favor of the | 0014| person entitled to it and pay or credit any payments or distributions | 0015| that the person did not receive as a result of the wrongful transfer. | 0016| If the securities intermediary does not reestablish a security | 0017| entitlement, the securities intermediary is liable to the entitlement | 0018| holder for damages." | 0019| Section 52. A new section of the Uniform Commercial Code, Section | 0020| 55-8-508 NMSA 1978, is enacted to read: | 0021| "55-8-508. DUTY OF SECURITIES INTERMEDIARY TO CHANGE ENTITLEMENT | 0022| HOLDER'S POSITION TO OTHER FORM OF SECURITY HOLDING.--A securities | 0023| intermediary shall act at the direction of an entitlement holder to | 0024| change a security entitlement into another available form of holding for | 0025| which the entitlement holder is eligible or to cause the financial asset | 0001| to be transferred to a securities account of the entitlement holder with | 0002| another securities intermediary. A securities intermediary satisfies | 0003| the duty if: | 0004| (1) the securities intermediary acts as agreed upon by the | 0005| entitlement holder and the securities intermediary; or | 0006| (2) in the absence of agreement, the securities intermediary | 0007| exercises due care in accordance with reasonable commercial standards to | 0008| follow the direction of the entitlement holder." | 0009| Section 53. A new section of the Uniform Commercial Code, Section | 0010| 55-8-509 NMSA 1978, is enacted to read: | 0011| "55-8-509. SPECIFICATION OF DUTIES OF SECURITIES INTERMEDIARY BY | 0012| OTHER STATUTE OR REGULATION--MANNER OF PERFORMANCE OF DUTIES OF | 0013| SECURITIES INTERMEDIARY AND EXERCISE OF RIGHTS OF ENTITLEMENT HOLDER.-- | 0014| (a) If the substance of a duty imposed upon a securities | 0015| intermediary by Sections 55-8-504 through 55-8-508 NMSA 1978 is the | 0016| subject of other statute, regulation or rule, compliance with that | 0017| statute, regulation or rule satisfies the duty. | 0018| (b) To the extent that specific standards for the | 0019| performance of the duties of a securities intermediary or the exercise | 0020| of the rights of an entitlement holder are not specified by other | 0021| statute, regulation or rule or by agreement between the securities | 0022| intermediary and entitlement holder, the securities intermediary shall | 0023| perform its duties and the entitlement holder shall exercise its rights | 0024| in a commercially reasonable manner. | 0025| (c) The obligation of a securities intermediary to perform | 0001| the duties imposed by Sections 55-8-504 through | 0002| 55-8-508 NMSA 1978 is subject to: | 0003| (1) rights of the securities intermediary arising out | 0004| of a security interest under a security agreement with the entitlement | 0005| holder or otherwise; and | 0006| (2) rights of the securities intermediary under other | 0007| law, regulation, rule, or agreement to withhold performance of its | 0008| duties as a result of unfulfilled obligations of the entitlement holder | 0009| to the securities intermediary. | 0010| (d) Sections 55-8-504 through 55-8-508 NMSA 1978 do not | 0011| require a securities intermediary to take any action that is prohibited | 0012| by other statute, regulation, or rule." | 0013| Section 54. A new section of the Uniform Commercial Code, Section | 0014| 55-8-510 NMSA 1978, is enacted to read: | 0015| "55-8-510. RIGHTS OF PURCHASER OF SECURITY ENTITLEMENT FROM | 0016| ENTITLEMENT HOLDER.-- | 0017| (a) An action based on an adverse claim to a financial asset | 0018| or security entitlement, whether framed in conversion, replevin, | 0019| constructive trust, equitable lien or other theory, may not be asserted | 0020| against a person who purchases a security entitlement, or an interest | 0021| therein, from an entitlement holder if the purchaser gives value, does | 0022| not have notice of the adverse claim and obtains control. | 0023| (b) If an adverse claim could not have been asserted against | 0024| an entitlement holder under Section 55-8-502 NMSA 1978, the adverse | 0025| claim cannot be asserted against a person who purchases a security | 0001| entitlement, or an interest therein, from the entitlement holder. | 0002| (c) In a case not covered by the priority rules in Chapter | 0003| 55, Article 9 NMSA 1978, a purchaser for value of a security | 0004| entitlement, or an interest therein, who obtains control has priority | 0005| over a purchaser of a security entitlement, or an interest therein, who | 0006| does not obtain control. Purchasers who have control rank equally, | 0007| except that a securities intermediary as purchaser has priority over a | 0008| conflicting purchaser who has control unless otherwise agreed by the | 0009| securities intermediary." | 0010| Section 55. A new section of the Uniform Commercial Code, Section | 0011| 55-8-511 NMSA 1978, is enacted to read: | 0012| "55-8-511. PRIORITY AMONG SECURITY INTERESTS AND ENTITLEMENT | 0013| HOLDERS.-- | 0014| (a) Except as otherwise provided in Subsections (b) and (c), | 0015| if a securities intermediary does not have sufficient interests in a | 0016| particular financial asset to satisfy both its obligations to | 0017| entitlement holders who have security entitlements to that financial | 0018| asset and its obligation to a creditor of the securities intermediary | 0019| who has a security interest in that financial asset, the claims of | 0020| entitlement holders, other than the creditor, have priority over the | 0021| claim of the creditor. | 0022| (b) A claim of a creditor of a securities intermediary who | 0023| has a security interest in a financial asset held by a securities | 0024| intermediary has priority over claims of the securities intermediary's | 0025| entitlement holders who have security entitlements with respect to that | 0001| financial asset if the creditor has control over the financial asset. | 0002| (c) If a clearing corporation does not have sufficient | 0003| financial assets to satisfy both its obligations to entitlement holders | 0004| who have security entitlements with respect to a financial asset and its | 0005| obligation to a creditor of the clearing corporation who has a security | 0006| interest in that financial asset, the claim of the creditor has priority | 0007| over the claims of entitlement holders." | 0008| Section 56. Section 55-9-103 NMSA 1978 (being Laws 1961, Chapter | 0009| 96, Section 9-103, as amended) is amended to read: | 0010| "55-9-103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE STATE | 0011| TRANSACTIONS.-- | 0012| (1) Documents, instruments and ordinary goods. | 0013| (a) This subsection applies to documents and instru- | 0014| ments and to goods other than those covered by a certificate of title | 0015| described in Subsection (2) of this section, mobile goods described in | 0016| Subsection (3) of this section and minerals described in Subsection (5) | 0017| of this section. | 0018| (b) Except as otherwise provided in this subsection, | 0019| perfection and the effect of perfection or non-perfection of a security | 0020| interest in collateral are governed by the law of the jurisdiction where | 0021| the collateral is when the last event occurs on which is based the | 0022| assertion that the security interest is perfected or unperfected. | 0023| (c) If the parties to a transaction creating a | 0024| purchase money security interest in goods in one jurisdiction understand | 0025| at the time that the security interest attaches that the goods will be | 0001| kept in another jurisdiction, then the law of the other jurisdiction | 0002| governs the perfection and the effect of perfection or non-perfection of | 0003| the security interest from the time it attaches until thirty days after | 0004| the debtor receives possession of the goods and thereafter if the goods | 0005| are taken to the other jurisdiction before the end of the thirty-day | 0006| period. | 0007| (d) When collateral is brought into and kept in this | 0008| state while subject to a security interest perfected under the law of | 0009| the jurisdiction from which the collateral was removed, the security | 0010| interest remains perfected, but if action is required by Sections 55-9-301 through 55-9-318 NMSA 1978 to perfect the security interest: | 0011| (i) if the action is not taken before the | 0012| expiration of the period of perfection in the other jurisdiction or the | 0013| end of four months after the collateral is brought into this state, | 0014| whichever period first expires, the security interest becomes | 0015| unperfected at the end of that period and is thereafter deemed to have | 0016| been unperfected as against a person who became a purchaser after | 0017| removal; | 0018| (ii) if the action is taken before the expiration | 0019| of the period specified in Subparagraph (i) of this paragraph, the | 0020| security interest continues perfected thereafter; or | 0021| (iii) for the purpose of priority over a buyer of | 0022| consumer goods (Subsection (2) of Section 55-9-307 NMSA 1978), the | 0023| period of the effectiveness of a filing in the jurisdiction from which | 0024| the collateral is removed is governed by the rules with respect to | 0025| perfection in Subparagraphs (i) and (ii) of this paragraph. | 0001| (2) Certificate of title. | 0002| (a) This subsection applies to goods covered by a | 0003| certificate of title issued under a statute of this state or of another | 0004| jurisdiction under the law of which indication of a security interest on | 0005| the certificate is required as a condition of perfection. | 0006| (b) Except as otherwise provided in this subsection, | 0007| perfection and the effect of perfection or non-perfection of the | 0008| security interest are governed by the law (including the conflict of | 0009| laws rules) of the jurisdiction issuing the certificate until four | 0010| months after the goods are removed from that jurisdiction and thereafter | 0011| until the goods are registered in another jurisdiction, but in any event | 0012| not beyond surrender of the certificate. After the expiration of that | 0013| period, the goods are not covered by the certificate of title within the | 0014| meaning of this section. | 0015| (c) Except with respect to the rights of a buyer | 0016| described in the next paragraph, a security interest, perfected in | 0017| another jurisdiction otherwise than by notation on a certificate of | 0018| title, in goods brought into this state and thereafter covered by a | 0019| certificate of title issued by this state is subject to the rules stated | 0020| in Paragraph (d) of Subsection (1) of this section. | 0021| (d) If goods are brought into this state while a | 0022| security interest therein is perfected in any manner under the law of | 0023| the jurisdiction from which the goods are removed and a certificate of | 0024| title is issued by this state and the certificate does not show that the | 0025| goods are subject to the security interest or that they may be subject | 0001| to security interests not shown on the certificate, the security | 0002| interest is subordinate to the rights of a buyer of the goods who is not | 0003| in the business of selling goods of that kind to the extent that he | 0004| gives value and receives delivery of the goods after issuance of the | 0005| certificate and without knowledge of the security interest. | 0006| (3) Accounts, general intangibles and mobile goods. | 0007| (a) This subsection applies to accounts (other than an | 0008| account described in Subsection (5) of this section on minerals) and | 0009| general intangibles (other than uncertificated securities) and to goods | 0010| which are mobile and which are of a type normally used in more than one | 0011| jurisdiction, such as motor vehicles, trailers, rolling stock, | 0012| airplanes, shipping containers, road building and construction machinery | 0013| and commercial harvesting machinery and the like, if the goods are | 0014| equipment or are inventory leased or held for lease by the debtor to | 0015| others, and are not covered by a certificate of title described in | 0016| Subsection (2) of this section. | 0017| (b) The law (including the conflict of laws rules) of | 0018| the jurisdiction in which the debtor is located governs the perfection | 0019| and the effect of perfection or non-perfection of the security interest. | 0020| (c) If, however, the debtor is located in a | 0021| jurisdiction which is not a part of the United States and which does not | 0022| provide for perfection of the security interest by filing or recording | 0023| in that jurisdiction, the law of the jurisdiction in the United States | 0024| in which the debtor has its major executive office in the United States | 0025| governs the perfection and the effect of perfection or non-perfection of | 0001| the security interest through filing. In the alternative, if the debtor | 0002| is located in a jurisdiction which is not a part of the United States or | 0003| Canada and the collateral is accounts or general intangibles for money | 0004| due or to become due, the security interest may be perfected by | 0005| notification to the accounts debtor. As used in this paragraph, "United | 0006| States" includes its territories and possessions and the Commonwealth of | 0007| Puerto Rico. | 0008| (d) A debtor shall be deemed located at his place of | 0009| business if he has one, at his chief executive office if he has more | 0010| than one place of business, otherwise at his residence. If, however, | 0011| the debtor is a foreign air carrier under the Federal Aviation Act of | 0012| 1958, as amended, it shall be deemed located at the designated office of | 0013| the agent upon whom service of process may be made on behalf of the | 0014| foreign air carrier. | 0015| (e) A security interest perfected under the law of the | 0016| jurisdiction of the location of the debtor is perfected until the | 0017| expiration of four months after a change of the debtor's location to | 0018| another jurisdiction or until perfection would have ceased by the law of | 0019| the first jurisdiction, whichever period first expires. Unless | 0020| perfected in the new jurisdiction before the end of that period, it | 0021| becomes unperfected thereafter and is deemed to have been unperfected as | 0022| against a person who became a purchaser after the change. | 0023| (4) Chattel paper. | 0024| The rules stated for goods in Subsection (1) of this section | 0025| apply to a possessory security interest in chattel paper. The rules | 0001| stated for accounts in Subsection (3) of this section apply to a | 0002| nonpossessory security interest in chattel paper, but the security | 0003| interest may not be perfected by notification to the account debtor. | 0004| (5) Minerals. | 0005| Perfection and the effect of perfection or non-perfection of | 0006| a security interest which is created by a debtor who has an interest in | 0007| minerals or the like (including oil and gas) before extraction and which | 0008| attaches thereto as extracted or which attaches to an account resulting | 0009| from the sale thereof at the wellhead or minehead are governed by the | 0010| law (including the conflict of laws rules) of the jurisdiction wherein | 0011| the wellhead or minehead is located. | 0012| (6) Investment property. | 0013| (a) This subsection applies to investment property. | 0014| (b) Except as otherwise provided in Paragraph (f), | 0015| during the time that a security certificate is located in a | 0016| jurisdiction, perfection of a security interest, the effect of | 0017| perfection or non-perfection and the priority of a security interest in | 0018| the certified security represented thereby are governed by the local law | 0019| of that jurisdiction. | 0020| (c) Except as otherwise provided in Paragraph (f), | 0021| perfection of a security interest, the effect of perfection or non-perfection and the priority of a security interest in an uncertificated | 0022| security are governed by the local law of the issuer's jurisdiction as | 0023| specified in Section 8-110(d). | 0024| (d) Except as otherwise provided in Paragraph (f), | 0025| perfection of a security interest, the effect of perfection or non-perfection and the priority of a security interest in a security | 0001| entitlement or securities account are governed by the local law of the | 0002| securities intermediary's jurisdiction as specified in Section 8-110(e). | 0003| (e) Except as otherwise provided in Paragraph (f), | 0004| perfection of a security interest, the effect of perfection or non-perfection and the priority of a security interest in a commodity | 0005| contract or commodity account are governed by the local law of the | 0006| commodity intermediary's jurisdiction. The following rules determine a | 0007| "commodity intermediary's jurisdiction" for purposes of this paragraph: | 0008| (i) if an agreement between the commodity | 0009| intermediary and commodity customer specifies that it is governed by the | 0010| law of a particular jurisdiction, that jurisdiction is the commodity | 0011| intermediary's jurisdiction; | 0012| (ii) if an agreement between the commodity | 0013| intermediary and commodity customer does not specify the governing law | 0014| as provided in Subparagraph (i), but expressly specifies that the | 0015| commodity account is maintained at an office in a particular | 0016| jurisdiction, that jurisdiction is the commodity intermediary's | 0017| jurisdiction; | 0018| (iii) if an agreement between the commodity | 0019| intermediary and commodity customer does not specify a jurisdiction as | 0020| provided in Subparagraphs (i) or (ii), the commodity intermediary's | 0021| jurisdiction is the jurisdiction in which is located the office | 0022| identified in an account statement as the office serving the commodity | 0023| customer's account; and | 0024| (iv) if an agreement between the commodity | 0025| intermediary and commodity customer does not specify a jurisdiction as | 0001| provided in Subparagraphs (i) or (ii) and an account statement does not | 0002| identify an office serving the commodity customer's account as provided | 0003| in Subparagraph (iii), the commodity intermediary's jurisdiction is the | 0004| jurisdiction in which is located the chief executive office of the | 0005| commodity intermediary. | 0006| (f) Perfection of a security interest by filing, | 0007| automatic perfection of a security interest in investment property | 0008| granted by a broker or securities intermediary and automatic perfection | 0009| of a security interest in a commodity contract or commodity account | 0010| granted by a commodity intermediary are governed by the local law of the | 0011| jurisdiction in which the debtor is located. The rules in Paragraphs | 0012| (c), (d) and (e) of Subsection (3) of this section apply to security | 0013| interests to which this paragraph applies." | 0014| Section 57. Section 55-9-105 NMSA 1978 (being Laws 1961, Chapter | 0015| 96, Section 9-105, as amended) is amended to read: | 0016| "55-9-105. DEFINITIONS AND INDEX OF DEFINITIONS.-- | 0017| (1) In Chapter 55, Article 9 NMSA 1978, unless the context | 0018| otherwise requires: | 0019| (a) "account debtor" means the person who is obligated | 0020| on an account, chattel paper or general intangible; | 0021| (b) "chattel paper" means a writing or writings which | 0022| evidence both a monetary obligation and a security interest in or a | 0023| lease of specific goods, but a charter or other contract involving the | 0024| use or hire of a vessel is not chattel paper. When a transaction is | 0025| evidenced both by such a security agreement or a lease and by an | 0001| instrument or a series of instruments, the group of writings taken | 0002| together constitutes chattel paper; | 0003| (c) "collateral" means the property subject to a | 0004| security interest and includes accounts and chattel paper which have | 0005| been sold; | 0006| (d) "debtor" means the person who owes payment or | 0007| other performance of the obligation secured, whether or not he owns or | 0008| has rights in the collateral, and includes the seller of accounts or | 0009| chattel paper. Where the debtor and the owner of the collateral are not | 0010| the same person, the term "debtor" means the owner of the collateral in | 0011| any provision of the article dealing with the collateral, the obligor in | 0012| any provision dealing with the obligation and may include both where the | 0013| context so requires; | 0014| (e) "deposit account" means a demand, time, savings, | 0015| passbook or like account maintained with a bank, savings and loan | 0016| association, credit union or like organization, other than an account | 0017| evidenced by a certificate of deposit; | 0018| (f) "document" means document of title as defined in | 0019| the general definitions of Article 1 (Section | 0020| 55-1-201 NMSA 1978) and a receipt of the kind described in Subsection | 0021| (2) of Section 55-7-201 NMSA 1978; | 0022| (g) "encumbrance" includes real estate mortgages and | 0023| other liens on real estate and all other rights in real estate that are | 0024| not ownership interests; | 0025| (h) "goods" includes all things which are movable at | 0001| the time the security interest attaches or which are fixtures (Section | 0002| 55-9-313 NMSA 1978), but does not include money, documents, instruments, | 0003| investment property, commodity contracts, accounts, chattel paper, | 0004| general intangibles or minerals or the like (including oil and gas) | 0005| before extraction. "Goods" also includes standing timber which is to be | 0006| cut and removed under a conveyance or contract for sale, the unborn | 0007| young of animals and growing crops; | 0008| (i) "instrument" means a negotiable instrument | 0009| (defined in Section 55-3-104 NMSA 1978) or any other writing which | 0010| evidences a right to the payment of money and is not itself a security | 0011| agreement or lease and is of a type which is in ordinary course of | 0012| business transferred by delivery with any necessary indorsement or | 0013| assignment. The term does not include investment property; | 0014| (j) "mortgage" means a consensual interest created by | 0015| a real estate mortgage, a trust deed on real estate or the like; | 0016| (k) an advance is made "pursuant to commitment" if the | 0017| secured party has bound himself to make it, whether or not a subsequent | 0018| event of default or other event not within his control has relieved or | 0019| may relieve him from his obligation; | 0020| (l) "security agreement" means an agreement which | 0021| creates or provides for a security interest; | 0022| (m) "secured party" means a lender, seller or other | 0023| person in whose favor there is a security interest, including a person | 0024| to whom accounts or chattel paper have been sold. When the holders of | 0025| obligations issued under an indenture of trust, equipment trust | 0001| agreement or the like are represented by a trustee or other person, the | 0002| representative is the secured party; and | 0003| (n) "transmitting utility" means any person primarily | 0004| engaged in the railroad, street railway or trolley bus business, the | 0005| electric or electronics communications transmission business, the | 0006| transmission of goods by pipeline or the transmission or the production | 0007| and transmission of electricity, steam, gas or water or the provision of | 0008| sewer service. | 0009| (2) Other definitions applying to Chapter 55, Article 9 NMSA | 0010| 1978 and the sections in which they appear are: | 0011| "account". Section 55-9-106 NMSA 1978; | 0012| "attach". Section 55-9-203 NMSA 1978; | 0013| "commodity contract". Section 55-9-115 NMSA 1978; | 0014| "commodity customer". Section 55-9-115 NMSA 1978; | 0015| "commodity intermediary". Section 55-9-115 NMSA 1978; | 0016| "construction mortgage". Subsection 1 of Section | 0017| 55-9-313 NMSA 1978; | 0018| "consumer goods". Subsection (1) of Section | 0019| 55-9-109 NMSA 1978; | 0020| "control". Section 55-9-115 NMSA 1978; | 0021| "equipment". Subsection (2) of Section 55-9-109 NMSA 1978; | 0022| "farm products". Subsection (3) of Section 55-9-109 NMSA | 0023| 1978; | 0024| "fixture". Section 55-9-313 NMSA 1978; | 0025| "fixture filing". Section 55-9-313 NMSA 1978; | 0001| "general intangibles". Section 55-9-106 NMSA 1978; | 0002| "inventory". Subsection (4) of Section 55-9-109 NMSA 1978; | 0003| "investment property". Section 55-9-115 NMSA 1978; | 0004| "lien creditor". Subsection (3) of Section 55-9-301 NMSA | 0005| 1978; | 0006| "proceeds". Subsection (1) of Section 55-9-306 NMSA 1978; | 0007| "purchase money security interest". Section | 0008| 55-9-107 NMSA 1978; and | 0009| "United States". Section 55-9-103 NMSA 1978. | 0010| (3) The following definitions in other articles apply to | 0011| Chapter 55, Article 9 NMSA 1978: | 0012| "broker". Section 55-8-102 NMSA 1978; | 0013| "certificated security". Section 55-8-102 NMSA 1978; | 0014| "check". Section 55-3-104 NMSA 1978; | 0015| "clearing corporation". Section 55-8-102 NMSA 1978; "contract for sale". Section 55-2-106 NMSA 1978; | 0016| "control". Section 55-8-106 NMSA 1978; | 0017| "delivery". Section 55-8-301 NMSA 1978; | 0018| "entitlement holder". Section 55-8-102 NMSA 1978; | 0019| "financial asset". Section 55-8-102 NMSA 1978; | 0020| "holder in due course". Section 55-3-302 NMSA 1978; | 0021| "note". Section 55-3-104 NMSA 1978; | 0022| "sale". Section 55-2-106 NMSA 1978; | 0023| "securities intermediary". Section 55-8-102 NMSA 1978; | 0024| "security". Section 55-8-102 NMSA 1978; | 0025| "security certificate". Section 55-8-102 NMSA 1978; and | 0001| "security entitlement". Section 55-8-102 NMSA 1978. | 0002| (4) In addition, Chapter 55, Article 1 NMSA 1978 contains | 0003| general definitions and principles of construction and interpretation | 0004| applicable throughout Chapter 55, Article 9 NMSA 1978." | 0005| Section 58. Section 55-9-106 NMSA 1978 (being Laws 1961, Chapter | 0006| 96, Section 9-106, as amended) is amended to read: | 0007| "55-9-106. DEFINITIONS--"ACCOUNT"--"GENERAL | 0008| INTANGIBLES".--"Account" means any right to payment for goods sold or | 0009| leased or for services rendered which is not evidenced by an instrument | 0010| or chattel paper, whether or not it has been earned by performance. | 0011| "General intangibles" means any personal property (including things in | 0012| action) other than goods, accounts, chattel paper, documents, | 0013| instruments, investment property and money. All rights to payment | 0014| earned or unearned under a charter or other contract involving the use | 0015| or hire of a vessel and all rights incident to the charter or contract | 0016| are accounts." | 0017| Section 59. A new section of the Uniform Commercial Code, Section | 0018| 55-9-115 NMSA 1978, is enacted to read: | 0019| "55-9-115. INVESTMENT PROPERTY.-- | 0020| (1) In this Article: | 0021| (a) "commodity account" means an account maintained by | 0022| a commodity intermediary in which a commodity contract is carried for a | 0023| commodity customer; | 0024| (b) "commodity contract" means a commodity futures | 0025| contract, an option on a commodity futures contract, a commodity option | 0001| or other contract that, in each case, is: | 0002| (i) traded on or subject to the rules of a board | 0003| of trade that has been designated as a contract market for such a | 0004| contract pursuant to the federal commodities laws; or | 0005| (ii) traded on a foreign commodity board of | 0006| trade, exchange or market and is carried on the books of a commodity | 0007| intermediary for a commodity customer; | 0008| (c) "commodity customer" means a person for whom a | 0009| commodity intermediary carries a commodity contract on its books; | 0010| (d) "commodity intermediary" means: | 0011| (i) a person who is registered as a futures | 0012| commission merchant under the federal commodities laws; or | 0013| (ii) a person who in the ordinary course of its | 0014| business provides clearance or settlement services for a board of trade | 0015| that has been designated as a contract market pursuant to the federal | 0016| commodities laws; | 0017| (e) "control" with respect to a certificated security, | 0018| uncertificated security or security entitlement has the meaning | 0019| specified in Section 8-106. A secured party has control over a | 0020| commodity contract if by agreement among the commodity customer, the | 0021| commodity intermediary, and the secured party, the commodity | 0022| intermediary, has agreed that it will apply any value distributed on | 0023| account of the commodity contract as directed by the secured party | 0024| without further consent by the commodity customer. If a commodity | 0025| customer grants a security interest in a commodity contract to its own | 0001| commodity intermediary, the commodity intermediary as secured party has | 0002| control. A secured party has control over a securities account or | 0003| commodity account if the secured party has control over all security | 0004| entitlements or commodity contracts carried in the securities account or | 0005| commodity account; and | 0006| (f) "investment property" means: | 0007| (i) a security, whether certificated or | 0008| uncertificated; | 0009| (ii) a security entitlement; | 0010| (iii) a securities account; | 0011| (iv) a commodity contract; or | 0012| (v) a commodity account. | 0013| (2) Attachment or perfection of a security interest in a | 0014| securities account is also attachment or perfection of a security | 0015| interest in all security entitlements carried in the securities account. | 0016| Attachment or perfection of a security interest in a commodity account | 0017| is also attachment or perfection of a security interest in all commodity | 0018| contracts carried in the commodity account. | 0019| (3) A description of collateral in a security agreement or | 0020| financing statement is sufficient to create or perfect a security | 0021| interest in a certificated security, uncertificated security, security | 0022| entitlement, securities account, commodity contract or commodity account | 0023| whether it describes the collateral by those terms or as investment | 0024| property or by description of the underlying security, financial asset | 0025| or commodity contract. A description of investment property collateral | 0001| in a security agreement or financing statement is sufficient if it | 0002| identifies the collateral by specific listing, by category, by quantity, | 0003| by a computational or allocational formula or procedure or by any other | 0004| method, if the identity of the collateral is objectively determinable. | 0005| (4) Perfection of a security interest in investment property | 0006| is governed by the following rules: | 0007| (a) a security interest in investment property may be | 0008| perfected by control; | 0009| (b) except as otherwise provided in Paragraphs (c) and | 0010| (d), a security interest in investment property may be perfected by | 0011| filing; | 0012| (c) if the debtor is a broker or securities | 0013| intermediary a security interest in investment property is perfected | 0014| when it attaches. The filing of a financing statement with respect to a | 0015| security interest in investment property granted by a broker or | 0016| securities intermediary has no effect for purposes of perfection or | 0017| priority with respect to that security interest; and | 0018| (d) if a debtor is a commodity intermediary, a | 0019| security interest in a commodity contract or a commodity account is | 0020| perfected when it attaches. The filing of a financing statement with | 0021| respect to a security interest in a commodity contract or a commodity | 0022| account granted by a commodity intermediary has no effect for purposes | 0023| of perfection or priority with respect to that security interest. | 0024| (5) Priority between conflicting security interests in the | 0025| same investment property is governed by the following rules: | 0001| (a) a security interest of a secured party who has | 0002| control over investment property has priority over a security interest | 0003| of a secured party who does not have control over the investment | 0004| property; | 0005| (b) except as otherwise provided in Paragraphs (c) and | 0006| (d), conflicting security interests of secured parties, each of whom has | 0007| control, rank equally; | 0008| (c) except as otherwise agreed by the securities | 0009| intermediary, a security interest in a security entitlement or a | 0010| securities account granted to the debtor's own securities intermediary | 0011| has priority over any security interest granted by the debtor to another | 0012| secured party; | 0013| (d) except as otherwise agreed by the commodity | 0014| intermediary, a security interest in a commodity contract or a commodity | 0015| account granted to the debtor's own commodity intermediary has priority | 0016| over any security interest granted by the debtor to another secured | 0017| party; | 0018| (e) conflicting security interests granted by a | 0019| broker, a securities intermediary or a commodity intermediary which are | 0020| perfected without control rank equally; and | 0021| (f) in all other cases, priority between conflicting | 0022| security interests in investment property is governed by Section | 0023| 9-312(5), (6) and (7). Section 9-312(4) | 0024| does not apply to investment property. | 0025| (6) If a security certificate in registered form is | 0001| delivered to a secured party pursuant to agreement, a written security | 0002| agreement is not required for attachment or enforceability of the | 0003| security interest, delivery suffices for perfection of the security | 0004| interest and the security interest has priority over a conflicting | 0005| security interest perfected by means other than control, even if a | 0006| necessary indorsement is lacking." | 0007| Section 60. A new section of the Uniform Commercial Code, Section | 0008| 55-9-116 NMSA 1978, is enacted to read: | 0009| "55-9-116. SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF | 0010| FINANCIAL ASSET.-- | 0011| (1) If a person buys a financial asset through a securities | 0012| intermediary in a transaction in which the buyer is obligated to pay the | 0013| purchase price to the securities intermediary at the time of the | 0014| purchase, and the securities intermediary credits the financial asset to | 0015| the buyer's securities account before the buyer pays the securities | 0016| intermediary, the securities intermediary has a security interest in the | 0017| buyer's security entitlement securing the buyer's obligation to pay. A | 0018| security agreement is not required for attachment or enforceability of | 0019| the security interest, and the security interest is automatically | 0020| perfected. | 0021| (2) If a certificated security or other financial asset | 0022| represented by a writing which in the ordinary course of business is | 0023| transferred by delivery with any necessary indorsement or assignment is | 0024| delivered pursuant to an agreement between persons in the business of | 0025| dealing with such securities or financial assets and the agreement calls | 0001| for delivery versus payment, the person delivering the certificate or | 0002| other financial asset has a security interest in the certificated | 0003| security or other financial asset securing the seller's right to receive | 0004| payment. A security agreement is not required for attachment or | 0005| enforceability of the security interest, and the security interest is | 0006| automatically perfected." | 0007| Section 61. Section 55-9-203 NMSA 1978 (being Laws 1961, Chapter | 0008| 96, Section 9-203, as amended) is amended to read: | 0009| "55-9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST--PROCEEDS--FORMAL REQUISITES.-- | 0010| (1) Subject to the provisions of Section 55-4-210 NMSA 1978 | 0011| on the security interest of a collecting bank, Sections 55-9-115 and 55-9-116 NMSA 1978 on security interests in investment property and Section | 0012| 55-9-113 NMSA 1978 on a security interest arising under the article on | 0013| sales (Article 2) or the article on leases (Article 2A), a security | 0014| interest is not enforceable against the debtor or third parties with | 0015| respect to the collateral and does not attach unless: | 0016| (a) the collateral is in the possession of the secured | 0017| party pursuant to agreement, the collateral is investment property and | 0018| the secured party has control pursuant to agreement, or the debtor has | 0019| signed a security agreement that contains a description of the | 0020| collateral and in addition, when the security interest covers crops | 0021| growing or to be grown or timber to be cut, a description of the land | 0022| concerned; | 0023| (b) value has been given; and | 0024| (c) the debtor has rights in the collateral. | 0025| (2) A security interest attaches when it becomes enforceable | 0001| against the debtor with respect to the collateral. Attachment occurs as | 0002| soon as all of the events specified in Subsection (1) of this section | 0003| have taken place unless explicit agreement postpones the time of | 0004| attaching. | 0005| (3) Unless otherwise agreed, a security agreement gives the | 0006| secured party the rights to proceeds provided by Section 55-9-306 NMSA | 0007| 1978. | 0008| (4) A transaction, although subject to Chapter 55, Article 9 | 0009| NMSA 1978, is also subject to the Oil and Gas Products Lien Act; | 0010| Sections 56-1-1 through 56-1-15 NMSA 1978 (pertaining to retail | 0011| installment sales); Sections 56-12-1 through 56-12-16 NMSA 1978 | 0012| (pertaining to credit extended by pawnbrokers); the New Mexico Bank | 0013| Installment Loan Act of 1959; the New Mexico Small Loan Act of 1955; and | 0014| the Motor Vehicle Sales Finance Act. In the case of conflict between | 0015| the provisions of Chapter 55, Article 9 NMSA 1978 and any such statute, | 0016| the provisions of such statute control. Failure to comply with any | 0017| applicable statute has only the effect which is specified therein." | 0018| Section 62. Section 55-9-301 NMSA 1978 (being Laws 1961, Chapter | 0019| 96, Section 9-301, as amended) is amended to read: | 0020| "55-9-301. PERSONS WHO TAKE PRIORITY OVER UNPERFECTED SECURITY | 0021| INTERESTS--RIGHT OF "LIEN CREDITOR".-- | 0022| (1) Except as otherwise provided in Subsection (2) of this | 0023| section, an unperfected security interest is subordinate to the rights | 0024| of: | 0025| (a) persons entitled to priority under Section 55-9-312 NMSA 1978; | 0001| (b) a person who becomes a lien creditor before the | 0002| security interest is perfected; | 0003| (c) in the case of goods, instruments, documents and | 0004| chattel paper, a person who is not a secured party and who is a | 0005| transferee in bulk or other buyer not in ordinary course of business or | 0006| is a buyer of farm products in ordinary course of business, to the | 0007| extent that he gives value and receives delivery of the collateral | 0008| without knowledge of the security interest and before it is perfected; | 0009| and | 0010| (d) in the case of accounts, general intangibles and | 0011| investment property, a person who is not a secured party and who is a | 0012| transferee to the extent that he gives value without knowledge of the | 0013| security interest and before it is perfected. | 0014| (2) If the secured party files with respect to a purchase | 0015| money security interest before or within twenty days after the debtor | 0016| receives possession of the collateral, he takes priority over the rights | 0017| of a transferee in bulk or of a lien creditor which arise between the | 0018| time the security interest attaches and the time of filing. | 0019| (3) A "lien creditor" means a creditor who has acquired a | 0020| lien on the property involved by attachment, levy or the like and | 0021| includes an assignee for benefit of creditors from the time of | 0022| assignment and a trustee in bankruptcy from the date of the filing of | 0023| the petition or a receiver in equity from the time of appointment. | 0024| (4) A person who becomes a lien creditor while a security | 0025| interest is perfected takes subject to the security interest only to the | 0001| extent that it secures advances made before he becomes a lien creditor | 0002| or within forty-five days thereafter or made without knowledge of the | 0003| lien or pursuant to a commitment entered into without knowledge of the | 0004| lien." | 0005| Section 63. Section 55-9-302 NMSA 1978 (being Laws 1961, Chapter | 0006| 96, Section 9-302, as amended) is amended to read: | 0007| "55-9-302. WHEN FILING IS REQUIRED TO PERFECT SECURITY INTEREST--SECURITY INTERESTS TO WHICH FILING PROVISIONS OF THIS ARTICLE DO NOT | 0008| APPLY.-- | 0009| (1) A financing statement must be filed to perfect all | 0010| security interests except the following: | 0011| (a) a security interest in collateral in possession of | 0012| the secured party under Section 55-9-305 NMSA 1978; | 0013| (b) a security interest temporarily perfected in | 0014| instruments, certificated securities or documents without delivery under | 0015| Section 55-9-304 NMSA 1978 or in proceeds for a ten-day period under | 0016| Section 55-9-306 NMSA 1978; | 0017| (c) a security interest created by an assignment of a | 0018| beneficial interest in a trust or a decedent's estate; | 0019| (d) a purchase money security interest in consumer | 0020| goods; but filing is required for a motor vehicle required to be | 0021| registered; and fixture filing is required for priority over conflicting | 0022| interests in fixtures to the extent provided in Section 55-9-313 NMSA | 0023| 1978; | 0024| (e) an assignment of accounts that does not alone or | 0025| in conjunction with other assignments to the same assignee transfer a | 0001| significant part of the outstanding accounts of the assignor; | 0002| (f) a security interest of a collecting bank (Section | 0003| 55-4-210 NMSA 1978) or arising under the article on sales (Article 2) | 0004| or the article on leases (Article 2A) (see Section 55-9-113 NMSA 1978) | 0005| or covered in Subsection (3) of this section; | 0006| (g) an assignment for the benefit of all the creditors | 0007| of the transferor and subsequent transfers by the assignee thereunder; | 0008| or | 0009| (h) a security interest in personal property which is | 0010| perfected without filing under Section 55-9-515 | 0011| or 55-9-116 NMSA 1978. | 0012| (2) If a secured party assigns a perfected security | 0013| interest, no filing under this article is required in order to continue | 0014| the perfected status of the security interest against creditors of and | 0015| transferees from the original debtor. | 0016| (3) The filing of a financing statement otherwise required | 0017| by Chapter 55, Article 9 NMSA 1978 is not necessary or effective to | 0018| perfect a security interest in property subject to: | 0019| (a) a statute or treaty of the United States that | 0020| provides for a national or international registration or a national or | 0021| international certificate of title or that specifies a place of filing | 0022| different from that specified in this article for filing of the security | 0023| interest; | 0024| (b) the following statutes of this state: Sections | 0025| 66-3-201 through 66-3-204 of the Motor Vehicle Code and any other | 0001| certificate of title statute covering automobiles, trailers, mobile | 0002| homes, boats, farm tractors or the like; but during any period in which | 0003| collateral is inventory held for sale by a person who is in the business | 0004| of selling goods of that kind, the filing provisions of Chapter 55, | 0005| Article 9 NMSA 1978 apply to a security interest in that collateral | 0006| created by him as debtor; or | 0007| (c) a certificate of title statute of another | 0008| jurisdiction under the law of which indication of a security interest on | 0009| the certificate is required as a condition of perfection (Subsection (2) | 0010| of Section 55-9-103 NMSA 1978). | 0011| (4) Compliance with a statute or treaty described in | 0012| Subsection (3) of this section is equivalent to the filing of a | 0013| financing statement under Chapter 55, Article 9 NMSA 1978, and a | 0014| security interest in property subject to the statute or treaty can be | 0015| perfected only by compliance therewith except as provided in Section 55-9-103 NMSA 1978 on multiple state transactions. Duration and renewal of | 0016| perfection of a security interest perfected by compliance with the | 0017| statute or treaty are governed by the provisions of the statute or | 0018| treaty; in other respects the security interest is subject to Chapter | 0019| 55, Article 9 NMSA 1978." | 0020| Section 64. Section 55-9-304 NMSA 1978 (being Laws 1961, Chapter | 0021| 96, Section 9-304, as amended) is amended to read: | 0022| "55-9-304. PERFECTION OF SECURITY INTEREST IN INSTRUMENTS, | 0023| DOCUMENTS AND GOODS COVERED BY DOCUMENTS--PERFECTION BY PERMISSIVE | 0024| FILING--TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION.-- | 0025| (1) A security interest in chattel paper or negotiable | 0001| documents may be perfected by filing. A security interest in money or | 0002| instruments (other than instruments which constitute part of chattel | 0003| paper) can be perfected only by the secured party's taking possession, | 0004| except as provided in Subsections (4) and (5) of this section and | 0005| Subsections (2) and (3) of Section 55-9-306 NMSA 1978 on proceeds. | 0006| (2) During the period that goods are in the possession of | 0007| the issuer of a negotiable document therefor, a security interest in the | 0008| goods is perfected by perfecting a security interest in the document, | 0009| and any security interest in the goods otherwise perfected during such | 0010| period is subject thereto. | 0011| (3) A security interest in goods in the possession of a | 0012| bailee other than one who has issued a negotiable document therefor is | 0013| perfected by issuance of a document in the name of the secured party or | 0014| by the bailee's receipt of notification of the secured party's interest | 0015| or by filing as to the goods. | 0016| (4) A security interest in instruments, certificated | 0017| securities or negotiable documents is perfected without filing or the | 0018| taking of possession for a period of twenty-one days from the time it | 0019| attaches to the extent that it arises for new value given under a | 0020| written security agreement. | 0021| (5) A security interest remains perfected for a period of | 0022| twenty-one days without filing where a secured party having a perfected | 0023| security interest in an instrument, a certificated security, a | 0024| negotiable document or goods in possession of a bailee other than one | 0025| who has issued a negotiable document therefor: | 0001| (a) makes available to the debtor the goods or | 0002| documents representing the goods for the purpose of ultimate sale or | 0003| exchange or for the purpose of loading, unloading, storing, shipping, | 0004| transhipping, manufacturing, processing or otherwise dealing with them | 0005| in a manner preliminary to their sale or exchange, but priority between | 0006| conflicting security interests in the goods is subject to Subsection (3) | 0007| of Section 55-9-312 NMSA 1978; or | 0008| (b) delivers the instrument or certificated security | 0009| to the debtor for the purpose of ultimate sale or exchange or of | 0010| presentation, collection, renewal or registration of transfer. | 0011| (6) After the twenty-one-day period in Subsections (4) and | 0012| (5) of this section, perfection depends upon compliance with applicable | 0013| provisions of Chapter 55, Article 9 NMSA 1978." | 0014| Section 65. Section 55-9-305 NMSA 1978 (being Laws 1961, Chapter | 0015| 96, Section 9-305, as amended) is amended to read: | 0016| "55-9-305. WHEN POSSESSION BY SECURED PARTY PERFECTS SECURITY | 0017| INTEREST WITHOUT FILING.--A security interest in letters of credit and | 0018| advices of credit (Paragraph (a) of Subsection 2 of Section 55-5-116 | 0019| NMSA 1978), goods, instruments, money, negotiable documents or chattel | 0020| paper may be perfected by the secured party's taking possession of the | 0021| collateral. If such collateral other than goods covered by a negotiable | 0022| document is held by a bailee, the secured party is deemed to have | 0023| possession from the time the bailee receives notification of the secured | 0024| party's interest. A security interest is perfected by possession from | 0025| the time possession is taken without relation back and continues only so | 0001| long as possession is retained, unless otherwise specified in Chapter | 0002| 55, Article 9 NMSA 1978. The security interest may be otherwise | 0003| perfected as provided in that article before or after the period of | 0004| possession by the secured party." | 0005| Section 66. Section 55-9-306 NMSA 1978 (being Laws 1961, Chapter | 0006| 96, Section 9-306, as amended) is amended to read: | 0007| "55-9-306. "PROCEEDS"--SECURED PARTY'S RIGHTS ON DISPOSITION OF | 0008| COLLATERAL.-- | 0009| (1) "Proceeds" includes whatever is received upon the sale, | 0010| exchange, collection or other disposition of collateral or proceeds. | 0011| Insurance payable by reason of loss or damage to the collateral is | 0012| proceeds, except to the extent that it is payable to a person other than | 0013| a party to the security agreement. Any payments or distributions made | 0014| with respect to investment property collateral are proceeds. Money, | 0015| checks, deposit accounts and the like are "cash proceeds". All other | 0016| proceeds are "non-cash proceeds". | 0017| (2) Except where Chapter 55, Article 9 NMSA 1978 otherwise | 0018| provides, a security interest continues in collateral notwithstanding | 0019| sale, exchange or other disposition thereof unless the disposition was | 0020| authorized by the secured party in the security agreement or otherwise | 0021| and also continues in any identifiable proceeds, including collections, | 0022| received by the debtor. | 0023| (3) The security interest in proceeds is a continuously | 0024| perfected security interest if the interest in the original collateral | 0025| was perfected, but it ceases to be a perfected security interest and | 0001| becomes unperfected ten days after receipt of the proceeds by the debtor | 0002| unless: | 0003| (a) a filed financing statement covers the original | 0004| collateral and the proceeds are collateral in which a security interest | 0005| may be perfected by filing in the office or offices where the financing | 0006| statement has been filed and, if the proceeds are acquired with cash | 0007| proceeds, the description of collateral in the financing statement | 0008| indicates the types of property constituting the proceeds; | 0009| (b) a filed financing statement covers the original | 0010| collateral and the proceeds are identifiable cash proceeds; | 0011| (c) the original collateral was investment property | 0012| and the proceeds are identifiable cash proceeds; or | 0013| (d) the security interest in the proceeds is perfected | 0014| before the expiration of the ten-day period. | 0015| Except as provided in this section, a security interest in proceeds can | 0016| be perfected only by the methods or under the circumstances permitted in | 0017| Chapter 55, Article 9 NMSA 1978 for original collateral of the same | 0018| type. | 0019| (4) In the event of insolvency proceedings instituted by or | 0020| against a debtor, a secured party with a perfected security interest in | 0021| proceeds has a perfected security interest only in the following | 0022| proceeds: | 0023| (a) in identifiable non-cash proceeds and in separate | 0024| deposit accounts containing only proceeds; | 0025| (b) in identifiable cash proceeds in the form of money | 0001| which is neither commingled with other money nor deposited in a deposit | 0002| account prior to the insolvency proceedings; | 0003| (c) in identifiable cash proceeds in the form of | 0004| checks and the like which are not deposited in a deposit account prior | 0005| to the insolvency proceedings; and | 0006| (d) in all cash and deposit accounts of the debtor in | 0007| which proceeds have been commingled with other funds, but the perfected | 0008| security interest under this Paragraph (d) is: | 0009| (i) subject to any right of set-off; and | 0010| (ii) limited to an amount not greater than the | 0011| amount of any cash proceeds received by the debtor within ten days | 0012| before the institution of the insolvency proceedings less the sum of (I) | 0013| the payments to the secured party on account of cash proceeds received | 0014| by the debtor during such period and (II) the cash proceeds received by | 0015| the debtor during such period to which the secured party is entitled | 0016| under Paragraphs (a) through (c) of this Subsection. | 0017| (5) If a sale of goods results in an account or chattel | 0018| paper which is transferred by the seller to a secured party, and if the | 0019| goods are returned to or are repossessed by the seller or the secured | 0020| party, the following rules determine priorities: | 0021| (a) if the goods were collateral at the time of sale, | 0022| for an indebtedness of the seller which is still unpaid, the original | 0023| security interest attaches again to the goods and continues as a | 0024| perfected security interest if it was perfected at the time when the | 0025| goods were sold. If the security interest was originally perfected by a | 0001| filing which is still effective, nothing further is required to continue | 0002| the perfected status; in any other case, the secured party must take | 0003| possession of the returned or repossessed goods or must file; | 0004| (b) an unpaid transferee of the chattel paper has a | 0005| security interest in the goods against the transferor. Such security | 0006| interest is prior to a security interest asserted under Paragraph (a) of | 0007| this subsection to the extent that the transferee of the chattel paper | 0008| was entitled to priority under Section 55-9-308 NMSA 1978; | 0009| (c) an unpaid transferee of the account has a security | 0010| interest in the goods against the transferor. Such security interest is | 0011| subordinate to a security interest asserted under Paragraph (a) of this | 0012| subsection; and | 0013| (d) a security interest of an unpaid transferee | 0014| asserted under Paragraph (b) or (c) of this subsection must be perfected | 0015| for protection against creditors of the transferor and purchasers of the | 0016| returned or repossessed goods." | 0017| Section 67. Section 55-9-309 NMSA 1978 (being Laws 1961, Chapter | 0018| 96, Section 9-309, as amended) is amended to read: | 0019| "55-9-309. PROTECTION OF PURCHASERS OF INSTRUMENTS AND DOCUMENTS | 0020| AND SECURITIES.--Nothing in this article limits the rights of a holder | 0021| in due course of a negotiable instrument (Section 55-3-302 NMSA 1978) or | 0022| a holder to whom a negotiable document of title has been duly negotiated | 0023| (Section 55-7-501 NMSA 1978) or a protected purchaser of a security | 0024| (Section 55-8-303 NMSA 1978) and such holders or purchasers take | 0025| priority over an earlier security interest even though perfected. | 0001| Filing under this article does not constitute notice of the security | 0002| interest to such holders or purchasers." | 0003| Section 68. Section 55-9-312 NMSA 1978 (being Laws 1961, Chapter | 0004| 96, Section 9-312, as amended) is amended to read: | 0005| "55-9-312. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS IN THE | 0006| SAME COLLATERAL.-- | 0007| (1) The rules of priority stated in other sections of this | 0008| part and in the following sections shall govern when applicable: | 0009| Section 55-4-210 NMSA 1978 with respect to the security interests of | 0010| collecting banks in items being collected, accompanying documents and | 0011| proceeds; Section | 0012| 55-9-103 NMSA 1978 on security interests related to other jurisdictions; | 0013| Section 55-9-114 NMSA 1978 on consignments; and Section 55-9-115 on | 0014| security interests in investment property. | 0015| (2) A perfected security interest in crops, for new value | 0016| given to enable the debtor to produce the crops during the production | 0017| season and given not more than three months before the crops become | 0018| growing crops by planting or otherwise, takes priority over an earlier | 0019| perfected security interest to the extent that such earlier interest | 0020| secures obligations due more than six months before the crops become | 0021| growing crops by planting or otherwise, even though the person giving | 0022| new value had knowledge of the earlier security interest. | 0023| (3) A perfected purchase money security interest in | 0024| inventory has priority over a conflicting security interest in the same | 0025| inventory and also has priority in identifiable cash proceeds received | 0001| on or before the delivery of the inventory to a buyer if: | 0002| (a) the purchase money security interest is perfected | 0003| at the time the debtor receives possession of the inventory; | 0004| (b) the purchase money secured party gives | 0005| notification in writing to the holder of the conflicting security | 0006| interest if the holder had filed a financing statement covering the same | 0007| types of inventory (i) before the date of the filing made by the | 0008| purchase money secured party, or (ii) before the beginning of the | 0009| twenty-one-day period where the purchase money security interest is | 0010| temporarily perfected without filing or possession (Subsection (5) of | 0011| Section 55-9-304 NMSA 1978); | 0012| (c) the holder of the conflicting security interest | 0013| receives the notification within five years before the debtor receives | 0014| possession of the inventory; and | 0015| (d) the notification states that the person giving the | 0016| notice has or expects to acquire a purchase money security interest in | 0017| inventory of the debtor, describing such inventory by item or type. | 0018| (4) A purchase money security interest in collateral other | 0019| than inventory has priority over a conflicting security interest in the | 0020| same collateral or its proceeds if the purchase money security interest | 0021| is perfected at the time the debtor receives possession of the | 0022| collateral or within twenty days thereafter. | 0023| (5) In all cases not governed by other rules stated in this | 0024| section (including cases of purchase money security interests that do | 0025| not qualify for the special priorities set forth in Subsections (3) and | 0001| (4) of this section), priority between conflicting security interests in | 0002| the same collateral shall be determined according to the following | 0003| rules: | 0004| (a) conflicting security interests rank according to | 0005| priority in time of filing or perfection. | 0006| Priority dates from the time a filing is first made covering the | 0007| collateral or the time the security interest is first perfected, | 0008| whichever is earlier, provided that there is no period thereafter when | 0009| there is neither filing nor perfection; and | 0010| (b) so long as conflicting security interests are | 0011| unperfected, the first to attach has priority. | 0012| (6) For the purposes of Subsection (5) of this section, a | 0013| date of filing or perfection as to collateral is also a date of filing | 0014| or perfection as to proceeds. | 0015| (7) If future advances are made while a security interest is | 0016| perfected by filing, by the taking of possession or under Section 55-9-115 or 55-9-116 NMSA 1978 on security interests in personal property, | 0017| the security interest has the same priority for the purposes of | 0018| Subsection (5) of this section with respect to the future advances as it | 0019| does with respect to the first advance. If a commitment is made before | 0020| or while the security interest is so perfected, the security interest | 0021| has the same priority with respect to advances made pursuant thereto. | 0022| In other cases a perfected security interest has priority from the date | 0023| the advance is made." | 0024| Section 69. SAVING CLAUSE.-- | 0025| (a) Chapter 55, Article 8 NMSA 1978 does not affect an | 0001| action or proceeding commenced before that Article takes effect. | 0002| (b) If a security interest in a security is perfected at the | 0003| date Chapter 55, Article 8 NMSA 1978 takes effect and the action by | 0004| which the security interest was perfected would suffice to perfect a | 0005| security interest under that article, no further action is required to | 0006| continue perfection. If a security interest in a security is perfected | 0007| at the date Chapter 55, Article 8 NMSA 1978 takes effect but the action | 0008| by which the security interest was perfected would not suffice to | 0009| perfect a security interest under that article, the security interest | 0010| remains perfected for a period of four months after the effective date | 0011| and continues perfected thereafter if appropriate action to perfect | 0012| under Chapter 55, Article 8 NMSA 1978 is taken within that period. If a | 0013| security interest is perfected at the date Chapter 55, Article 8 NMSA | 0014| 1978 takes effect and the security interest can be perfected by filing | 0015| under that article, a financing statement signed by the secured party | 0016| instead of the debtor may be filed within that period to continue | 0017| perfection or thereafter to perfect. | 0018| Section 70. REPEAL.--Sections 55-8-308 through 55-8-321 and | 0019| Section 55-8-408 NMSA 1978 (being Laws 1961, Chapter 96, Sections 8-308 | 0020| through 8-319, Laws 1967, Chapter 186, Section 3, Laws 1987, Chapter | 0021| 248, Sections 38 and 46, as amended) are repealed. | 0022| | 0023| | 0024| HB | 0025| 37 | 0001| Page  |