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SB 2364

A BILL for an Act to provide for a legislative management study relating to the property rights of entitlement holders in Uniform Commercial Code transactions.

69th Legislative Assembly (2025-26) Introduced by Keith Boehm and 5 co-sponsors

Directs a 2025-26 interim study on entitlement holders' property rights in UCC securities (Article 8) and dispute jurisdiction, with findings, recommendations, and draft legislation.

Second reading, failed to pass, yeas 20 nays 27
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Bill Summary · SB 2364

Summary — SB 2364 (North Dakota)

Title: A bill to provide for a legislative management study relating to the property rights of entitlement holders in Uniform Commercial Code transactions

Purpose

SB 2364 would direct the Legislative Management to conduct a formal study during the 2025–26 interim on the property rights of entitlement holders in Uniform Commercial Code (UCC) transactions and on jurisdictional rules for disputes between entitlement holders and securities intermediaries. The study is intended to review Article 8 and related UCC provisions in the context of state and federal law and to produce findings and legislative recommendations for the Seventieth Legislative Assembly.

Key provisions

  • Directs the Legislative Management to consider a study during the 2025–26 interim on:
    • Property rights of entitlement holders in UCC transactions (with emphasis on Article 8).
    • Jurisdiction for disputes between entitlement holders and securities intermediaries.
    • Interaction of the UCC with state law, federal law, and rules governing ownership of personal property.
  • Requires the study to seek input from relevant stakeholders, explicitly including securities intermediaries.
  • Requires a written report of findings and recommendations, including any draft legislation necessary to implement recommendations, to be submitted to the Seventieth Legislative Assembly.

Earlier substantive text (context)

Earlier versions of the bill contained direct statutory amendments to North Dakota Century Code chapters dealing with:
- Choice-of-law rules for securities and securities intermediaries (41‑08‑10).
- Status of interests held by securities intermediaries (41‑08‑43), clarifying that interests are held for entitlement holders and are not property of the intermediary except as provided elsewhere.
- Priority rules among security interests and entitlement holders (41‑08‑51), including exceptions where a creditor with “control” or claims against clearing corporations could have priority.
- Choice-of-law rules governing perfection and priority of security interests in certificated, uncertificated, and intermediary‑held securities (41‑09‑25).
Those substantive amendments were replaced by the engrossed version making the bill a study.

Who would be affected

  • Entitlement holders (investors holding securities through intermediaries)
  • Securities intermediaries (brokers, custodians, clearing corporations)
  • Creditors taking security interests in financial assets
  • Financial institutions, legal practitioners, and regulators involved in secured transactions and securities custody
  • State agencies that would participate in or receive the study’s report

Procedural / timeline information

  • Introduced: March 12, 2025 (filed with Senate Secretary March 12; read first time March 25 and referred to Finance).
  • Study period (as proposed): 2025–26 interim.
  • Report required: findings and recommended legislation to the Seventieth Legislative Assembly.
  • Legislative status: Second reading — failed to pass (yeas 20, nays 27). As of that recorded action, the bill did not advance to enactment.

Potential impact

If enacted, the study could lead to recommended statutory changes clarifying the property status of securities entitlements, perfection and priority rules, and choice-of-law for intermediary-held assets — areas with important implications for investor protection, creditor rights, and the legal certainty of securities custody arrangements. Because the bill failed second reading, those outcomes would only occur if the study directive is reintroduced or legislative leaders commission a comparable review by other means.

Compiled from official sources — confirm details with the bill’s official record.

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