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HB 1659

LOCAL GOVERNMENT-TECH

104th Regular Session Introduced by Jay Hoffman

HB 1659 aimed to clarify the priority of claims among security interests and entitlement holders, impacting securities intermediaries, creditors, and entitlement holders in Arkansas.

Referred to Rules Committee
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WeVote Research Nonpartisan
Bill Summary · HB 1659

Summary of House Bill 1659

Bill Number: HB 1659
Title: To Amend the Uniform Commercial Code; and to Clarify the Priority Among Security Interests and Entitlement Holders Under the Uniform Commercial Code
Status: Died in House Committee at Sine Die adjournment
Introduced: March 04, 2025
Sponsor: Representative S. Meeks

Purpose and Intent

House Bill 1659 aimed to amend the Uniform Commercial Code (UCC) in Arkansas to clarify the priority of claims among security interests and entitlement holders. The bill sought to address ambiguities in the current law regarding how financial assets are treated when held by securities intermediaries, particularly in situations where there are competing claims from entitlement holders and creditors.

Key Provisions

The bill proposed several amendments to existing Arkansas Code sections related to security interests and entitlement holders:

  1. Amendment to § 4-8-503(a):

    • Clarified that interests in financial assets held by a securities intermediary are not considered property of the intermediary and are not subject to claims from the intermediary's creditors, except as specified in § 4-8-511.

  2. Amendment to § 4-8-511:

    • Established a hierarchy for claims:
      • Entitlement holders have priority over creditors if the intermediary lacks sufficient interests to satisfy both parties.
      • Creditors with control over the financial asset have priority over entitlement holders if the intermediary cannot satisfy both.
    • Required that disputes arising from these claims be litigated in Arkansas.

  3. Amendment to § 4-9-305(a):

    • Specified that the local law of the jurisdiction where a security certificate is located governs the perfection and priority of security interests in that certificate.
    • Similar provisions were included for uncertificated securities, security entitlements, and commodity contracts.

Impact

The proposed changes would have impacted:
- Securities Intermediaries: Clarified their role and responsibilities regarding financial assets and the claims against them.
- Entitlement Holders: Provided clearer rights and priorities in relation to their claims on financial assets.
- Creditors: Defined the conditions under which their claims would take precedence over those of entitlement holders.

Procedural Aspects

  • Timeline:
    • March 04, 2025: Bill filed and referred to the House Committee on Insurance & Commerce.
    • May 05, 2025: The bill died in the House Committee at Sine Die adjournment, meaning it did not progress to a vote or further consideration.

Conclusion

While HB 1659 aimed to clarify important aspects of the Uniform Commercial Code in Arkansas, it ultimately did not advance through the legislative process. The proposed amendments would have provided greater clarity and structure to the handling of security interests and entitlement claims, impacting various stakeholders in the financial and legal sectors.

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

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