WeVote
Log In

Bill

Bill

HB 1736

TO AMEND ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE.

2025 Regular Session Introduced by Matt Brown and 1 co-sponsor

Act 603 streamlines assignment rules in Arkansas, ensuring businesses can operate efficiently by removing ineffective restrictions on assignments and security interests.

Notification that HB1736 is now Act 603
0
WeVote Research Nonpartisan
Bill Summary · HB 1736

Summary of House Bill 1736 (Act 603)

Purpose and Intent

House Bill 1736, now known as Act 603, aims to amend Article 9 of the Uniform Commercial Code (UCC) in Arkansas. The primary intent of the bill is to clarify and streamline the rules regarding the effectiveness of certain assignments and security interests in accounts, chattel paper, and promissory notes. This legislation seeks to enhance the legal framework governing commercial transactions, thereby promoting business efficiency and reducing potential disputes.

Key Provisions

The bill introduces several amendments to existing Arkansas Code § 4-9-406 and § 4-9-408, which address the ineffectiveness of certain legal restrictions on assignments. The key provisions include:

  1. Amendments to § 4-9-406:

    • Subsection (d): Clarifies that terms in agreements that prohibit or restrict assignments or create defaults due to assignments are ineffective, with certain exceptions.
    • Subsection (f): States that legal rules or regulations requiring consent for assignments are ineffective to the extent they impose restrictions on the assignment or creation of security interests.

  2. New Subsection (k):

    • Specifies that the aforementioned subsections do not apply to security interests in ownership interests in general partnerships, limited partnerships, or limited liability companies.

  3. Amendments to § 4-9-408:

    • Subsection (a): Similar to § 4-9-406(d), it states that terms in promissory notes or agreements that restrict assignments are ineffective if they impair the creation or perfection of a security interest.
    • Subsection (c): Reiterates that legal restrictions requiring consent for assignments are ineffective under specified conditions.
    • New Subsection (g): Clarifies that this section does not apply to security interests in ownership interests in partnerships or limited liability companies.

Affected Parties

The amendments primarily affect:
- Businesses and Commercial Entities: Companies that engage in transactions involving accounts, chattel paper, and promissory notes will benefit from clearer rules regarding assignments and security interests.
- Account Debtors and Assignors: Individuals or entities that are parties to agreements involving assignments will see changes in how their rights and obligations are defined under the law.
- Legal Practitioners: Attorneys and legal advisors will have updated guidelines to assist clients in navigating commercial transactions.

Procedural Timeline

  • Introduced: March 11, 2025
  • Passed by the House: March 20, 2025
  • Passed by the Senate: April 9, 2025
  • Enacted as Act 603: April 14, 2025

The bill underwent multiple readings and committee reviews before being enrolled and transmitted to the Governor's Office for approval.

Conclusion

House Bill 1736 (Act 603) represents a significant update to the Uniform Commercial Code in Arkansas, aimed at enhancing the clarity and effectiveness of commercial transactions. By addressing the ineffectiveness of certain assignment restrictions, the legislation seeks to foster a more conducive environment for business operations and legal compliance.

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

Sign in to ask a question.