SB308: Bill Text

SB308,54,8 409.105 (3) (bp) "Entitlement holder" — s. 408.102 (1) (g).

SB308, s. 23 Section 23. 409.105 (3) (bt) of the statutes is created to read:

SB308,54,10 409.105 (3) (bt) "Financial asset" — s. 408.102 (1) (i).

SB308, s. 24 Section 24. 409.105 (3) (f) of the statutes is created to read:

SB308,54,12 409.105 (3) (f) "Securities intermediary" — s. 408.102 (1) (n).

SB308, s. 25 Section 25. 409.105 (3) (g) of the statutes is created to read:

SB308,54,14 409.105 (3) (g) "Security" — s. 408.102 (1) (o).

SB308, s. 26 Section 26. 409.105 (3) (h) of the statutes is created to read:

SB308,54,16 409.105 (3) (h) "Security certificate" — s. 408.102 (1) (p).

SB308, s. 27 Section 27. 409.105 (3) (i) of the statutes is created to read:

SB308,54,18 409.105 (3) (i) "Security entitlement" — s. 408.102 (1) (q).

SB308, s. 28 Section 28. 409.105 (3) (j) of the statutes is created to read:

SB308,54,20 409.105 (3) (j) "Uncertificated security" — s. 408.102 (1) (r).

SB308, s. 29 Section 29. 409.106 of the statutes is amended to read:

SB308,55,4 409.106 Definitions: "account"; "general intangibles". "Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. "General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments, investment property and money. All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.

SB308, s. 30 Section 30. 409.115 of the statutes is created to read:

SB308,55,6 409.115 Investment property. (1) In this chapter:

SB308,55,8 (a) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

SB308,55,11 (b) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or other contract that, in each case, is:

SB308,55,14 1. Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws; or

SB308,55,16 2. Traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer.

SB308,55,18 (c) "Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books.

SB308,55,19 (d) "Commodity intermediary" means:

SB308,55,21 1. A person who is registered as a futures commission merchant under the federal commodities laws; or

SB308,55,24 2. A person who in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to the federal commodities laws.

SB308,56,11 (e) "Control" with respect to a certificated security, uncertificated security, or security entitlement has the meaning specified in s. 408.106. A secured party has control over a commodity contract if, by agreement among the commodity customer, the commodity intermediary, and the secured party, the commodity intermediary has agreed that it will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary as secured party has control. A secured party has control over a securities account or commodity account if the secured party has control over all security entitlements or commodity contracts carried in the securities account or commodity account.

SB308,56,12 (f) "Investment property" means:

SB308,56,13 1. A security, whether certificated or uncertificated;

SB308,56,14 2. A security entitlement;

SB308,56,15 3. A securities account;

SB308,56,16 4. A commodity contract; or

SB308,56,17 5. A commodity account.

SB308,56,22 (2) Attachment or perfection of a security interest in a securities account is also attachment or perfection of a security interest in all security entitlements carried in the securities account. Attachment or perfection of a security interest in a commodity account is also attachment or perfection of a security interest in all commodity contracts carried in the commodity account.

SB308,57,7 (3) A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract or commodity account whether it describes the collateral by those terms, or as investment property, or by description of the underlying security, financial asset or commodity contract. A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.

SB308,57,9 (4) Perfection of a security interest in investment property is governed by the following rules:

SB308,57,10 (a) A security interest in investment property may be perfected by control.

SB308,57,12 (b) Except as otherwise provided in pars. (c) and (d), a security interest in investment property may be perfected by filing.

SB308,57,17 (c) If the debtor is a broker or securities intermediary, a security interest in investment property is perfected when it attaches. The filing of a financing statement with respect to a security interest in investment property granted by a broker or securities intermediary has no effect for purposes of perfection or priority with respect to that security interest.

SB308,57,22 (d) If a debtor is a commodity intermediary, a security interest in a commodity contract or a commodity account is perfected when it attaches. The filing of a financing statement with respect to a security interest in a commodity contract or a commodity account granted by a commodity intermediary has no effect for purposes of perfection or priority with respect to that security interest.

SB308,57,24 (5) Priority between conflicting security interests in the same investment property is governed by the following rules:

SB308,58,3 (a) A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property.

SB308,58,5 (b) Except as otherwise provided in pars. (c) and (d), conflicting security interests of secured parties each of whom has control rank equally.

SB308,58,9 (c) Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party.

SB308,58,13 (d) Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party.

SB308,58,15 (e) Conflicting security interests granted by a broker, a securities intermediary or a commodity intermediary which are perfected without control rank equally.

SB308,58,18 (f) In all other cases, priority between conflicting security interests in investment property is governed by s. 409.312 (5), (6) and (7). Section 409.312 (4) does not apply to investment property.

SB308,58,24 (6) If a security certificate in registered form is delivered to a secured party pursuant to agreement, a written security agreement is not required for attachment or enforceability of the security interest, delivery suffices for perfection of the security interest, and the security interest has priority over a conflicting security interest perfected by means other than control, even if a necessary endorsement is lacking.

SB308, s. 31 Section 31. 409.116 of the statutes is created to read:

SB308,59,9 409.116 Security interest arising in purchase or delivery of financial asset. (1) If a person buys a financial asset through a securities intermediary in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase, and the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary, the securities intermediary has a security interest in the buyer's security entitlement securing the buyer's obligation to pay. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

SB308,59,18 (2) If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery rather than payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

SB308, s. 32 Section 32. 409.203 (1) (intro.) of the statutes is amended to read:

SB308,59,24 409.203 (1) (intro.) Subject to s. 404.210 on the security interest of a collecting bank, s. 408.321 on security interests in securities ss. 409.115 and 409.116 on security interests in investment property, and s. 409.113 on a security interest arising under ch. 402 or 411, a security interest is not enforceable against the debtor or 3rd parties with respect to the collateral and does not attach unless:

SB308, s. 33 Section 33. 409.203 (1) (a) of the statutes is amended to read:

SB308,60,6 409.203 (1) (a) The collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops growing or to be grown or timber to be cut, a description of the land concerned;

SB308, s. 34 Section 34. 409.301 (1) (d) of the statutes is amended to read:

SB308,60,11 409.301 (1) (d) In the case of accounts and , general intangibles, and investment property, a person who is not a secured party and who is a transferee to the extent that that person gives value without knowledge of the security interest and before it is perfected.

SB308, s. 35 Section 35. 409.302 (1) (b) of the statutes is amended to read:

SB308,60,15 409.302 (1) (b) A security interest temporarily perfected in instruments, certificated securities, or documents without delivery under s. 409.304 or in proceeds for a 10-day period under s. 409.306;

SB308, s. 36 Section 36. 409.302 (1) (f) of the statutes is amended to read:

SB308,60,19 409.302 (1) (f) A security interest of a collecting bank (s. 404.210) or in securities (s. 408.321) or arising under ch. 402 or 411 (see s. 409.113) or covered in sub. (3);

SB308, s. 37 Section 37. 409.302 (1) (g) of the statutes is amended to read:

SB308,60,22 409.302 (1) (g) An assignment for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee thereunder; or

SB308, s. 38 Section 38. 409.302 (1) (h) of the statutes is repealed and recreated to read:

SB308,60,25 409.302 (1) (h) A security interest in investment property which is perfected without filing under s. 409.115 or 409.116; or

SB308, s. 39 Section 39. 409.302 (1) (i) of the statutes is created to read:

SB308,61,3 409.302 (1) (i) A security interest created by a master lease entered into by the state under s. 16.76 (4).

SB308, s. 40 Section 40. 409.303 (1) of the statutes is amended to read:

SB308,61,9 409.303 (1) A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken. Such steps are specified in ss. 409.115, 409.302, 409.304, 409.305 and 409.306. If such steps are taken before the security interest attaches, it is perfected at the time when it attaches.

SB308, s. 41 Section 41. 409.304 (1) of the statutes is amended to read:

SB308,61,15 409.304 (1) A security interest in chattel paper or negotiable documents may be perfected by filing. A security interest in money or instruments, other than certificated securities or instruments which constitute part of chattel paper, can be perfected only by the secured party's taking possession, except as provided in subs. (4) and (5) and s. 409.306 (2) and (3) on proceeds.

SB308, s. 42 Section 42. 409.304 (4) of the statutes is amended to read:

SB308,61,20 409.304 (4) A security interest in instruments, other than certificated securities, or negotiable documents is perfected without filing or the taking of possession for a period of 21 days from the time it attaches to the extent that it arises for new value given under a written security agreement.

SB308, s. 43 Section 43. 409.304 (5) (intro.) of the statutes is amended to read:

SB308,61,25 409.304 (5) (intro.) A security interest remains perfected for a period of 21 days without filing where a secured party having a perfected security interest in an instrument (other than, a certificated security), a negotiable document or goods in possession of a bailee other than one who has issued a negotiable document therefor:

SB308, s. 44 Section 44. 409.304 (5) (b) of the statutes is amended to read:

SB308,62,4 409.304 (5) (b) Delivers the instrument or certificated security to the debtor for the purpose of ultimate sale or exchange or of presentation, collection, renewal or registration of transfer.

SB308, s. 45 Section 45. 409.305 of the statutes is amended to read:

SB308,62,17 409.305 When possession by secured party perfects security interest without filing. A security interest in letters of credit and advices of credit (s. 405.116 (2) (a)), goods, instruments (other than certificated securities), money, negotiable documents or chattel paper may be perfected by the secured party's taking possession of the collateral. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this chapter. The security interest may be otherwise perfected as provided in this chapter before or after the period of possession by the secured party.

SB308, s. 46 Section 46. 409.306 (1) of the statutes is amended to read:

SB308,62,25 409.306 (1) "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Any payments or distributions made with respect to investment property collateral are proceeds. Money, checks, deposit accounts, and the like are "cash proceeds". All other proceeds are "noncash proceeds".

SB308, s. 47 Section 47. 409.306 (3) of the statutes is repealed and recreated to read:

SB308,63,5 409.306 (3) (a) Subject to sub. (3m), the security interest in proceeds is a continuously perfected security interest if the interest in the original collateral was perfected but it ceases to be a perfected security interest and becomes unperfected 10 days after receipt of the proceeds by the debtor unless:

SB308,63,10 1. A filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office or offices where the financing statement has been filed and, if the proceeds are acquired with cash proceeds, the description of collateral in the financing statement indicates the types of property constituting the proceeds;

SB308,63,12 2. A filed financing statement covers the original collateral and the proceeds are identifiable cash proceeds;

SB308,63,14 3. The original collateral was investment property and the proceeds are identifiable cash proceeds; or

SB308,63,16 4. The security interest in the proceeds is perfected before the expiration of the 10-day period.

SB308,63,19 (b) Except as provided in this section, a security interest in proceeds may be perfected only by the methods or under the circumstances permitted in this chapter for original collateral of the same type.

SB308, s. 48 Section 48. 409.309 of the statutes is amended to read:

SB308,64,2 409.309 Protection of purchasers of instruments, documents and securities. Nothing in this chapter limits the rights of a holder in due course of a negotiable instrument (s. 403.302) or a holder to whom a negotiable document of title has been duly negotiated (s. 407.501) or a bona fide protected purchaser of a security (s. 408.302 408.303) and such holders or purchasers take priority over an earlier security interest even though perfected. Filing under this chapter does not constitute notice of the security interest to such holders or purchasers.