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The Post-2010 Amendment World and The Customer

PerspectiveWally Boggus, Capital Services, Inc.

Maureen Ewing, Rhode Island

Paul Hodnefield, Corporation Service Company

Despina Shields, National Corporate Research, Ltd.

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§ 9-526 Statistics

• 48 of 52 “States” Enacted “Shall Adopt” Provision• No record of rule adoption in 11 states since 2001.

• 42 of 52 “States” Enacted “Shall Publish” Provision• 28 states publish rules on the filing office web site.• 9 states publish UCC rules on other web sites, such as legislature.• 4 states have broken links to UCC rules on filing office web site.

• 46 of 52 “States” Enacted “Consult & Harmonize”• Still a substantial amount of non-uniformity.

•Other:• Several state filing office web sites publish the rules, but make them

very difficult to find.• At least 15 states (probably several more) have significantly outdated

and/or misleading information on the filing office web site.

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Enacted 2010 Amendments: Updated Rules

Colorado Massachusetts*

Georgia Nebraska

Illinois* New Mexico

Kentucky Oregon

Louisiana** Texas

Maine Virginia

Wyoming

*Updated, but with some old references

**Links to Updated IACA Rules

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Enacted 2010 Amendments: Old Rules

Arkansas* Missouri

California* Montana

Connecticut* Nevada

District of Columbia New Jersey*

Delaware North Carolina

Idaho North Dakota

Indiana Ohio

Iowa Rhode Island

Kansas South Dakota

Maryland Tennessee

Michigan Washington

Minnesota West Virginia

Mississippi Wisconsin

*Rulemaking process underway

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No Published Rules

Alaska* Puerto Rico

Arizona South Carolina*

Florida USVI

Hawaii** Oklahoma

Pennsylvania

*Rulemaking process underway

**One paragraph rule published

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Suggestions

•Adopt Updated UCC Administrative Rules• Demonstrates diligence of the filing office.• Avoids confusion for stakeholders.

• Publish Current UCC Rules• Publish prominently on filing office web site.• Verify external links on a regular basis.

•Harmonize Rules• Consult with other state filing offices and IACA Model

Administrative Rules (“MARS”).• Depart from MARS only if necessary to comply with local law.

•Other:• Verify that rules are compatible with the Article 9 statutes as enacted

in the state.

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Why Updating UCC Administrative Rules Should be a Priority • The updates are required by law in most states. Under UCC § 9-526(a)(1), filing offices shall

adopt rules consistent with Article 9. (Emphasis added). Rules adopted prior to enactment of the 2010 Amendments are not entirely consistent and, in some cases, directly conflict with the new statutory requirements.

• New UCC rules are necessary to provide consistent guidance for the filing office. The new form designs changed the location of some indicators and require special procedures for the indexing of long debtor names. Rule updates are necessary to ensure filing offices have documented procedures for address these issues correctly and consistently.

• Filing office stakeholders rely on published UCC rules. Updated UCC rules are essential to help those who file UCC records or search the index minimize risk. The rules help filers avoid unnecessary rejections and to comply with filing requirements. The rules also set expectations for those who search UCC records so they can better understand the results.

• Dual Purpose of UCC Administrative Rules. The main purpose of most administrative rules from any state or federal office is to direct the public on how to interact with the office and/or provide instruction concerning specific matters. The UCC Administrate Rules are a bit different because these rules are directed to the public AND the SOS so that the office has a training guide for their staff. This ensures consistency when there is staff turnover while acting as an instructional manual to staff and the public.

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Practices Contrary to Statute

• Electronic filing systems and XML systems also need to be updated to reflect the 2010 Amendments• Terminology has changed with can create confusion• Indications regarding the collateral have also changed• When online forms do not comply with the new statutes, filing companies

will utilize the online systems less

• Form acceptance• Jurisdictions that use their own form – acceptance of national form

• Other Deviations (not related to 2010 Amendments)

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The County Issue

Often times, county filing offices are not informed that statutory changes have taken place.

While most states do not have authority over the county offices, county offices often look to the state filing offices (and their websites) for direction in processing UCCs. There are things state offices can do to help:

• State-wide meetings with County Recorder trade groups to communicate legislative updates and form updates• Letters to county offices informing them of the updated statutes• Stating on your website that the office also accepts the national/IACA forms