HBA-ATS H.B. 1305 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1305 By: George Business & Industry 2/17/1999 Introduced BACKGROUND AND PURPOSE Title 1 (Uniform Commercial Code) of the Business & Commerce Code prescribes the proper place to file a security interest to perfect it. The determination of where to file depends on the type of security interest. Most security interests need to be filed in the Office of the Secretary of State, who is authorized to prescribe the forms to be used in making any filing. In 1996, the secretary of state made available to banks and other lending institutions a computer system designed to receive any required filings electronically as an alternative to the traditional filing of paper forms. Financial institutions have been hesitant to transmit filings electronically, however. These institutions perceive a danger of losing their secured commercial loans because no provision expressly permits electronic filing. H.B. 1305 provides that the secretary of state is authorized, by rule, to allow a person to file a financing statement or other filing electronically as an alternative to the traditional filing of a paper document. In addition, this bill avows that the secretary of state has always been authorized to adopt such a measure. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the secretary of state in SECTION 1 (Section 9.409(c), Business & Commerce Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 9.409, Business & Commerce Code, by adding Subsection (c), to authorize the secretary of state, by rule, to allow a person to file electronically a financing statement or other filing made under Subchapter D (Filings) as an alternative to the traditional filing of a paper document. SECTION 2. Provides that Section 9.409(c) is a clarification of existing law. Makes this Act applicable to the filing of a financing statement or other filing made before, on, or after the effective date of this Act. SECTION 3. Emergency clause. Effective date: upon passage.