HBA-ATS S.B. 478 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 478 By: Carona Business & Industry 3/31/1999 Engrossed BACKGROUND AND PURPOSE Generally, a financing statement (a document that notifies third parties that a debtor's property is or may be encumbered) must be filed to perfect a security interest (an interest in personal property or fixtures that secures the payment or performance of an obligation). Rules adopted by the secretary of state authorize a person to file a financing statement electronically as an alternative to the traditional filing of a paper form. Because no statutory provision expressly permits electronic filing, some lenders have been hesitant to transmit filings electronically due to their concerns regarding the permissibility of electronic filing under the law. This ambiguity requires clarification. S.B. 478 sets forth that the Business & Commerce Code does not require that a financing statement or other filing made under Subchapter D (Filing), Chapter 9 (Secured Transactions; Sales of Accounts and Chattel Paper), Business & Commerce Code, be created or transmitted to the secretary of state on paper. Under this bill, a statement or other filing made in accordance with rules adopted under Subchapter D is not ineffective or insufficient because the statement or other filing is generated or transmitted electronically. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 9.402, Business & Commerce Code, by adding Subsection (i), as follows: (i) Sets forth that the Business & Commerce Code does not require that a financing statement (statement) or other filing made under Subchapter D (Filing) be created or transmitted to the secretary of state on paper. Provides that a statement or other filing made in accordance with rules adopted under Subchapter D is not ineffective or insufficient because the statement or other filing is generated or transmitted electronically. SECTION 2. Provides that Subsection (i) is intended to clarify law existing before the effective date of this Act. Sets forth that the authority expressed in Section 9.402 (Formal Requisites of Financing Statement; Amendments; Mortgage as Financing Statement) is within the authority previously granted to the secretary of state under Section 9.411 (Rules). Provides that this Act applies to the filing of a statement or other filing made before, on, or after the effective date of this Act. SECTION 3.Emergency clause. Effective date: upon passage.