What to Know about Filing UCC Financing Statements under the 2010 Amendments
In 2010, a review committee finalized several changes (“2010 Amendments”) to the Uniform Commercial Code’s Revised Article 9. The 2010 Amendments have been enacted by the State of Minnesota, and will go into effect on July 1, 2013. Although only eight other states have enacted the changes at this time, most other states are expected to follow suit in the coming years. Two of the 2010 Amendments are discussed in detail below.
DEBTOR NAMING ISSUES
First, one major goal of the 2010 Amendments was to provide clarity as to how a particular debtor’s name should be stated on a UCC financing statement. With respect to an organization formed by the filing of a particular document with a state office (a “registered organization”), the amended statute points to the organization’s “public organic record,” which is the document that resulted in the formation of the organization upon such document’s filing with the appropriate state office (e.g., the Articles of Organization). The amended statute states that, in order to be properly perfected, a creditor must match the organization’s name on the financing statement, to its name as stated on the most recently filed public organic record. Thus, creditors should rely on the actual public organic record rather than any online database, or any other corporate document which is not the “organic” record (e.g., the Certificate of Organization). Also, the amended statute accounts for discrepancies within an entity’s organizational documents by indicating that the name to be used is the name, “stated to be the registered organization’s name” within the public organic record.
By way of example, assume the following are true:
- A corporation’s Articles of Incorporation are titled, “Articles of Incorporation of XYZ Co., Inc.”;
- Within the Articles of Incorporation, one provision states, “The name of the company shall be XYZ Company, Inc.”; and
- The Secretary of State’s searchable database shows the name of the corporation as “XYX, Inc.”.
Prior to the 2010 Amendments, a creditor would be left guessing as to which name should be used on the financing statement. Under the 2010 Amendments, it is clear that the debtor should be listed as, “XYZ Company, LLC”.
Additionally, the amended statute references the “most recent” public organic record of the registered organization. Consequently, if the above scenario also included Articles of Amendment stating that the corporation’s name shall now be, “ABC Company, LLC”, then a proper financing statement should list the debtor as ABC Company, LLC. Because of these issues, creditors should obtain a copy of an organization’s public organic record to determine how the organization should be listed on a financing statement.
With respect to individual debtors that are Minnesota residents, under the amended statute, the name on the financing statement must exactly match the name on the individual debtor’s unexpired Minnesota driver’s license or state identification card, even if the license or identification card misspells the individual’s name. As the official comments to the amended statute point out, if the debtor’s name is actually Joseph Allan Jones, but his valid Minnesota driver’s license states his name as Joseph Alan Jones, then a Financing Statement listing Joseph Allan Jones, or Joseph A. Jones, is insufficient. If the debtor has neither an unexpired Minnesota license, nor an ID card, then the debtor may be named by the debtor’s “individual name”, or the debtor’s “surname” and “first personal name”. To be safe, if there is uncertainty as to an individual debtor’s exact name, creditors can include each possible alternative name as an “additional debtor,” on the financing statement.
Second, the UCC financing statement forms have been updated. In part, the forms were updated to make them consistent with the 2010 Amendments. In this regard, the new forms ask for an individual debtor’s surname, first personal name, and additional names or initials, rather than last, first, and middle name. Further, the forms do not require an organization’s type, jurisdiction of organization, or organizational identification number. Second, the forms have been formatted to be more user friendly, and to eliminate filing errors. To this effect, the filer is allowed to check a box if the collateral is held in a trust, or being administered by a personal representative. Also, due to the common mistake of checking the wrong box on the existing Amendment form, the boxes for continuation and termination are no longer adjacent to each other on the new form.
In the official text of the 2010 Amendments, the new Section 9-521 actually includes the new forms of the UCC financing statement, amendment, and addendum in their entireties. Minnesota’s equivalent statute, Section 336.9-521, currently states that any form adopted by the National Conference of Commissioner on Uniform State Laws or the International Association of Commercial Administrators, if properly submitted, must be accepted by the filing office. This section will remain unchanged with the adoption of the 2010 Amendments. Thus, although Minnesota’s 336.9-521 will not contain the new forms, it will mandate that the new forms be accepted if properly submitted. Also, each form in use today may still be accepted after July 1, 2013, so long as it provides all of the statutorily required information and is properly submitted.
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