Lambert Securities Bill Hands Buyers The Seller’s Legal Claims

The text as introduced · 545 words

89R9915 AJA-F

By: Lambert
H.B. No. 3929

A BILL TO BE ENTITLED

AN ACT

relating to choice of law and assignment or acquisition of claims

and demands in connection with certificated and uncertificated

securities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 8.110, Business & Commerce Code, is

amended by adding Subsection (g) to read as follows:

(g) If a security is determined not to be valid under the

local law of the issuer's jurisdiction, the law of the jurisdiction

agreed by the issuer of the security to govern the construction or

interpretation of documents evidencing or containing the terms of

the security and matters arising out of or relating to the security

and documents, including the enforceability of the security and the

rights and remedies available to a purchaser of such a security,

governs the consequences to the issuer and the purchaser of the

invalidity.

SECTION 2. Section 8.302, Business & Commerce Code, is

amended by adding Subsections (d) and (e) to read as follows:

(d) The rights acquired by a purchaser of a certificated or

uncertificated security, unless otherwise agreed in writing,

include, without limitation, all of the following claims and

demands of the transferor, regardless of whether the claims and

demands are known to exist:

(1) a claim or demand for damages or rescission

against the issuer or other party to the security;

(2) a claim or demand for damages against the trustee,

depositary, or other party under any indenture under which the

security was issued or is outstanding;

(3) a claim or demand for damages against any issuer,

underwriter, trustee, depositary, guarantor, or other party to the

obligations of the issuer; and

(4) a claim or demand to enforce any rights of a

securityholder under the terms of the security, including rights

arising prior to the date of the transfer.

(e) Except as specifically provided by statute with respect

to assignments of the claims and demands of a transferor to the

purchaser of a certificated or uncertificated security, no issuer

or other party subject to any obligation, or to any claim or demand

for damages, with respect to any such security may assert a defense

to such an obligation, claim, or demand, or assert a claim against

the purchaser, based on the intent of the purchaser, or an assignor

or assignee of the purchaser, to assert or pursue through

litigation or other lawful means the enforcement of the purchaser's

rights thereto.

SECTION 3. Section 271.005, Business & Commerce Code, is

amended by adding Subsections (a-1) and (c) to read as follows:

(a-1) Unless otherwise agreed in writing, the choice of

governing law specified in the terms applicable to a certificated

or uncertificated security issued in a qualified transaction,

including any change in that governing law, applies retroactively

to all issues relating to the security.

(c) A security issued in a qualified transaction may be

modified or amended, in accordance with the security's terms, to

permit amendment of the terms of the security by less than unanimous

consent, and to choose the law of a different jurisdiction to govern

the security. An amendment described by this subsection applies

retroactively unless otherwise agreed by the parties in writing.

SECTION 4. This Act takes effect September 1, 2025.