5VAC5-30 Uniform Commercial Code Filing Rules

REGULATIONS

Vol. 29 Iss. 17 - April 22, 2013

TITLE 5. CORPORATIONS

STATE CORPORATION COMMISSION

Chapter 30

Proposed Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is claiming an exemption from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Title of Regulation: 5VAC5-30. Uniform Commercial Code Filing Rules (amending 5VAC5-30-20 through 5VAC5-30-70).

Statutory Authority: §§ 12.1-13 and 8.9A-526 of the Code of Virginia.

Public Hearing Information: A public hearing will be held upon request.

Public Comment Deadline: May 14, 2013.

Agency Contact: Joel Peck, Clerk of the Commission, State Corporation Commission, 1300 E. Main Street, P.O. Box 1197, Richmond, VA 23218, telephone [phone], FAX [phone], or email [e-mail].

Summary:

These proposed revisions include technical amendments, such as changing "correction statement" to "information statement," changing "filing officer" to "filing office," amending a website address, and clarifying the grounds to refuse a Uniform Commercial Code (UCC) record for filing. Additionally, proposed amendments allow UCC search requests to be delivered by electronic delivery method provided and authorized by the filing office. Further, proposed amendments allow the filing office to accept payment via electronic funds under National Automated Clearing House Association (NACHA) rules for remitters, as well as allow a filing office to void a filing if the filing fee payment is dishonored, declined, refused, reversed, charged back, returned unpaid, or otherwise rejected for any reason and the remitter fails to submit a valid payment for the filing fee and any penalties after notice by the filing office. The proposed revisions also substitute current UCC forms with updated forms adopted by the International Association of Commercial Administrators.

AT RICHMOND, APRIL 2, 2013

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. CLK-2013-00007

Ex Parte: In the matter of Adopting
a Revision to the Rules Governing UCC Filings

ORDER TO TAKE NOTICE

Section 12.1-13 of the Code of Virginia ("Code") provides that the State Corporation Commission ("Commission") shall have the power to promulgate rules and regulations in the enforcement and administration of all laws within its jurisdiction. Section 8.9A-526 of Virginia's Uniform Commercial Code – Secured Transactions, § 8.9A-101 et seq. of the Code, provides that: (a) the Commission shall promulgate and make available to the public such rules as it deems necessary to implement Title 8.9A of the Code and in accordance with applicable law; and (b) when adopting such rules and establishing filing office practices, the Commission shall make an effort to keep such rules and practices in harmony with the rules and practices of other jurisdictions which enact substantially similar legislation and, to the extent feasible, to keep the technology it uses compatible with the technology used by such other jurisdictions, as well as take into account the most recent version of any Model Rules proposed by the International Association of Commercial Administrators ("IACA"), or any successor organization.

The rules and regulations issued by the Commission pursuant to § 8.9A-526 of the Code are set forth in Title 5, Chapter 30 of the Virginia Administrative Code. These rules and regulations also may be found on the Commission's website at: www.scc.virginia.gov/clk/uccrules.aspx.

The Office of the Clerk of the Commission ("Clerk") has submitted to the Commission a number of proposed revisions to Chapter 30 of Title 5 of the Virginia Administrative Code entitled "Rules Governing UCC Filings" ("Rules"). Most of the changes are minor and provide technical amendments to the Rules. In addition, the Clerk requests changes to allow electronic delivery of Uniform Commercial Code ("UCC") search requests and to accept payment via certain electronic funds transfer. The Clerk also requests the ability to void filings for uncollected filing fee payments. Finally, the Clerk requests updates to UCC forms.

Rules 5 VAC 5-30-20, 5 VAC 5-30-40, 5 VAC 5-30-50, 5 VAC 5-30-60, and 5 VAC 5-30-70 revise the term "filing officer" to "filing office."

Rule 5 VAC 5-30-20 provides technical amendments to the current definitions of "Correction Statement," "Termination Statement," and "UCC record," including changing the term "Correction Statement" to "Information Statement."

Rule 5 VAC 5-30-30 amends subsection C to allow UCC search requests to be delivered by electronic delivery method provided and authorized by the filing office.

Rule 5 VAC 5-30-40 deletes subdivision A 2 regarding acceptance of forms set forth in § 8.9A-521 of the Code and amends the filing office's website address in subdivision A 3. Additionally, this rule adds subdivision C 4 and subsection E. Subdivision C 4 provides that the filing office may accept payment via electronic funds under National Automated Clearing House Association rules from remitters. Subsection E provides that a filing office may void a filing if the filing fee payment is dishonored, declined, refused, reversed, charged back, returned unpaid, or otherwise rejected for any reason and the remitter fails to submit a valid payment for the filing fee and any penalties after notice by the filing office.

Rule 5 VAC 5-30-50 provides technical amendments to subsections C and D, including clarification that grounds to refuse a UCC record for filing include those grounds set forth in § 8.9A-516 (b) of the Code.

Rules 5 VAC 5-30-60 and 5-30-70 include technical amendments based on changes to UCC forms and updating "correction statement" to "information statement."

The Clerk also proposes to adopt forms concerning UCC financing statements, information statements and information requests adopted by IACA, by substituting these forms for the current forms. This substitution will conform the forms with other jurisdictions' UCC forms.

The Clerk has recommended to the Commission that the proposed revisions should be considered for adoption with an effective date of July 1, 2013. The Clerk also has recommended to the Commission that a hearing should be held only if requested by those interested persons who specifically indicate that a hearing is necessary and the reasons therefor.

IT IS THEREFORE ORDERED THAT:

(1) The proposed revisions are appended hereto and made a part of the record herein.

(2) Comments or requests for hearing on the proposed revisions must be in writing, directed to Joel H. Peck, Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218, and received on or before May 14, 2013. Any request for hearing shall state why a hearing is necessary and why the issues cannot be adequately addressed in written comments. All correspondence shall reference Case No. CLK-2013-00007. Interested persons desiring to submit comments electronically may do so by following the instructions available at the Commission's website: http://www.scc.virginia.gov/case.

(3) The proposed revisions shall be posted on the Commission's website at http://www.scc.virginia.gov/case. Interested persons may also request a copy of the proposed revisions from the Clerk by telephone, mail or e-mail.

AN ATTESTED COPY hereof, together with a copy of the proposed revisions, shall be sent to the Registrar of Regulations for publication in the Virginia Register.

AN ATTESTED COPY hereof shall be delivered to the Clerk of the Commission, who shall forthwith mail or e-mail a copy of this Order and the proposed revisions to any interested persons as he may designate. A list of the foregoing persons shall be filed in this case.

5VAC5-30-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Amendment" means a UCC record that amends the information contained in a financing statement. Amendments also include (i) assignments and (ii) continuation and termination statements.

"Assignment" means an amendment that assigns all or a part of a secured party's power to authorize an amendment to a financing statement.

"Continuation statement" shall have the meaning prescribed by § 8.9A-102(a)(27) of the Code of Virginia.

"Correction Information statement" means a UCC record that indicates that a financing statement is inaccurate or wrongfully filed.

"File number" shall have the meaning prescribed by § 8.9A-102(a)(36) of the Code of Virginia.

"Filing office" means the Clerk's Office of the State Corporation Commission.

"Filing officer" means the Clerk of the State Corporation Commission.

"Filing officer statement" means a statement entered into the UCC information management system to describe the correction of an error or inaccuracy made by the filing office.

"Financing statement" shall have the meaning prescribed by § 8.9A-102(a)(39) of the Code of Virginia.

"Individual" means a natural person, living or deceased.

"Initial financing statement" means a UCC record containing the information required to be in an initial financing statement and that causes the filing office to establish the initial record of existence of a financing statement.

"Organization" means a legal person that is not an individual.

"Personal identifiable information" shall have the meaning prescribed by § 12.1-19 B of the Code of Virginia.

"Remitter" means a person who tenders a UCC record to the filing officer office for filing, whether the person is a filer or an agent of a filer responsible for tendering the record for filing. "Remitter" does not include a person responsible merely for the delivery of the record to the filing office, such as the postal service or a courier service but does include a service provider who acts as a filer's representative in the filing process.

"Secured party of record" shall have the meaning prescribed by § 8.9A-511 of the Code of Virginia.

"Termination statement" shall have the meaning prescribed by § 8.9A-102(a)(79) 8.9A-102(a)(80) of the Code of Virginia.

"Through date" means the most recent date that all submissions for a specified day have been indexed in the UCC information management system.

"UCC" means the Uniform Commercial Code - Secured Transactions (§ 8.9A-101 et seq. of the Code of Virginia).

"UCC information management system" means the information management system used by the filing office to store, index, and retrieve information relating to financing statements.

"UCC record" means an initial financing statement, an amendment, and a correction an information or a filing officer statement, and shall not be deemed to refer exclusively to paper or paper-based writings.

5VAC5-30-30. General filing and search requirements.

A. UCC records may be tendered for filing at the filing office as follows:

1. By personal delivery, at the filing office street address;

2. By courier delivery, at the filing office street address;

3. By postal delivery, to the filing office mailing address; or

4. By electronic delivery method provided and authorized by the filing office.

B. The filing time for a UCC record delivered by personal, courier, or postal delivery is the time the UCC record is date-and-time stamped by the filing office even though the UCC record may not yet have been accepted for filing and may be subsequently rejected. The filing time for a UCC record delivered by authorized electronic delivery method is the date and time the UCC information management system receives the record and determines that all the required elements of the transmission have been received in the required format.

C. UCC search requests may be delivered to the filing office by personal, courier, or postal delivery, or by electronic delivery method provided and authorized by the filing office.

5VAC5-30-40. Forms, fees, and payments.

A. Forms.

1. The filing office shall only accept forms for UCC records that conform to the requirements of this chapter.

2. The forms set forth in § 8.9A-521 of the Code of Virginia shall be accepted.

3. 2. The forms approved by the International Association of Commercial Administrators as they appear on the filing office's website (http://www.scc.virginia.gov/division/clk/uccfile.aspx) (http://www.scc.virginia.gov/clk/uccfile.aspx) shall be accepted.

4. 3. The filing officer office may approve other forms for acceptance, including additional forms approved by the International Association of Commercial Administrators.

B. Fees.

1. The fee for filing and indexing a UCC record is $20.

2. The fee for submitting a UCC search request is $7.00.

3. The fee for furnishing UCC search copies is $.50 for each page. The fee for affixing the seal of the commission to a certificate is $3.00.

C. Methods of payment. Filing fees and fees for services provided under this chapter may be paid by the following methods:

1. Payment in cash shall be accepted if paid in person at the filing office.

2. Personal checks, cashier's checks and money orders made payable to the State Corporation Commission or Treasurer of Virginia shall be accepted for payment if drawn on a bank acceptable to the filing office or if the drawer is acceptable to the filing office.

3. Payment by credit card acceptable to the filing office or electronic check shall may be accepted for the filing or submission of documents delivered by authorized electronic delivery method.

4. The filing office may accept payment via electronic funds under National Automated Clearing House Association (NACHA) rules from remitters who have entered into appropriate NACHA-approved arrangements for such transfers and who authorize the relevant transfer pursuant to such arrangements and rules.

D. Overpayment and underpayment policies.

1. The filing officer office shall notify the remitter of the amount of any overpayment exceeding $24.99 and send the remitter the appropriate procedure and form for requesting a refund. The filing officer office shall refund an overpayment of $24.99 or less only upon the written request of the remitter. A request for a refund shall be delivered to the filing office within 12 months from the date of payment.

2. Upon receipt of a UCC record with an insufficient filing fee, the filing officer office shall return the record to the remitter with a notice stating the deficiency and may retain the filing fee.

E. Uncollected filing fee payment. A filing may be voided by the filing office if the filing fee payment that is submitted by the remitter is dishonored, declined, refused, reversed, charged back to the commission, returned to the commission unpaid, or otherwise rejected for any reason by a financial institution or other third party, and after notice from the filing office, the remitter fails to submit a valid payment for the filing fee and any penalties.

F. Federal liens. A notice of lien, certificate and other notice affecting a federal tax lien or other federal lien presented to the filing office pursuant to the provisions of the Uniform Federal Lien Registration Act (§ 55-142.1 et seq. of the Code of Virginia) shall be treated as the most analogous UCC record unless the Uniform Federal Lien Registration Act or federal law provides otherwise.

Part II
Record Requirements

5VAC5-30-50. Acceptance and refusal of records; continuation statements.

A. The duties and responsibilities of the filing officer office with respect to the administration of the UCC are ministerial. In accepting for filing or refusing to file a UCC record pursuant to this chapter, the filing officer office does none of the following:

1. Determine the legal sufficiency or insufficiency of a record;

2. Determine that a security interest in collateral exists or does not exist;

3. Determine that information in the record is correct or incorrect, in whole or in part; or

4. Create a presumption that information in the record is correct or incorrect, in whole or in part.

B. The first day on which a continuation statement may be filed is the day of the month corresponding to the date upon which the related financing statement would lapse in the sixth month preceding the month in which the financing statement would lapse. If there is no such corresponding date, the first day on which a continuation statement may be filed is the last day of the sixth month preceding the month in which the financing statement would lapse. The last day on which a continuation statement may be filed is the date upon which the financing statement lapses. If the lapse date falls on a Saturday, Sunday, or other day on which the filing office is not open, then the last day on which a continuation statement may be filed, if tendered for filing by personal, courier, or postal delivery, is the last day the filing office is open prior to the lapse date. An authorized electronic delivery method may be available to file a continuation statement on a Saturday, Sunday, or other day on which the filing office is not open. The relevant anniversary for a February 29 filing date shall be March 1 in the fifth or 30th year following the date of filing.

C. Except as provided in 5VAC5-30-40 D, if the filing officer office finds grounds to refuse a UCC record for filing, including those set forth in § 8.9A-516 (b) of the Code of Virginia, the filing officer office shall return the record to the remitter and may retain the filing fee.

D. Nothing in this chapter shall prevent the filing officer office from communicating to a filer or a remitter that the filing officer office noticed apparent potential defects in a UCC record, whether or not it was filed or refused for filing. However, the filing office is under no obligation to do so and may not, in fact, have the resources to identify potential defects. The responsibility for the legal effectiveness of filing rests with filers and remitters and the filing office bears no responsibility for such effectiveness.

E. The filing officer office may act in accordance with § 12.1-19 B of the Code of Virginia with respect to submissions that contain personal identifiable information.

F. If a secured party or a remitter demonstrates to the satisfaction of the filing officer office that a UCC record that was refused for filing should not have been refused, the filing officer office shall file the UCC record as provided in this chapter with a filing date and time assigned when the record was originally tendered for filing. The filing officer office shall also file a filing officer statement that states the effective date and time of filing, which shall be the date and time the UCC record was originally tendered for filing.

Part III
Record Filing and Searches

5VAC5-30-60. Filing and data entry procedures.

A. The filing office may correct errors made by its personnel in the UCC information management system at any time. If the correction occurs after the filing officer office has issued a certification, the filing officer office shall file a filing officer statement in the UCC information management system identifying the record to which it relates, the date of the correction, and explaining the nature of the corrective action taken. The record shall be preserved as long as the record of the initial financing statement is preserved in the UCC information management system.

B. An error by a filer or remitter is the responsibility of that person. It can be corrected by filing an amendment or it can be disclosed by filing a correction an information statement pursuant to § 8.9A-518 of the Code of Virginia. A correction statement shall be made only on a Statement of Claim form (Form UCC5).

C. 1. A UCC record tendered for filing shall designate whether a name is a name of an individual or an organization. If the name is that of an individual, the first, middle and last names surname, first personal name, additional name or names, and any suffix shall be given.

2. Organization names are entered into the UCC information management system exactly as set forth in the UCC record, even if it appears that multiple names are set forth in the record or if it appears that the name of an individual has been included in the field designated for an organization name.

3. The filing office will only accept forms that designate separate fields for individual and organization names and separate fields for first, middle, and last names the surname, first personal name, additional name or names, and any suffix. Such forms diminish the possibility of filing office error and help assure that filers' expectations are met. However, the inclusion of names in an incorrect field or the failure to transmit names accurately to the filing office may cause a financing statement to be ineffective.

D. The filing officer office shall take no action upon receipt of a notification, formal or informal, of a bankruptcy proceeding involving a debtor included in the UCC information management system.

5VAC5-30-70. Search requests and reports.

A. The filing officer office maintains for public inspection a searchable index for all UCC records. The index shall provide for the retrieval of all filed records by the name of the debtor and by the file number of the initial financing statement.

B. Search requests shall be made only on the National Information Request form (Form UCC11) and shall include:

1. The name of the debtor to be searched, specifying whether the debtor is an individual or organization. A search request will be processed using the exact name provided by the requestor.

2. The name and address of the person to whom the search report is to be sent.

3. Payment of the appropriate fee, which shall be made by a method set forth in this chapter.

C. Search requests may include:

1. A request that copies of records found in the search be included with the search report, and

2. Instructions on the mode of delivery desired, if other than by postal delivery, which shall be followed if the desired mode is acceptable to the filing office.

D. Search results are produced by the application of standardized search logic to the name presented to the filing officer office. The following criteria apply to searches:

1. There is no limit to the number of matches that may be returned in response to the search request.

2. No distinction is made between upper and lower case letters.

3. Punctuation marks and accents are disregarded.

4. "Noise words" are limited to "an," "and," "for," "of," and "the." The word "the" is disregarded. Other noise words appearing anywhere except at the beginning of an organization name are disregarded. Certain business words are modified to a standard abbreviation: company to "co," corporation to "corp," limited to "ltd," incorporated to "inc."

5. All spaces are disregarded.

6. After using the preceding criteria to modify the name to be searched, the search will reveal names of debtors that are contained in unlapsed or all initial financing statements in an alphabetical list.

E. Reports created in response to a search request shall include the following:

1. The date and time the report was generated.

2. Identification of the name searched.

3. The through date as of the date and time the report was generated.

4. For an organization, the name as it appears after application of the standardized search logic.

5. Identification of each unlapsed initial financing statement or all initial financing statements filed on or prior to the report date and time corresponding to the search criteria, by name of debtor, by file number, and by file date and file time.

6. For each initial financing statement on the report, a listing of all related UCC records filed by the filing officer office on or prior to the report date.

7. Copies of all UCC records revealed by the search and requested by the requestor.

F. The filing office may provide access to the searchable index via the Internet that produces search results beyond exact name matches. Search results obtained via the Internet shall not constitute an official search and will not be certified by the filing office.

NOTICE: The following forms used in administering the regulation were filed by the agency. The forms are not being published; however, online users of this issue of the Virginia Register of Regulations may click on the name to access a form. The forms are also available from the agency contact or may be viewed at the Office of the Registrar of Regulations, General Assembly Building, 2nd Floor, Richmond, Virginia 23219.

FORMS (5VAC5-30)

UCC Financing Statement, Form UCC1, (rev. 5/02).

UCC Financing Statement Addendum, Form UCC1Ad, (rev. 5/09).

UCC Financing Statement Additional Party, Form UCC1AP, (rev. 5/02).

UCC Financing Statement Amendment, Form UCC3, (rev. 5/02).

UCC Financing Statement Amendment Addendum, Form UCC3Ad, (rev. 7/98).

UCC Financing Statement Amendment Additional Party, Form UCC3AP, (rev. 5/02).

UCC Information Statement of Claim, Form UCC5, (rev. 5/09).

National UCC Information Request, Form UCC11, (rev. 5/09).

UCC Financing Statement, Form UCC1 (rev. 4/11).

UCC Financing Statement Addendum, Form UCC1Ad (rev. 4/11).

UCC Financing Statement Additional Party, Form UCC1AP (rev. 8/11).

UCC Financing Statement Amendment, Form UCC3 (rev. 4/11).

UCC Financing Statement Amendment Addendum, Form UCC3Ad (rev. 4/11).

UCC Financing Statement Amendment Additional Party, Form UCC3AP (rev. 8/11).

UCC Information Statement, Form UCC5 (rev. 7/12).

UCC Information Request, Form UCC11 (rev. 7/12).

VA.R. Doc. No. R13-3633; Filed April 2, 2013, 5:10 p.m.