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LEGISLATURE
OF
THE
STATE
OF
IDAHO
Sixty-eighth
Legislature
Second
Regular
Session
-
2026
IN
THE
HOUSE
OF
REPRESENTATIVES
HOUSE
BILL
NO.
702
BY
BUSINESS
COMMITTEE
AN
ACT
1
RELATING
TO
COMMERCIAL
TRANSACTIONS;
AMENDING
SECTION
28
-
8
-
110,
IDAHO
2
CODE,
TO
REVISE
A
PROVISION
REGARDING
APPLICABILITY
AND
CHOICE
OF
LAW
3
AND
TO
REMOVE
PROVISIONS
REGARDING
APPLICABILITY
AND
CHOICE
OF
LAW;
4
AMENDING
SECTION
28
-
8
-
503,
IDAHO
CODE,
TO
REMOVE
A
CODE
REFERENCE
AND
5
TO
MAKE
TECHNICAL
CORRECTIONS;
AMENDING
SECTION
28
-
8
-
511,
IDAHO
CODE,
6
TO
REMOVE
PROVISIONS
REGARDING
PRIORITY
AMONG
SECURITY
INTERESTS
AND
7
ENTITLEMENT
HOLDERS;
AMENDING
SECTION
28
-
9
-
305,
IDAHO
CODE,
TO
REMOVE
A
8
PROVISION
REGARDING
SECURITY
INTERESTS
AND
TO
MAKE
A
TECHNICAL
CORREC
-
9
TION;
AND
DECLARING
AN
EMERGENCY
AND
PROVIDING
AN
EFFECTIVE
DATE.
10
Be
It
Enacted
by
the
Legislature
of
the
State
of
Idaho:
1
1
SECTION
1.
That
Section
28
-
8
-
110,
Idaho
Code,
be,
and
the
same
is
hereby
12
amended
to
read
as
follows:
13
28
-
8
-
110.
APPLICABILITY
AND
CHOICE
OF
LAW.
(1)
The
local
law
of
the
is
-
14
suer's
jurisdiction,
as
specified
in
subsection
(4)
of
this
section,
gov
-
15
erns:
16
(a)
The
validity
of
a
security;
17
(b)
The
rights
and
duties
of
the
issuer
with
respect
to
registration
of
18
transfer;
19
(c)
The
effectiveness
of
registration
of
transfer
by
the
issuer;
20
(d)
Whether
the
issuer
owes
any
duties
to
an
adverse
claimant
to
a
secu
-
21
rity;
and
22
(e)
Whether
an
adverse
claim
can
be
asserted
against
a
person
to
whom
23
transfer
of
a
certificated
or
uncertificated
security
is
registered
or
24
a
person
who
obtains
control
of
an
uncertificated
security.
25
(2)
The
local
law
of
the
securities
intermediary's
jurisdiction,
as
26
specified
in
subsection
(5)
of
this
section,
Idaho
governs:
27
(a)
Acquisition
of
a
security
entitlement
from
the
securities
interme
-
28
diary;
29
(b)
The
rights
and
duties
of
the
securities
intermediary
and
entitle
-
30
ment
holder
arising
out
of
a
security
entitlement;
31
(c)
Whether
the
securities
intermediary
owes
any
duties
to
an
adverse
32
claimant
to
a
security
entitlement;
and
33
(d)
Whether
an
adverse
claim
can
be
asserted
against
a
person
who
ac
-
34
quires
a
security
entitlement
from
the
securities
intermediary
or
a
35
person
who
purchases
a
security
entitlement
or
interest
therein
from
an
36
entitlement
holder.
37
(3)
The
local
law
of
the
jurisdiction
in
which
a
security
certificate
38
is
located
at
the
time
of
delivery
governs
whether
an
adverse
claim
can
be
39
asserted
against
a
person
to
whom
the
security
certificate
is
delivered.
40
(4)
"Issuer's
jurisdiction"
means
the
jurisdiction
under
which
the
is
-
41
suer
of
the
security
is
organized
or,
if
permitted
by
the
law
of
that
juris
-
42
2
diction,
the
law
of
another
jurisdiction
specified
by
the
issuer.
An
is
-
1
suer
organized
under
the
law
of
this
state
may
specify
the
law
of
another
ju
-
2
risdiction
as
the
law
governing
the
matters
specified
in
subsections
(1)(b)
3
through
(1)(e)
of
this
section.
4
(5)
The
following
rules
determine
a
"securities
intermediary's
juris
-
5
diction"
for
purposes
of
this
section:
6
(a)
If
an
agreement
between
the
securities
intermediary
and
its
en
-
7
titlement
holder
governing
the
securities
account
expressly
provides
8
that
a
particular
jurisdiction
is
the
securities
intermediary's
ju
-
9
risdiction
for
purposes
of
this
part,
this
chapter,
or
this
act,
that
10
jurisdiction
is
the
securities
intermediary's
jurisdiction.
1
1
(b)
If
paragraph
(a)
of
this
subsection
does
not
apply
and
an
agreement
12
between
the
securities
intermediary
and
its
entitlement
holder
gov
-
13
erning
the
securities
account
expressly
provides
that
the
agreement
is
14
governed
by
the
law
of
a
particular
jurisdiction,
that
jurisdiction
is
15
the
securities
intermediary's
jurisdiction.
16
(c)
If
neither
paragraph
(a)
nor
paragraph
(b)
of
this
section
applies
17
and
an
agreement
between
the
securities
intermediary
and
its
entitle
-
18
ment
holder
governing
the
securities
account
expressly
provides
that
19
the
securities
account
is
maintained
at
an
office
in
a
particular
juris
-
20
diction,
that
jurisdiction
is
the
securities
intermediary's
jurisdic
-
21
tion.
22
(d)
If
none
of
the
preceding
paragraphs
apply,
the
securities
interme
-
23
diary's
jurisdiction
is
the
jurisdiction
in
which
the
office
identified
24
in
an
account
statement
as
the
office
serving
the
entitlement
holder's
25
account
is
located.
26
(e)
If
none
of
the
preceding
paragraphs
apply,
the
securities
interme
-
27
diary's
jurisdiction
is
the
jurisdiction
in
which
the
chief
executive
28
office
of
the
securities
intermediary
is
located.
29
(6)
A
securities
intermediary's
jurisdiction
is
not
determined
by
the
30
physical
location
of
certificates
representing
financial
assets,
or
by
the
31
jurisdiction
in
which
is
organized
the
issuer
of
the
financial
asset
with
re
-
32
spect
to
which
an
entitlement
holder
has
a
security
entitlement,
or
by
the
33
location
of
facilities
for
data
processing
or
other
recordkeeping
concern
-
34
ing
the
account.
35
SECTION
2.
That
Section
28
-
8
-
503,
Idaho
Code,
be,
and
the
same
is
hereby
36
amended
to
read
as
follows:
37
28
-
8
-
503.
PROPERTY
INTEREST
OF
ENTITLEMENT
HOLDER
IN
FINANCIAL
ASSET
38
HELD
BY
SECURITIES
INTERMEDIARY.
(1)
To
the
extent
necessary
for
a
secu
-
39
rities
intermediary
to
satisfy
all
security
entitlements
with
respect
to
40
a
particular
financial
asset,
all
interests
in
that
financial
asset
held
41
by
the
securities
intermediary
are
held
by
the
securities
intermediary
for
42
the
entitlement
holders,
are
not
property
of
the
securities
intermediary,
43
and
are
not
subject
to
claims
of
creditors
of
the
securities
intermediary
,
44
except
as
otherwise
provided
in
section
28
-
8
-
511
.
45
(2)
An
entitlement
holder's
property
interest
with
respect
to
a
partic
-
46
ular
financial
asset
under
subsection
(1)
of
this
section
is
a
pro
rata
prop
-
47
erty
interest
in
all
interests
in
that
financial
asset
held
by
the
securities
48
intermediary,
without
regard
to
the
time
the
entitlement
holder
acquired
the
49
3
security
entitlement
or
the
time
the
securities
intermediary
acquired
the
1
interest
in
that
financial
asset.
2
(3)
An
entitlement
holder's
property
interest
with
respect
to
a
par
-
3
ticular
financial
asset
under
subsection
(1)
of
this
section
may
be
enforced
4
against
the
securities
intermediary
only
by
exercise
of
the
entitlement
5
holder's
rights
under
sections
28
-
8
-
505
through
28
-
8
-
508
,
Idaho
Code
.
6
(4)
An
entitlement
holder's
property
interest
with
respect
to
a
par
-
7
ticular
financial
asset
under
subsection
(1)
of
this
section
may
be
enforced
8
against
a
purchaser
of
the
financial
asset
or
interest
therein
only
if:
9
(a)
Insolvency
proceedings
have
been
initiated
by
or
against
the
secu
-
10
rities
intermediary;
1
1
(b)
The
securities
intermediary
does
not
have
sufficient
interests
in
12
the
financial
asset
to
satisfy
the
security
entitlements
of
all
of
its
13
entitlement
holders
to
that
financial
asset;
14
(c)
The
securities
intermediary
violated
its
obligations
under
section
15
28
-
8
-
504
,
Idaho
Code,
by
transferring
the
financial
asset
or
interest
16
therein
to
the
purchaser;
and
17
(d)
The
purchaser
is
not
protected
under
subsection
(5)
of
this
sec
-
18
tion.
19
The
trustee
or
other
liquidator,
acting
on
behalf
of
all
entitlement
holders
20
having
security
entitlements
with
respect
to
a
particular
financial
asset,
21
may
recover
the
financial
asset,
or
interest
therein,
from
the
purchaser.
If
22
the
trustee
or
other
liquidator
elects
not
to
pursue
that
right,
an
entitle
-
23
ment
holder
whose
security
entitlement
remains
unsatisfied
has
the
right
to
24
recover
its
interest
in
the
financial
asset
from
the
purchaser.
25
(5)
An
action
based
on
the
entitlement
holder's
property
interest
with
26
respect
to
a
particular
financial
asset
under
subsection
(1)
of
this
sec
-
27
tion,
whether
framed
in
conversion,
replevin,
constructive
trust,
equitable
28
lien
or
other
theory,
may
not
be
asserted
against
any
purchaser
of
a
finan
-
29
cial
asset
or
interest
therein
who
gives
value,
obtains
control,
and
does
not
30
act
in
collusion
with
the
securities
intermediary
in
violating
the
securi
-
31
ties
intermediary's
obligations
under
section
28
-
8
-
504
,
Idaho
Code
.
32
SECTION
3.
That
Section
28
-
8
-
511,
Idaho
Code,
be,
and
the
same
is
hereby
33
amended
to
read
as
follows:
34
28
-
8
-
511.
PRIORITY
AMONG
SECURITY
INTERESTS
AND
ENTITLEMENT
HOLD
-
35
ERS.
(1)
Except
as
otherwise
provided
in
subsections
(2)
and
(3)
of
this
36
section,
if
If
a
securities
intermediary
does
not
have
sufficient
interests
37
in
a
particular
financial
asset
to
satisfy
both
its
obligations
to
entitle
-
38
ment
holders
who
have
security
entitlements
to
that
financial
asset
and
its
39
obligation
to
a
creditor
of
the
securities
intermediary
who
has
a
security
40
interest
in
that
financial
asset,
the
claims
of
entitlement
holders,
other
41
than
the
creditor,
have
priority
over
the
claim
of
the
creditor.
42
(2)
A
claim
of
a
creditor
of
a
securities
intermediary
who
has
a
secu
-
43
rity
interest
in
a
financial
asset
held
by
a
securities
intermediary
has
pri
-
44
ority
over
claims
of
the
securities
intermediary's
entitlement
holders
who
45
have
security
entitlements
with
respect
to
that
financial
asset
if
the
cred
-
46
itor
has
control
over
the
financial
asset.
47
(3)
If
a
clearing
corporation
does
not
have
sufficient
financial
assets
48
to
satisfy
both
its
obligations
to
entitlement
holders
who
have
security
en
-
49
4
titlements
with
respect
to
a
financial
asset
and
its
obligation
to
a
creditor
1
of
the
clearing
corporation
who
has
a
security
interest
in
that
financial
as
-
2
set,
the
claim
of
the
creditor
has
priority
over
the
claims
of
entitlement
3
holders.
4
SECTION
4.
That
Section
28
-
9
-
305,
Idaho
Code,
be,
and
the
same
is
hereby
5
amended
to
read
as
follows:
6
28
-
9
-
305.
LAW
GOVERNING
PERFECTION
AND
PRIORITY
OF
SECURITY
INTERESTS
7
IN
INVESTMENT
PROPERTY.
(a)
Except
as
otherwise
provided
in
subsection
(c)
8
of
this
section,
the
following
rules
apply:
9
(1)
While
a
security
certificate
is
located
in
a
jurisdiction,
the
lo
-
10
cal
law
of
that
jurisdiction
governs
perfection,
the
effect
of
perfec
-
1
1
tion
or
nonperfection,
and
the
priority
of
a
security
interest
in
the
12
certificated
security
represented
thereby.
13
(2)
The
local
law
of
the
issuer's
jurisdiction
as
specified
in
section
14
28
-
8
-
110(4)
,
Idaho
Code,
governs
perfection,
the
effect
of
perfection
15
or
nonperfection,
and
the
priority
of
a
security
interest
in
an
uncer
-
16
tificated
security.
17
(3)
The
local
law
of
the
securities
intermediary's
jurisdiction
as
18
specified
in
section
28
-
8
-
110(5)
governs
perfection,
the
effect
of
per
-
19
fection
or
nonperfection,
and
the
priority
of
a
security
interest
in
a
20
security
entitlement
or
securities
account.
21
(4)
(3)
The
local
law
of
the
commodity
intermediary's
jurisdiction
22
governs
perfection,
the
effect
of
perfection
or
nonperfection,
and
the
23
priority
of
a
security
interest
in
a
commodity
contract
or
commodity
24
account.
25
(b)
The
following
rules
determine
a
commodity
intermediary's
jurisdic
-
26
tion
for
purposes
of
this
part:
27
(1)
If
an
agreement
between
the
commodity
intermediary
and
commodity
28
customer
governing
the
commodity
account
expressly
provides
that
a
par
-
29
ticular
jurisdiction
is
the
commodity
intermediary's
jurisdiction
for
30
purposes
of
this
part,
this
chapter,
or
the
uniform
commercial
code,
31
that
jurisdiction
is
the
commodity
intermediary's
jurisdiction.
32
(2)
If
paragraph
(1)
of
this
subsection
does
not
apply
and
an
agree
-
33
ment
between
the
commodity
intermediary
and
commodity
customer
govern
-
34
ing
the
commodity
account
expressly
provides
that
the
agreement
is
gov
-
35
erned
by
the
law
of
a
particular
jurisdiction,
that
jurisdiction
is
the
36
commodity
intermediary's
jurisdiction.
37
(3)
If
neither
paragraph
(1)
nor
(2)
of
this
subsection
applies
and
an
38
agreement
between
the
commodity
intermediary
and
commodity
customer
39
governing
the
commodity
account
expressly
provides
that
the
commodity
40
account
is
maintained
at
an
office
in
a
particular
jurisdiction,
that
41
jurisdiction
is
the
commodity
intermediary's
jurisdiction.
42
(4)
If
none
of
the
preceding
paragraphs
apply,
the
commodity
interme
-
43
diary's
jurisdiction
is
the
jurisdiction
in
which
the
office
identified
44
in
an
account
statement
as
the
office
serving
the
commodity
customer's
45
account
is
located.
46
(5)
If
none
of
the
preceding
paragraphs
apply,
the
commodity
intermedi
-
47
ary's
jurisdiction
is
the
jurisdiction
in
which
the
chief
executive
of
-
48
fice
of
the
commodity
intermediary
is
located.
49
5
(c)
The
local
law
of
the
jurisdiction
in
which
the
debtor
is
located
1
governs:
2
(1)
Perfection
of
a
security
interest
in
investment
property
by
filing;
3
(2)
Automatic
perfection
of
a
security
interest
in
investment
property
4
created
by
a
broker
or
securities
intermediary;
and
5
(3)
Automatic
perfection
of
a
security
interest
in
a
commodity
contract
6
or
commodity
account
created
by
a
commodity
intermediary.
7
SECTION
5.
An
emergency
existing
therefor,
which
emergency
is
hereby
8
declared
to
exist,
this
act
shall
be
in
full
force
and
effect
on
and
after
9
July
1,
2026.
10