A Guide to the Uniform Commercial Code, Article 8 - Investment Securities, 1971-2007

Historical Background

In 1942, the Uniform Law Commission (ULC) and the American Law Institute (ALI) started a collaborative effort to draft a single, comprehensive model code governing commercial law in the United States. The first Official Text of the Uniform Commercial Code (UCC) was published in 1952, with subsequent revised versions promulgated in 1957, 1958, 1962, 1972, 1978, 1987 (Article 2A added), 1989 (Article 4A added), 1990, 1994, 1995, 2000, 2001, 2002, 2003, and 2004, 2010, and 2012. The stated purpose of the UCC is “(1) to simplify, clarify, and modernize the law governing commercial transactions; (2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and (3) to make uniform the law among the various jurisdictions” (UCC 1-103). This facilitates the conduct of various business transactions such as purchase of raw materials, sales, check processing, and securing obligations, and also reduces inconsistency and variability in court decisions across jurisdictions.

UCC has been enacted in all 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands. UCC does not become law unless it is enacted by legislature, and does not have to be adopted exactly as promulgated by the ULC. Louisiana, for example, has not adopted Article 2 (Sales) or Article 2A (Leases) in favor of its civil code tradition governing these transactions. Some jurisdictions adopt non-uniform amendments or fail to enact the latest amendments or revisions. To reduce the ambiguities of language, the Code is accompanied by Official Comments. PEB also publishes a separate UCC commentary, addressing uncertainties or conflicts that appear in the Official Text and Comments and other related issues. While often consulted, the comments themselves do not hold legal status, unless they are explicitly adopted by a legislature.

The drafting and revision process often takes several years. Permanent Editorial Board (PEB), in charge of reviewing and revising the Code, studies a suggestion or sets up a study committee with the goal of determining whether a change in law is desirable and feasible. If it is, the nature and scope of the change is proposed for approval by the ULC Scope and Program and Executive Committees and the ALI Council. If the project is approved, a drafting committee of experts and at least one generalist is formed to revise and/or amend the Official Text. The reporters collect and report the input of advisors, observers, lawyers, scholars, industry leaders, consumer interest representatives, various committees and task forces of ULC, ALI and ABA, state commissions, government agencies, lobby groups, and other stakeholders. Once the drafting committee members decide on the policy, the reporters are tasked with producing the new draft reflecting those decisions. A draft usually goes through multiple iterations, and is checked for grammatical and structural correctness and consistency by a style committee. If ULC and ALI memberships approve the changes, ULC commissioners work to ensure that all states adopt the revised statute, preferably as promulgated to maintain uniformity of law.

Article 8 of the Uniform Commercial Code (UCC) addresses ownership and transfer of investment securities such as stocks, bonds, mutual fund shares, and limited partnership shares, among other types of investment medium. Based on the Uniform Stock Transfer Act (1909), it was first published in 1952 as part of the original UCC text. Article 8 was revised in 1962, adding provisions for securities held by a clearing corporation; in 1977, adding the concept of uncertificated - or certificateless - securities to allow for paperless or electronic transfers; and again in 1994, to better accommodate security trading in the vastly popular indirect holding systems. The 1994 version has been enacted by all states and District of Columbia. Its sections are: Short Title and General Matters; Issue and Issuer; Transfer of Certificated and Uncertificated Securities; Registration; and Security Entitlements.

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Contents of the Collection

The collection contains correspondence, committee files, conference proceedings, reports, working drafts, commissioner notes, research materials, publications, legislative materials, and miscellaneous documents related to drafting, interpretation, and state adoption of revisions to Article 8 of the Uniform Commercial Code (UCC). Includes some material on UCC Articles 3, 4 and 9 and related international laws.

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Restrictions

Access Restrictions

Duplication restrictions on copyrighted material in research files. Please contact the Department of Special Collections for more information.

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Related Materials

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Administrative Information

Cite As

Uniform Commercial Code, Article 8 - Investment Securities, Uniform Law Commission Archives, Tarlton Law Library, The University of Texas at Austin.

Acquisition Information

On loan from the Uniform Law Commission, 2012.

Processing Information

Processing completed May 2015 by Evelina Stulgaityte.

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Detailed Description of the Collection

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