Relating to choice of law and assignment or acquisition of claims and demands in connection with certificated and uncertificated securities, the official text

S.B. No. 1239

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 issued by a foreign state as defined by 28

U.S.C. Section 1603, 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 such security;

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

depositary, or other party under any indenture under which such

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 such 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 issued by a

foreign state as defined by 28 U.S.C. Section 1603, 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 by a foreign state as defined by

28 U.S.C. Section 1603 in a qualified transaction, including any

change in that governing law, applies retroactively to all issues

relating to such security.

(c) A security issued by a foreign state as defined by 28

U.S.C. Section 1603 in a qualified transaction may be modified or

amended, in accordance with such 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.

______________________________
______________________________

President of the Senate
Speaker of the House

I hereby certify that S.B. No. 1239 passed the Senate on

April 10, 2025, by the following vote: Yeas 30, Nays 0.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 1239 passed the House on

May 20, 2025, by the following vote: Yeas 136, Nays 10, three

present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor