(a) As used in Chapter 55, Article 12 NMSA 1978: (1) "controllable electronic record" means a record stored in an electronic medium that can be subjected to control pursuant to Section 55-12-105 NMSA 1978. The term does not include a controllable account, a controllable payment intangible, a deposit account, an electronic copy of a record evidencing chattel paper, an electronic document of title, electronic money, investment property or a transferable record; (2) "qualifying purchaser" means a purchaser of a controllable electronic record or an interest in a controllable electronic record that obtains control of the controllable electronic record for value, in good faith, and without notice of a claim of a property right in the controllable electronic record; (3) "transferable record" has the meaning provided for that term in: (A) Section 201(a)(1) of the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7021(a)(1), as amended; or (B) Subsection (a) of Section 14-16-16 NMSA 1978; and (4) "value" has the meaning provided in Subsection (a) of Section 55-3-303 NMSA 1978 as if references in that subsection to an "instrument" were references to a controllable account, controllable electronic record or controllable payment intangible. (b) The definitions in Article 9 of the Uniform Commercial Code of "account debtor", "controllable account", "controllable payment intangible", "chattel paper", "deposit account", "electronic money" and "investment property" apply to Sections 55-12-101 through 55-12-106 NMSA 1978. (c) Article 1 of the Uniform Commercial Code contains general definitions and principles of construction and interpretation applicable throughout Sections 55-12-101 through 55-12-106 NMSA 1978. History: 1978 Comp., § 55-12-102, enacted by Laws 2023, ch. 142, § 97. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Source. Subsection (a)(2), defining "qualifying purchaser," derives from Section 3-302(a)(2), which defines "holder in due course" of a negotiable instrument. 2. "Controllable electronic record." To be a "controllable electronic record" (CER) within the scope of Article 12, an electronic record must be susceptible of control under Section 12-105. Unlike "transferable records" under the Electronic Signatures in Global and National Commerce Act (E-SIGN) or a "transferable record" under the Uniform Electronic Transactions Act (UETA), a record can be a CER under Article 12 in the absence of an agreement to that effect. This definition uses the term "record," defined in Section 1-201 to include "information . . . that is stored in an electronic or other medium and is retrievable in perceivable form." The term "electronic" also is defined in Section 1-201. These broad definitions of "record" and "electronic" necessarily produce an expansive meaning of "electronic record." An electronic record would include, for example, music stored on compact disks, email messages, digital photos, personal and other information stored on a social media platform, and all types of databases stored on in an electronic medium. But most of these electronic records typically would not fall within the definition of a CER in Subsection (a)(1), which includes only those electronic records "that can be subjected to control under Section 12-105." See generally Prefatory Note 2. Consider, for example, a so-called "page" on a social media platform. Generalizations about social media/social networking platforms are difficult and these systems no doubt will continue to evolve. But these platforms typically involve licensing arrangements with users that do not permit the users (or anyone) to acquire the exclusive powers contemplated by the definition of "control" in Section 12-105. Consequently, these electronic records are not controllable electronic records as defined. The provisions of Article 12 also do not apply to certain specified types of electronic records, and the definition has been limited accordingly. For example, the definition does not include a "transferable record" under E-SIGN or UETA. It also does not include "investment property," as defined in Section 9-102(a)(49). For this reason, the rights of an entitlement holder in a controllable electronic record that is a financial asset with respect to which the entitlement holder has a security entitlement are excluded from the definition (although the entitlement holder's securities intermediary may hold directly an interest in a controllable electronic record that it has credited to a securities account). See Sections 8-102(a)(9) (defining "financial asset"), (a)(14) (defining "securities intermediary"), (a)(17) (defining "security entitlement"), and Comment 9; 9-102(a)(49) (defining "investment property"). See also Section 8-103(h), clarifying that a controllable electronic record is not a "financial asset" except pursuant to Section 8-102(a)(9)(iii). A controllable electronic record is not itself a "security," defined in part in Section 8-102(a)(15) as "an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer." It also is not "a share or similar equity interest," an "investment company security," or "an interest in a partnership or limited liability company." See Section 8-103(a), (b), and (c). For a discussion of the roles that controllable electronic records may play in transactions involving uncertificated securities, see Section 8-102, Comment 18. 3. "Qualifying purchaser." The conditions for becoming a qualifying purchaser were drawn from Article 3. More specifically, the conditions for becoming a qualifying purchaser were drawn from Section 3-302(a)(2), which defines "holder in due course" of a negotiable instrument. Among these conditions is that a person take the instrument "for value." See Subsection (a)(4) (defining "value") and Comment 5. To meet the requirements for a qualifying purchaser under Subsection (a)(2) there must be a time at which all of the requirements are satisfied. For example, if a purchaser obtains notice of a claim of a property right before giving value or satisfying the requirements for control, the purchaser cannot be a qualifying purchaser. Under Section 12-104(a), not only a purchaser of a controllable electronic record but also a purchaser of a controllable account or controllable payment intangible may be a qualifying purchaser. Moreover, a purchaser of a controllable account or a controllable payment intangible may be a qualifying purchaser even if the purchaser does not also purchase the controllable electronic record that evidences the account or payment intangible. For example, a secured party having a security interest in all of a debtor's accounts and payment intangibles would be a purchaser of those rights to payment, which would include the debtor's controllable accounts and payment intangibles. If the secured party were to obtain control of the debtor's controllable account or payment intangible, it would become a qualifying purchaser if it also met the other conditions for that status. However, to obtain control of the controllable account or controllable payment intangible, a requirement for qualifying purchaser status, the purchaser must obtain control of the controllable electronic record evidencing the controllable account or controllable payment intangible. Section 12-104(b); see also Section 9-107A. A person need not be a purchaser, however, to obtain control of a controllable electronic record. 4. "Transferable record." This definition facilitates the exclusion of transferable records from the definition of controllable electronic record. 5. "Value." This definition adopts the concept of value in Section 3-303, which is narrower than the generally applicable concept in Section 1-204. Comment 10 to Section 12-104 explains the difference between the two concepts. Effective dates. — Laws 2023, ch. 142, § 112 made Laws 2023, ch. 142, § 97 effective January 1, 2024. Compiler's notes. — Laws 2023, ch. 142, § 97 enacted a new 55-12-102 NMSA 1978, effective January 1, 2024. Former 55-12-102 NMSA 1978, as enacted by Laws 1985, ch. 193, § 40, was recompiled as 55-11A-102 NMSA 1978, effective January 1, 2024.
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