Uncertificated Securities Control Agreement

Summary

This is an uncertificated securities control agreement (UNCA) for use where the collateral is uncertificated securities which are transferred on the books and records of an issuer of the security. This template includes practical guidance, drafting notes, and alternate clauses. This template is not appropriate to perfect the security interest in securities held in securities accounts (this is accomplished by the entering into of a securities account control agreement). Where the uncertificated securities are issued by a mutual fund, these can be held in a securities account with a broker and will generally be treated as a securities entitlement but where the mutual fund shares are held by a transfer agent for the mutual fund issuer, the transfer agent is typically not a securities intermediary and the "account" where the mutual funds shares are held is not likely a "securities account" for UCC purposes. Mutual fund shares credited to any such "account" held by a transfer agent cannot be perfected by the entering into of a securities account control agreement because they are not indorsed to a securities intermediary or in blank and are thus, not financial assets for purposes of UCC 8-501(d) as they are registered in the name of the pledgor and it is the registered owner (and not a securities intermediary) who has the power to instruct the issuer to transfer the shares. The transfer agent should also be a party to the UNCA. Modify this template, as appropriate, to conform to the terms of your specific transaction. The user is cautioned that the modification of statutorily required language necessary for legal sufficiency may impair the perfection of the security interest in the uncertificated security by control pursuant to the UNCA. For a full listing of key content covering perfecting collateral in limited liability company (LLC) and limited partnership (LP) ownership interests, see LLC and Partnership Interests Security Interests. For a full listing of key content that provides an overview of the creation, perfection, and priority of security interests under the Uniform Commercial Code (UCC), see Security Interests Resource Kit.