The second session of Nebraska’s 108th Legislature adjourned on April 18, drawing the 60-day session to a close. During this short session, Gov. Jim Pillen signed into law four bills that passed through the Committee on Banking, Commerce and Insurance, which will impact Nebraska banks and financial institutions. The following is a brief explanation of the legislative bills introduced and the impacts they will have on Nebraska’s statutory framework.

LB94

Legislative Bill 94 (LB94) was introduced on Jan. 23, 2023, by Sen. Julie Slama to amend several sections of the Uniform Commercial Code (UCC). The bill was prepared by representatives of the Uniform Law Commission and Nebraska banks and comes on the heels of Nebraska’s passage of legislation allowing for the deposit of cryptocurrency or other digital assets into financial institutions. LB94 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024.

The UCC governs commercial transactions in Nebraska and other adopting states and requires periodic updates to stay current with new forms of personal property and evolving markets. LB94 seeks to adopt a new Article 12 of the UCC to replace the current language and implement accompanying amendments to UCC Article 9, which would create a new category of asset, “controllable electronic records.”

Controllable electronic record (CER) will be defined in the updated language of Nebraska Uniform Commercial Code § 12-102(a) as “a record stored in an electronic medium that can be subjected to control.” The Committee on Banking, Commerce and Insurance noted in their LB94 Committee Statement that the definition will cover many forms of property created through the use of blockchain technology that exist today or that may exist in the future. Examples of such property would include virtual currency like Bitcoin, non-fungible tokens (NFTs) and digital assets with embedded payment rights.¹

Updated language to Nebraska Uniform Commercial Code § 12-105 will now govern control of a CER. The Committee on Banking, Commerce and Insurance has summarized the definition of control found in § 12-105 to include: (1) the nonexclusive power to enjoy substantially all the benefits of the CER; (2) the exclusive power to prevent others from enjoying substantially all the benefits of the CER; (3) the exclusive power to transfer control or to cause another person to get control of the CER; and (4) the ability of the person in control to identify itself to a third-party as the person having control (can be accomplished through the use of the cryptographic key or account number).² The updated language will also direct how a security interest attaches to CERs and how to perfect security interests.

LB94 looks to replace the current language in UCC Article 12, put in place on July 1, 2022. Importantly, LB94 contains a “Special Transitional Rule” that applies the current UCC Article 12 language to any transaction involving a CER that arose on or after July 21, 2022, and before the operative date of LB94. This rule also states that transactions involving a CER arising before July 1, 2022, will be carried out under the laws existing before July 1, 2022, and the transaction may be terminated, completed, consummated or enforced under that pre-existing statute, treating the current version of UCC Article 12 as if it had not existed.

LB279

Legislative Bill 279 (LB279) was introduced on Jan. 31, 2023, by Sen. Kathleen Kauth, seeking to change and eliminate provisions relating to reporting requirements of executive officers of banks at a state level, explicitly amending Neb. Rev. Stat. § 8-143.01. LB279 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024.

LB279 amends Neb. Rev. Stat. § 8-143.01 to eliminate provisions relating to the report of loans, indebtedness and credit of executive officers of banks and to adopt federal updates to the law relating to extension of credit.³ These changes are made to establish as much parity as possible between state and national banks. Because the Financial Services Regulatory Relief Act of 2006 removed the requirement of executive officers to report outside indebtedness for national banks, LB279 removes those same requirements currently found at the state level.

LB628

Legislative Bill 628 (LB628) was introduced on Jan. 31, 2023, by Sen. Mike Jacobson to amend sections of the Revised Uniform Limited Liability Act (RULLCA) and the Nebraska Professional Corporation Act (NPCA). This bill was brought by the Nebraska Secretary of State, seeking to address inconsistencies in the aforementioned acts. The amended sections relate to the filing requirements for professional services organized under those acts.⁴ LB628 was carried over to the second session and signed into law by Gov. Jim Pillen on Feb. 14, 2024.

LB628 makes the following amendments to RULLCA and NPCA:

RULLCA § 21-102

Two definitional changes:

1. 1. A certificate of registration under RULLCA would also include the verification that all members, managers, professional employees and agents who are required by law to do so are duly licensed or otherwise legally authorized to render the professional service for which the limited liability company is organized to do business or ancillary service as those which the limited liability company renders, through the electronic accessing of the regulatory body’s licensing records or through compacts or other certifying organizations recognized by the regulatory body by the Secretary of State.⁵
   2. The definition of professional service under RULLCA is clarified by providing an exhaustive list of professions included in the definition.⁶

RULLCA § 21-185

Removes the residential address filing requirement, requiring only that an address be provided. Further, amendments include the expansion of the scope to which the section applies, now including any ancillary service the professional LLC renders. The section now includes a grandfather clause for professional service LLCs that already have a certificate of registration.⁷

RULLCA § 21-186

Amended to expand the scope to which the section applies to include any ancillary service the professional LLC renders. Adds clarification on the accessibility of licensing records of regulating boards and provides a requirement to make such records automated, electronically accessible and verifiable by the Secretary of State.⁸

RULLCA § 21-118

Amended to expand the scope to which the section applies to include any ancillary service the professional LLC renders.

NPCA § 21-2202

Changes the definition of certificate of registration to also include the verification that all directors, officers, shareholders and professional employees listed on the application filed with the Secretary of State, except for the secretary and assistant secretary, are duly licensed or otherwise legally authorized to render the professional service or an ancillary service for which the professional corporation is organized, through the electronic accessing of the regulating board’s licensing records or through compacts or other certifying organizations recognized by the regulatory body by the Secretary of State. ⁹

NPCA § 21-2216

Removes the residential address filing requirement, requiring only that an address be provided. Amended to expand the scope to which the section applies to include any ancillary service the professional corporation renders. Adds clarification on the accessibility of licensing records of regulating boards and provides a requirement to make such records automated, electronically accessible and verifiable by the Secretary of State.¹⁰

LB1074

Legislative Bill 1074 (LB1074) was introduced on Jan. 9, 2024, by Sen. Julie Slama to adopt changes to federal law regarding banking and finance and changing provisions of the Commodity Code, the Credit Union Act and the Securities Act of Nebraska. The bill was introduced at the request of the Nebraska Department of Banking and Finance and was signed into law by Gov. Jim Pillen on April 17, 2024.

LB1074 amends several Nebraska statutes and the Uniform Commercial Code by adopting updates that mirror federal law relating to banking and finance. Bills of this nature are commonly introduced to update “wildcard” statutes. State “wildcard” statutes allow state-chartered financial institutions to engage in the same activities as their federally chartered counterparts. “Wildcard” statutes preserve parity with federal institutions and ensure that state financial institutions are not disadvantaged by state laws that are more restrictive than federal laws.¹¹

LB1074 is comprised of several additional bills seeking to modernize and synchronize Nebraska and Federal banking and finance law, including the following: LB1075, which will change provisions of the Delayed Deposit Services Licensing Act, the Nebraska Installment Loan Act, the Nebraska Installment Sales Act, the Nebraska Money Transmitters Act and the Residential Mortgage Licensing Act; LB710, which will change provisions of the Credit Union Act; LB872, which will prohibit state and local governments from accepting central bank currency; LB1122, which will change enforcement provisions relating to written solicitations for financial products or services; and LB1294, which would adopt the Data Privacy Act, change provisions relating to certain certificates and information relating to vital records, and provide for certain records to be exempt from public disclosure.

In sum, these new changes to Nebraska statutes take great strides in modernizing the regulation of banks and financial institutions. It is clear that through these changes, digital safety and data security are at the top of lawmaker’s minds. Implementing more efficient legislation provides a more secure banking and financial ecosystem. As the digital age continues to progress, it is reassuring to see our legislative bodies take steps to evolve along with it.