AR HB1746

Comprehensively updates Arkansas's Uniform Commercial Code (Title 4) to implement the 2022 UCC Amendments, modernizing terminology throughout by replacing "writing" with "record," "signed writing" with "signed record," and redefining "sign" to encompass electronic symbols, sounds, or processes attached to or logically associated with a record, effective September 1, 2026.

Creates a new Chapter 12 governing controllable electronic records and introduces related definitions including "controllable account," "controllable payment intangible," and "electronic money," establishing a legal framework for digital assets within commercial transactions.

Redefines "money" as a medium of exchange currently authorized or adopted by a domestic or foreign government (including intergovernmental monetary units), while explicitly excluding central bank digital currency from the definition.

Establishes a "hybrid transaction" framework for both sales (Chapter 2) and leases (Chapter 2A), providing rules for transactions that bundle goods with services, other leases, or licenses—applying goods-specific provisions only to the goods aspects when the sale or lease of goods does not predominate, and applying the full chapter when it does.

Modernizes control of electronic documents of title (§ 4-7-106) with a new alternative control test requiring identification of authoritative copies, self-identification of the controlling person, and exclusive power to prevent changes and transfer control, along with detailed rules on shared power, presumption of exclusivity, and control through acknowledged third parties.

Updates negotiable instruments law to permit terms specifying governing law and dispute-resolution forums, and recognizes the electronic transmission of check images as a form of "issue" when agreed to by the payee, while clarifying that check destruction during image-capture processing does not discharge the payment obligation.

Revises funds transfer provisions (Chapter 4A) to update security procedure definitions to include biometrics and to specify that requiring orders from a known email address, IP address, or telephone number alone does not constitute a security procedure.

Modernizes letters of credit (Chapter 5) to require only a "signed record" rather than authenticated writings, and adds provisions treating bank branches as separate juridical entities for jurisdiction and choice-of-law purposes.

Updates investment securities (Chapter 8) to add cross-references to controllable accounts, controllable electronic records, and controllable payment intangibles, while specifying these new digital asset types are not financial assets unless held through a securities intermediary.

Provides detailed transitional rules (Chapter 12A) ensuring security interests validly perfected before September 1, 2026 continue as perfected if new requirements are satisfied, granting an adjustment-date grace period for interests that do not immediately comply, and preserving priorities established under prior law except where the amended act specifically modifies them for Chapter 12 property and electronic money.