Togiola signs
bill witnesses say will help banks and borrowers
By Fili Sagapolutele
Samoa News Correspondent
(03/29/06) -
Governor Togiola has signed into law a bill amending provisions
of the Commercial Code clarifying the applicability and descriptions
of collateral pledged as security for lending transactions.
Government and
bank officials say the measure, which passed the Fono during
the 3rd Regular Session, would help the banks and borrowers.
The bill originated from the Administration and was supported
by the Bank of Hawai'i and ANZ Amerika Samoa Bank.
Specifically,
the bill amends A.S.C.A. Section 27.1510 of the Commercial Code
"to clarify applicability of the section to security agreements
and to provide greater detail on acceptable descriptions of collateral
pledged as security for lending transactions," according
to the governor's letter to the Fono leadership.
"Providing
certainty for lenders and borrowers regarding pledged property
will reduce the need to rely on the courts to apply this outdated
section to new transactions," the governor informed the
Fono leadership.
"It is the
intent of this amendment that any cost savings resulting from
these classifications will be properly reflected in the cost
of financing," he continued. "Also, the increased comfort
level the amendment affords would help facilitate additional
credit transactions, providing an overall benefit to our economy
and its development."
Industry sources
say the absence of the amendments passed by the Fono has resulted
in several court opinions that have addressed the problems of
Section 27.1510 in piecemeal fashion, but not in a comprehensive
manner.
They say the
courts defer to the Fono to provide the clarification.
According to
the governor, the amendments update this section "to keep
pace with the standard of lending transactions that have evolved"
since Commercial Code provision was last amended in 1968.
The measure amends
ASCA 27.1510 "Validity of mortgage, bill of sale, etc."
by adding the wording "agreement that creates or provides
for a security interest" in the statute and delete "specific
article, articles, or" on subsection 3, and adding the language,
"or the security for the debt or liability that reasonably
identifies the security, whether specific or not. The security
may be described by its listing, category, type, quantity and/or
location and may include property so described which is acquired
after execution of the mortgage or agreement creating or providing
for the security interest."
"The current
requirement of listing specific articles is impracticable in
many situations," said the governor early this year.
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