Security and Quasi Security

A Q&A guide to finance in Finland. The Q&A gives a high level overview of the lending market, forms of security over assets, special purpose vehicles in secured lending, quasi-security, negative pledge clauses, guarantees, and loan agreements. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring the priority of debt; debt trading and transfer mechanisms; agent and trust concepts; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform. To compare answers across multiple jurisdictions, visit the Lending and taking security in country Q&A tool. This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

The High Court has held that an exception to the application of the common debtor rule to the doctrine of marshalling exists to enable a creditor to enforce security where that security does not belong to the common debtor, but to a principal for whom the common debtor acts as guarantor.

Every month, PLC Finance features a selection of its resources on a particular topic. This month's topic is the new regime for registering security at Companies House.

A Q&A guide to lending and taking security in Bermuda. The Q&A gives a high level overview of the lending market, forms of security over assets, special purpose vehicles in secured lending, quasi-security and guarantees. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring the priority of debt; debt trading and transfer mechanisms; agent and trust concepts; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform. To compare answers across multiple jurisdictions, visit the Lending and taking security in country Q&A tool. This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

A Q&A guide to lending and taking security in Nigeria. The Q&A gives a high level overview of the lending market, forms of security over assets, special purpose vehicles in secured lending, quasi-security and guarantees. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring the priority of debt; debt trading and transfer mechanisms; agent and trust concepts; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform. To compare answers across multiple jurisdictions, visit the Lending and taking security in country Q&A tool. This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

A Q&A guide to finance in the UK (England and Wales). The Q&A gives a high level overview of the lending market, forms of security over assets, special purpose vehicles in secured lending, quasi-security, guarantees, and loan agreements. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring the priority of debt; debt trading and transfer mechanisms; agent and trust concepts; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform. To compare answers across multiple jurisdictions, visit the Lending and taking security in country Q&A tool. This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

The High Court has considered whether documents giving rise to an inference of assignment would be sufficient to constitute notice of assignment for the purposes of section 136 of the Law of Property Act 1925.

The Department for Business, Innovation & Skills has published a revised draft statutory instrument amending the regime under Part 25 of the Companies Act 2006 for the registration of security at Companies House and Companies House has published outline guidance.

The High Court has held as valid a restructuring which saw a security trustee take enforcement action on the instructions of senior lenders to transfer a business to a special purpose vehicle and to release all the debt and security held by the mezzanine lenders to that business, who got nothing.

Every month, PLC Finance features a selection of its resources on a particular topic. This month's topic is intercreditor arrangements and priority issues.

We have a new practice note on the meaning of the term debenture.

PLC Finance has substantially revised Standard document, Debenture.  The standard document now includes integrated drafting notes.

The High Court has held that, under a loan agreement that permitted prepayment but provided that the borrower would indemnify the lender against any losses that the lender incurs due to the prepayment of the loan before the maturity date, the lender could recover its losses incurred up to the date the loan was prepaid, but not for extrapolated future losses.

The Court of Appeal has held that a registered charge over land cannot be interpreted so as to include a clause accidently omitted from the document but set out in an unregistered facility agreement executed by the parties at the same time as the charge.

This Law Firm Publication by Ogier focuses on the Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 which, as of November 2012, will outline and govern the statutory prospectus content requirements in Jersey. The legislation aims to align Jersey with global standards previously put forward by the International Organisation of Securities Commission.

This Law Firm Publication by Ogier focuses on the new Security Interests (Jersey) Law which was approved on 19 July 2011 and expected to enter into force during 2012/2013. The new Law aims to increase certainty and flexibility of securities in relation to intangible movables.

This Law Firm Publication by Stikeman Elliott provides an overview of the responses so far to the “accredited investor” and other prospectus exemptions, published as part of the Consultation Paper the Canadian Securities Administrators (CSA) released in 2011. In June 2012 the CSA circulated an update to market participants which included the impact the exemptions are likely to have on capital raising and investment opportunities.

This Law Firm Publication by Morrison & Foerster LLP focuses on “wall-crossing” activities in Hong Kong and how the Securities and Futures Commission (SFC) alongside the Market Misconduct Tribunal are approaching this type of market abuse. “Wall-crossing” is the process by which a securities offering is selectively pre-marketed to potential investors before the deal is publicly announced. The Market Misconduct Tribunal delivered two decisions which offer guidance and information in relation to this activity.

In this article, Jonathan Porteous and Mary Hatt of Stevens & Bolton LLP examine the rights, obligations and risks for lenders when an event of default has occurred under a loan agreement.

This Law Firm Publication by Fraser Milner Casgrain LLP focuses on two staff notices published by the Canadian Securities Administrators on 26 April 2012. The Notices are aimed at improving compliance in relation to the prospectus exemptions, as well assisting market participants in avoiding deficiencies.  

This Law Firm Publication by Cleary Gottlieb Steen & Hamilton LLP outlines the key features of amendments made to the Securities and Futures (Amendment) Ordinance in Hong Kong. The legislation, effective as of 1 January 2013, requires listed companies to disclose relevant price sensitive information. Breaches and non-disclosure provisions will be handled by the Market Misconduct Tribunal.

This Law Firm Publication by Castrén & Snellman focuses on the recent proposals put forward by the Finnish government in relation to securities markets legislation in Finland. The proposals aim to overhaul the current structure of the securities legislation and to carve up the Securities Markets Act, if they are approved they are scheduled to come into force by 1 July 2012.

This Law Firm Publication by Blake Cassels & Graydon LLP examines the recent guidance notice issued by the Canadian Securities Administrators (CSA) in relation to prospectus offering, where there are concerns in relation to an issuer’s financial condition. The guidance is applicable to all issuers and all prospectus reviews in Canada.

This Law Firm Publication by Ogier examines the transitional provisions that will take effect when the draft Security Interests (Jersey) Law 201 is enacted. The new Law is expected to receive approval from the privy council in 2012, and will impact on security interests and contracts in Jersey.

This Law Firm Publication by Herbert Smith examines the recent Bill, passed by the French General Assembly on 29 February 2012, which proposes to introduce the aggregation of cash-settled securities for the calculation of thresholds crossing disclosure obligations. If the Bill is enacted, cash-settled instruments will remain excluded from the calculation of the thresholds triggering mandatory public tender offers.

The Court of Appeal has held that the occupiers in the North East Property Buyers' litigation had no equitable rights capable of being overriding interests, and the lenders' rights had priority.

This Law Firm Publication by Mallesons Stephen Jaques examines the key points of the recently published conclusions on the further consultation on the Securities and Futures (Short Position Reporting) Rules in Australia. The Rules aim to increase short position transparency by requiring prompt disclosure of reportable short position on a net basis by market participants, and are scheduled to come into effect on 18 June 2012.

This Law Firm Publications by Freshfields Bruckhaus Deringer focuses on new disclosure rules for interests in German listed companies, which came into force in Germany on 1 February 2012. The German Securities Trading Act has been amended, and now requires anyone who holds financial or other instruments under the Act to disclose the holding by no later than 13 March 2012.

This Law Firm Publication by Shearman & Sterling looks at the recent extension of the German voting right disclosure rules, to financial instruments and other instruments, which enable the share-holder or third parties to acquire ordinary shares that are German listed securities. New statutory notification and publication requirements for net short-selling positions in all financial instruments admitted to trading on a German regulated market will come into force on 26 March 2012.

This Law Firm Publication by Mallesons Stephen Jaques examines the revised Personal Property Securities Act 2009 (PPSA) which comes into force in Australia on 30 January 2012. The new laws creates a regime for dealing with security interests in all property other than land throughout Australia inclusive of personal property, including security interests in relation to intellectual property and intellectual property licenses.

In a case that provides an increasingly common example of a capital market structure unravelling, the Supreme Court has handed down its judgment in Re Kaupthing Singer and Friedlander Limited (in administration) [2011] UKSC 48. The appeal concerned a long-standing principle of insolvency law known as the rule against double proof.

This Law Firm Publication by Jones Day looks at the effect the Personal Property Securities Act 2009 (the Act), scheduled to commence on 1 February 2012, will have on companies in Australia when it comes into force. The core element of the new Act is that a security interest in newly defined personal property must now be registered.

In addition to addressing the status of a fixed charge over future acquired property, the recent High Court case of Rayford Homes Ltd v Bank of Scotland plc and another looks at a point of construction: how to deal with a definition in a contract that is never used in any of the operative provisions ([2011] EWHC 1948 (Ch)). The case also illustrates how strongly the courts rely on commercial context to construe the effect of a contract as a whole.

The Court of Appeal has held that advance payment guarantees are performance bonds rather than contracts of surety.

The High Court has held that a fixed charge over future acquired freehold and leasehold properties took effect as a fixed charge and not a floating charge.

This Law Firm Publication by Ogier examines some of the key provisions in the new Security Interests (Jersey) Law, which is awaiting approval by the States of Jersey and the Privy Council and is expected to come into force during the first half of 2012. The new legislation aims to modify the regime for creating and perfecting security in Jersey.

The Court of Appeal has held that a trustee's right of lien did not have priority over a bank's rights as a secured creditor under the terms of a debenture.

The High Court has held that an advance payment guarantee was a performance bond and not a contract of surety.

The High Court has held that the doctrine of marshalling of security is distinct from equitable subrogation, though the effect of marshalling is to subrogate an unsatisfied junior creditor to a satisfied senior creditor’s security.

A Q&A guide to finance in Scotland. The Q&A gives a high level overview of the lending market, taking security over assets, special purpose vehicles in secured lending, quasi-security, guarantees, and loan agreements. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring of debt agreements; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform. For a full list of recommended finance law firms and lawyers, please visit PLC Which lawyer? This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

This chapter considers the UNCITRAL Legislative Guide on Secured Transactions, including the Guide's purpose, terminology, scope, key objectives and fundamental policies. For a full list of recommended finance lawyers and law firms, please visit PLC Which lawyer? This article is part of the PLC multi-jurisdictional guide to finance. For a full list of contents visit www.practicallaw.com/finance-mjg.

Every month, PLC Finance features a selection of its resources on a particular topic. This month's topic is guarantees and indemnities.

The High Court has ruled on a number of issues relating to bills of sale.

The High Court has made a declaration on the interpretation of certain provisions including the definition of enforcement action in an intercreditor agreement, which was similar to the definition of enforcement action in the standard Loan Market Association intercreditor agreement.

In this article, Patrick Buckingham, a partner in Herbert Smith LLP's Financial Services Regulatory Group, Stephen Gale, a partner in the firm's Restructuring and Insolvency Group, and Laura Reynolds, an associate in the firm's Financial Services Regulatory Group, consider the implications of the decision of the Court of Appeal in CRC Credit Fund Ltd & Ors v GLG Investments Plc Sub-Fund: European Equity Fund & Ors [2010] EWCA Civ 917 (02 August 2010). This decision represents the current state of law in relation to the FSA's client money rules in its Client Assets sourcebook (CASS) and its implications should be considered by creditors of Lehman Brothers International (Europe) and by other FSA regulated firms and their clients. This article discusses the main aspects of the Court of Appeal's judgment, its potential impact and the likely next steps. NOTE ADDED ON 21 SEPTEMBER 2011: The Supreme Court hearing of the appeal from the Court of Appeal judgment is scheduled for 31 October 2011 (see Supreme Court, Case details, UKSC 2010/0194). NOTE ADDED ON 8 NOVEMBER 2011: The Supreme Court hearing of the appeal from the Court of Appeal judgment concluded on 3 November 2011. Judgment is expected in the first quarter of 2012 (see PwC, Client Money Update). NOTE ADDED ON 24 FEBRUARY 2012: The Supreme Court is to hand down its judgment on the appeal from the Court of Appeal decision on 29 February 2012 (see Legal update, Supreme Court to give judgment on Lehman clie

The Court of Appeal has considered, in the context of guarantees, the ability of parties to exclude cross-claims by principals and guarantors (as against each other) from competing with those of the creditor under the guarantee.

The Department for Business, Innovation and Skills is consulting on the Companies House regime for the registration of charges created by companies and limited liability partnerships under the Companies Act 2006.

The International Chamber of Commerce has published the revised version of the Uniform Rules for Demand Guarantees, which will come into force on 1 July 2010.

The High Court has held that the beneficiary of an on demand performance guarantee is under no obligation to show that the damage caused by the breaches relied on to enforce the guarantee is commensurate with the money claimed under the guarantee.

An outline of different types of cash pooling, explaining its increasing relevance, and examining the legal and practical issues involved in its use.

The first in a three-part series on insolvency-related issues discusses the background to and current state of play in the UK corporate insolvency regime.

Obtaining first ranking valid and enforceable security over real estate is essential to any real estate financing transaction. It has become imperative for London-based banks to become familiar with taking effective security over real estate in Germany. Against this background, this chapter highlights some of the issues relating to security over real estate faced by banks lending money to investors in Germany, and compares those issues to England and Wales.

The decision in Jackson & Another v RBS has raised important issues for the banking community. The House of Lords confirmed that a breach of confidence by an issuing bank in a letter of credit transaction could leave the bank open to a claim for damages for loss of an opportunity to earn future profit, which may be substantial.

Date: 23 November 2004. Information The consultation paper on company security interests is available on the Law Commission web site. Responses are requested by 23 November 2004. For more information on the consultation paper, see the Legal update, Law Commission consultation paper on company security interests.

The first part of a two-part series outlines the options available to lenders when taking security for loans.

The Court of Appeal has held that a creditor’s failure to obtain the proper value for property held as security for repayment of a loan does not release an independent guarantor from all further liability under his guarantee of the same loan, rather it reduces to that extent the amount for which the guarantor is liable.

The purpose of the PLC Contract Series is to review the fundamentals of contract law explaining the legal concepts involved in forming and discharging contracts with reference to practical examples. The first part of a four part series on practical contract law considers formation.

The final article in the PLC Scottish Law Series looks at the fundamental differences between taking security under Scottish and English law.

Whether a company holding a deposit with a bank can create a charge over that deposit to secure obligations owed to the bank.

Security which is effective under English law may fail in a foreign jurisdiction. The article explains what obstacles a creditor should expect to face with regard to floating charges, secured assets, trusts, notarisation and other costs and enforcement.

An analysis of guarantees given by one company to others in its group, including the main terms of the guarantee and a discussion of the ultra vires rule as well as potential challenges from insolvency legislation such as rules against transactions that are at an under value and preferences.

Taking security over shares and other financial instruments is an integral part of business in the financial markets. This article examines the different types of security interests, including mortgages, fixed and floating changes, liens and pledges as well as discussing their effect on securities held in clearance or depository systems, such as CREST, Euroclear or CEDEL and explains how to make sure that they are effective.

The Financial Law Panel (FLP) has published a paper outlining the risk to lenders of committing insider dealing offences if they enforce security over listed securites while in possesion of price sensitive information.

Practical advice on the use of letters of credit.

The damages award against Samuel Montagu for negligent misstatement.

An explanation of raising finance by forfaiting bills of exchange or promissory notes.

A review of the taxation treatment of stock lending in the light of the new arrangements and the taxation treatment which resolves those difficulties.