Jersey has introduced a new security interests regime, bringing it in line with modern international standards and making Jersey even more attractive to lenders where an offshore vehicle is required to give security.
Offshore vehicles regularly provide security over their intangible movable property (e.g. bank accounts, shares, etc.) as part of transactions varying from group corporate financing activities for multinational companies, to finance for high net worth individuals via personal investment companies. Difficulties may arise, for example, due to local requirements for taking security or a lack of information on competing interests.
Jersey's new security interests law has introduced an online, fully automated security registration system. This will greatly assist with recognising the existence, perfection and priority of security; a significant benefit to any parties giving or receiving security.
The ability to register security interests is yet another advantage of using Jersey companies, which are fast and cost effective to establish, and easy to operate.
SOME OF THE IMPORTANT BENEFITS OF THE NEW LAW ARE:
| OLD LAW | NEW LAW | |
| Can you take "all moneys" security over present and future property? | No | Yes, similar to an English law debenture |
| Can you take security over the proceeds of sale of collateral? | No | Yes, provided the proceeds are also intangible movable property |
| Can you create third party security? | No, but commonly created by a guarantee which is then secured | Yes |
| How to perfect the security interest? | Only by possession or control | Two
methods:
|
| What determines the priority of security? | Order of creation, but the need for possession makes it difficult to create subordinated security | Rules of priority specified in the law |
| What methods of enforcement are available? | Power of sale | 1.
Power of sale 2. Appropriation 3. Control or possession 4. Exercise rights of grantor 5. Instruct obliged party 6. Otherwise as provided in the security agreement |
JERSEY'S NEW SECURITY INTERESTS LAW WILL COME INTO FORCE IN TWO STAGES:
2 October 2013: Able to register existing assignments of receivables on the new online security registration system.
2 January 2014: Fully adopted. Creation and registration of security interests and assignments of receivables under the new law will be possible from this date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
