The draft Security Interests (Jersey) Law 201- (the
"new Law") is in close-to-final form and
is shortly due to commence its journey through the legislative
process. It is currently anticipated that the new Law will come
into force in the first half of 2011.
This briefing note is one of a series relating to the new Law
and deals with the transitional provisions that will apply to
pre-existing security once the new Law comes into force.
Under the new Law, a security interest which was created under
the Security Interests (Jersey) Law 1983 (the
"previous Law"), and which is still in
effect when the new Law comes into force will continue to be
effective, and will be subject to the previous Law, rather than the
new Law. Further, the existing security interest will have priority
over any new security interest in the same collateral created under
the new Law unless otherwise agreed between the security interest
However, if a continuing security interest under the previous
Law is "amended", it will become a security interest
subject to the new Law. The definition of "amend"
alter the security interest to cover a new secured obligation
(in other words, one that was not previously secured under the
security interest agreement pursuant to the previous Law);
alter the terms on which obligations are secured;
extend or reduce the duration of the security interest;
add to or modify the collateral to which the security interest
Ideally, any "amendment" of a security interest will
be made in conjunction with a careful review of the contractual
provisions of the relevant security agreement to check compliance
with the new Law. In particular, the agreement should be checked to
see that it:
provides for valid attachment and perfection (e.g. by public
registration under the new Law);
includes waivers under the new Law for such things as the
obligation to give the grantor 14 days' notice of an
appropriation or sale, or to provide a grantor with copies of any
verification statement following a registration; and
allows a full range of enforcement powers and ancillary actions
which are permitted under the new Law.
On an "amendment", if the continuing security interest
was created by possession or control in a manner also sufficient to
perfect security under the new Law, it will be taken to have been
created at the time of the amendment. Otherwise, additional steps,
such as public registration, may need to be taken to ensure
perfection of security.
If an "amendment" of an existing security interest
takes place without consideration of the new Law, there could be a
potential mismatch between the terms of the agreement and the
applicable statute, detrimentally affecting the position of the
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.
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