22 July 2024

Secured Lending Comparative Guide



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Secured Lending Comparative Guide for the jurisdiction of Canada, check out our comparative guides section to compare across multiple countries
Canada Finance and Banking
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1 Legal framework

1.1 Beyond general commercial and contract laws, what other specific laws and regulations govern secured finance in your jurisdiction?

Security and special property legislation: Save for the province of Quebec, each of Canada's nine other provinces and three territories is a common law jurisdiction and has its own legislation governing the creation, perfection and enforcement of security over real and personal property, including a Land Titles Act and a Personal Property Security Act. Although these statutes are substantially similar in each of the Canadian common law jurisdictions, they are by no means identical. The province of Quebec is a civil law jurisdiction, and the rules governing the creation, opposability to third parties (perfection) and enforcement of security over immovable (real) and movable (personal) property are codified in the Civil Code of Quebec. Each province and territory also has legislation governing specific types of property that imposes additional requirements on the taking, registration and enforcement of security, including statutes governing mines, mineral interests, mining property and railways. Canada also has several federal statutes governing security on special property including ships, railways, inventory (special type of security available exclusively to Canadian banks and authorised foreign banks under the Bank Act (Canada)) and Crown claims.

Interest limitations: Although the Interest Act (Canada) does not apply only to secured financing transactions, it does impose limits on the amount of interest that can be charged when a financing is secured by liens on real (immovable) property. In addition, the Criminal Code (Canada) makes it an offence to charge an effective annual rate of interest that exceeds 60% per annum (considered a ‘criminal rate of interest'), which is calculated broadly and includes all payments made in connection with the financing including interest, fees and penalties.

Anti-money laundering, anti-bribery legislation and sanctions: Canada has its own set of anti-money laundering, anti-bribery and anti-terrorist financing rules which are contained in the Criminal Code (Canada) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), and the regulations adopted thereunder, which apply to financial institutions. The government of Canada also has its own set of sanctions which can be imposed under:

  • the United Nations Act (Canada);
  • the Special Economic Measures Act (Canada);
  • the Freezing Assets of Corrupt Foreign Officials Act (Canada);
  • Part II.1 of the Criminal Code (Canada);
  • the Export and Import Permits Act (Canada); and
  • the Justice for Victims of Corrupt Foreign Officials Act (Canada).

1.2 Do any bilateral and/or multilateral treaties or trade agreements have particular relevance for secured finance in your jurisdiction?

No bilateral or multilateral treaties or trade agreements have particular relevance to secured finance in Canada other than the Convention on International Interests in Mobile Equipment (commonly known as the Cape Town Convention) and the Protocol to the Convention on International Interests in Mobile Equipment in Matters Specific to Aircraft Equipment.

1.3 Beyond normal governmental institutions, are there regulatory or tax bodies that play a particular role in secured finance your jurisdiction? What powers do they have?

Although it does not target secured financing transactions specifically, the Office of the Superintendent of Financial Institutions is an independent federal government agency that regulates and supervises federally regulated financial institutions including domestic banks and foreign banks authorised under the Bank Act (Canada) to establish deposit taking or lending only branches in Canada and to carry on the business of banking in Canada. A foreign lender need not be authorised under the Bank Act (Canada) in order to simply provide secured financing to a Canadian debtor or participate in a lending syndicate to a Canadian debtor. No tax bodies in Canada play a particular role in secured finance transactions.

1.4 What is the government's general approach to secured finance in your jurisdiction? Are there government guarantee/support schemes available to lenders, and if so what are the qualifications to that support?

Generally, the government does not intervene in secured finance transactions in Canada and it is an open market. Nonetheless, to support Canadian businesses and encourage investment in Canada, a number of federal and provincial Crown corporations have programmes available to lenders in Canada providing secured finance to Canadian businesses, including the following:

  • at the federal level, Export Development Canada – the agency that supports and develops Canada's export trade – can provide 100% risk transfer on letters of guarantee issued by lenders, participate in lending syndicates and in special circumstances (eg, the COVID-19 pandemic), issue loan-loss guarantees;
  • also at the federal level, the Business Development Bank of Canada, which focuses on supporting small and medium-sized businesses with various different financing options, small business advisory services and other financing services can participate in lending syndicates; and
  • in the province of Quebec, Investissement Québec – whose mission is to contribute to economic growth and investment in Quebec – regularly provides loan-loss guarantees to lenders and lending syndicates providing financing to Quebec businesses.

2 Secured finance market

2.1 How mature is the secured finance market in your jurisdiction? Are the majority of the transactions purely bilateral and domestic, or is there an international syndicated market for secured financing under your domestic law?

Canada has a robust, sophisticated and well-established secured finance market. Although many deals are not publicly available, based on our experience acting in secured financings from one coast to another in Canada, bilateral transactions are most often used for financings of less than C$50 million. Over that threshold, secured financings are usually made available under domestic law financing agreements by lending syndicates, most often led by a relationship bank of the debtor or debtor group. Cross-border lending syndicates and secured transactions are common.

2.2 Are there any bodies in your jurisdiction/region that promote the use of standard documentation and best practices in secured finance transactions? If so, are these widely used and followed?

The Canadian Bankers' Association adopted model credit provisions in November 2004, which have not been regularly updated and are not commonly used in bilateral or syndicated financing transactions in Canada. Almost all financing agreements in Canada are bespoke and negotiated among the parties to the financing transaction in question. Most Canadian banks and foreign banks lending in Canada do use certain of the model credit agreement provisions of the Loan Syndications and Trading Association – notably those related to benchmark replacements and in syndicated transactions, those related to erroneous payments and supported qualified financial contracts.

2.3 What significant secured finance transactions have taken place in your jurisdiction in recent times?

Given the number of non-publicly available transactions, it is difficult to qualify any one transaction as more significant than another.

3 Secured finance providers

3.1 Who are the key providers of secured finance in your jurisdiction? Is there a thriving alternative credit market (beyond bank lenders)?

Secured finance in Canada is made available to debtors by a wide range of providers. The vast majority of bilateral secured finance transactions are provided by domestic banks, credit unions, insurance companies, pensions funds and other financial institutions. Foreign banks and funds also participate in bilateral transactions but are less active than Canadian financial institutions. Syndicated secured finance transactions are usually led by one of the primary Canadian chartered banks, most often a relationship bank of the debtor or debtor group, with lending syndicates composed almost exclusively of domestic and foreign banks. Given the capital adequacy requirements imposed on Canadian banks, longer-term secured finance is most commonly provided by insurance companies and pension funds or foreign financial institutions. Increasingly, specialised private lending companies and funds are also providing secured finance, often in more targeted circumstances and with specific financing products including short-term bridge financing, factoring and specific asset-based lending. The presence of foreign actors and alternative private lenders keeps the Canadian secured finance market competitive.

3.2 What requirements and restrictions apply to secured finance providers in your jurisdiction? Do these vary depending on (a) the type of entity; (b) whether the lender is domestic or foreign?

The business of banking is federally regulated. Federally, there is no licensing requirement that is imposed on a non-bank entity that wishes to extend commercial loans to borrowers in Canada, but such lenders should be aware of the provincial requirements, including licensing requirements for financing corporations in Saskatchewan. Additionally, if the loan is a consumer loan (as opposed to a commercial loan), lenders will be required to comply with provincial consumer protection legislation.

Generally, there are no federal laws that would prohibit either a domestic bank in Canada or a foreign bank from making secured commercial loans to borrowers in Canada, except that domestic banks and foreign banks that are authorised to carry on business in Canada are subject to various capital requirements and investment restrictions (including loan to value restrictions) imposed by federal legislation which limit the type and amount that it may lend. A foreign bank that is not authorised to carry on business in Canada and a foreign lender having a regulated bank in its corporate group outside of Canada may make a commercial loan to a borrower in Canada so long as such lender takes care to ensure that in making the loan, it will not be considered or deemed to have engaged in or carried on business in Canada, which is generally a question of fact.

Finally, in order to enforce security and have access to the courts, most provinces and territories require secured creditors that do business in that province or territory to be registered to do business in the applicable province or territory.

4 Secured finance structures

4.1 What secured finance structures are most commonly used in your jurisdiction?

The most common structures used in the Canadian secured finance market are bilateral and syndicated loan financings, secured private placements and capital markets issuances of secured debt instruments such as bonds. When bilateral and syndicated financings are used, the financing provided may take the form of term loans, revolving loans, project financing loans, asset-based loans and/or a combination of the foregoing. Finance leases, factoring and asset sale transactions – including sale and leasebacks and securitisation financings – are also common in the Canadian secured finance market. Any of these structures may be provided by way of a subordinated financing as well. In such event, the priority of the security interests and the relative rights of enforcement of the creditors are typically governed by an intercreditor agreement or a priority agreement.

Determining the structure of a secured financing in Canada usually depends on a number of factors, including:

  • the nature and location of the primary debtors and other obligors;
  • the nature of the project or asset being financed;
  • the creditworthiness of the primary debtors and other obligors;
  • the intended use of proceeds from such financing;
  • the type of business that the primary debtors and other obligors carry on; and
  • the scope of the collateral over which security is being taken.

4.2 What are the advantages and disadvantages of these different types of structures?

The primary advantages and disadvantages of loan financings and financing by way of debt securities are as follows:

  • Bilateral secured loan financings:
    • Advantages:
      • Given the typically smaller size of these financings (often under C$50 million), they are often less costly and quicker to implement, with many domestic Canadian banks using standard form documentation.
      • Any negotiation on the loan documentation may be streamlined since there are only two parties involved.
    • Disadvantages:
      • There is less flexibility to upsize the financing.
      • Where standard form documentation is used, fewer opportunities exist to negotiate changes to the loan documents.
  • Syndicated secured loan financings
    • Advantage:
      • Depending on the creditworthiness of the debtors, the size of the financing can fluctuate, as needed.
    • Disadvantage:
      • These facilities are more costly and generally require more time to implement since the loan documentation is typically more complex and multiple parties are involved in negotiating and finalising the loan documentation.
  • Debt security instruments
    • Advantages:
      • Typically, the credit documentation contains fewer covenants than in a traditional loan financing and financial maintenance covenants are rare.
      • The financing is typically provided for a longer term than traditional loan financing.
      • Depending on the nature of the security instrument, notes or bonds may be freely tradeable on a securities exchange.
    • Disadvantages:
      • The interest may be higher than with a traditional loan financing.
      • The debt security instruments must comply with laws governing securities.
      • Pre-payment provisions are typically more rigid than in a loan financing and may contain costly make-whole premiums.

4.3 What other factors should parties bear in mind when deciding on a secured finance structure?

A debtor should consider:

  • the amount of financing needed; and
  • the purpose for which and for how long the financing will be required.

The creditworthiness of a debtor will also be a relevant factor in determining the amount of financing that can be obtained and the most advantageous structure for the financing. Typically, the creditworthiness of the debtor, coupled with the amount of financing being sought, will determine the extensiveness of the covenants and restrictions in the underlying financing agreement or debt security.

5 Security

5.1 What types of security interests are available in your jurisdiction? Which are most commonly used and which are recommended (if different)?

Common law provinces and territories: Security is often required from the borrower or primary obligor, and may also be required from one or more subsidiaries or affiliates of the borrower or primary obligor. When security is to be taken from a subsidiary or affiliate of a borrower or primary obligor, typically such persons enter into a guarantee agreement pursuant to which they agree to guarantee the payment and performance of the borrower's or primary obligor's and any other related obligors' obligations (as applicable) under the financing arrangement.

In the Canadian common law jurisdictions, generally speaking, security interests are divided into two categories: personal property security and real property security.

Security interests granted in real property are governed by a number of different statutes for each common law province and territory, and vary between jurisdictions. Separate legislation governs charges on real property which fall under the Canadian federal jurisdiction, such as government lands and buildings, national parks and international airports.

Security interests granted in ‘personal property' are governed by and defined in the Personal Property Security Act in force in each common law province and each territory. Each Personal Property Security Act sets out a comprehensive regime governing the creation, attachment and perfection of security interests, establishes the priorities of competing security interests and sets out the rights and remedies of secured creditors on enforcement. The Personal Property Security Acts are generally quite similar to each other across the Canadian common law jurisdictions.

When determining the type of security interests to be obtained, several factors should be considered, including:

  • the type, value and location of the security provider's assets; and
  • the cost associated with putting such security in place.

Personal property security: The most common type of security documents used by secured creditors in the Canadian common law jurisdictions are security agreements (or general security agreements). Security agreements are often drafted so as to grant a security interest over all of a debtor's present and after-acquired personal property. However, depending on the nature of the business and the assets of a debtor, security interests may be taken in collateral held or used at specific locations or in a number of specific items of personal property, such as a specific assignment of contracts, receivables, insurance proceeds or serial numbered goods (including motor vehicles). A debtor may also be required to pledge the shares it holds in any subsidiaries as security, which can often be effected under a security agreement but is also frequently effected by way of a separate securities pledge agreement.

Real property security: The methods and documentation required to perfect a security interest in real property across common law jurisdictions in Canada are largely prescribed by various provincial and territorial statutes and regulations, and vary from one common law jurisdiction to another. However, real property security is most often taken by way of a simple mortgage document, for which many Canadian lenders have a standard form or by way of a debenture which may or may not create a charge on personal property as well as real property. The presence of language charging personal property in a debenture does not impact registration or perfection requirements under real property statutes. The real property statutes of the Canadian common law jurisdictions stipulate to varying degrees certain essential terms, information and forms that a registrable mortgage or debenture must have.

Real property security can be burdensome to put in place, particularly when many real property assets are involved. While most of the common law jurisdictions in Canada charge only nominal amounts for registration of mortgages or debentures, in the province of Alberta the cost of registering a mortgage or debenture includes a nominal fee plus a fee based on the principal amount secured by the underlying mortgage or debenture. Given that taking real property security can be burdensome and expensive in certain of the common law jurisdictions in Canada, the value of the real property assets should be considered before real property security is taken.

Quebec: The Civil Code of Quebec sets out a comprehensive regime governing the creation and opposability to third parties (perfection) of liens, establishes the priorities among them and sets out the rights and remedies of secured creditors on enforcement.

In Quebec, the only conventional security that can be created is by way of a hypothec. A hypothec can secure any obligation and may be granted on all present and future movable (personal) and immovable (real) property of a grantor or on specific assets or categories of assets. In the case of movable property, a hypothec can be granted with delivery (a pledge) or without delivery. In order to be valid, a hypothec must be granted for a specific amount, expressed in Canadian dollars. Typically, the hypothec is granted for an amount exceeding the principal obligations secured at the time it is executed, in order to account for obligations that may fluctuate in time, such as:

  • hedging obligations;
  • potential increases to the financing in the future (including any contemplated accordion or incremental credit facilities); and
  • currency fluctuations in the primary obligations owed to the creditors.

National Bank Act security: Section 427 of the Bank Act (Canada) allows certain banks regulated under that legislation, including authorised foreign banks, to take security over the inventory of certain debtors, including manufacturers, farmers and aquaculturists. The current scheme has existed in substantially similar form for at least a century and is being used with decreasing frequency. In order for a qualified bank to obtain Bank Act security, the debtor must enter into:

  • an application for credit;
  • a notice of intention;
  • a grant of security over inventory; and
  • an agreement concerning loans and advances.

The foregoing documents are fairly standard form documents and are not often negotiated.

5.2 What are the formal, documentary and procedural requirements for perfecting these different types of security interests (ensuring that they are enforceable against debtors and third parties)?

Common law provinces and territories: For security governed under a Personal Property Security Act, a secured creditor must follow the prescribed steps to obtain a ‘perfected' security interest as set out in the applicable Personal Property Security Act. Generally speaking, this means both of the following criteria have been met:

  • The security interest must ‘attach' to the collateral. Attachment of a security interest generally requires the following elements to be satisfied:
    • Value has been given;
    • The debtor has rights in the collateral or the power to transfer rights in the collateral; and
    • The secured creditor either has obtained a written security agreement that is signed by the debtor and contains a description of the collateral sufficient to enable it to be identified; or has possession or control of the collateral.
  • However, in commercial secured lending transactions, for most categories of collateral, secured creditors typically rely on a signed security agreement which usually includes a statement to the effect that "the security interest is deemed to have attached at the time of execution of the Security Agreement".
  • A financing statement must be filed in the form prescribed by the applicable Personal Property Security Act with the applicable personal property registry. Registration of a financing statement in the applicable jurisdiction(s) is typically sufficient to effect perfection against the assets charged by a security agreement.

Certain classes of personal property (eg, tangible chattel paper, goods, instruments, negotiable documents of title and money) may be perfected by possession or repossession of these assets by the secured creditor or another party on its behalf.

Investment property and electronic chattel paper may be perfected by control, which results in the secured creditor having priority over any other secured creditors in the same collateral. The Securities Transfer Act or equivalent legislation in force in each common law province and territory will apply.

Quebec: A hypothec is documented by way of an agreement signed between the borrower or primary obligor and the creditor. In the following circumstances, however, the hypothec must be executed as a deed before a Quebec notary in order to be valid:

  • Immovable (real) property forms part of the collateral; or
  • The hypothec is intended to secure obligations owed to more than one creditor, such as in a syndicated loan financing or issuance of debt securities to many holders. In this case, the hypothec is granted in favour of a person acting as the hypothecary representative of the creditors whose obligations are to be secured. The agent in a syndicated financing and the trustee under the indenture or other agreement under which debt securities are issued generally perform this function. When the hypothec is granted to secure obligations owed to different classes of creditors, such as senior and subordinated creditors or syndicated lenders and noteholders, an independent trust company is sometimes named as hypothecary representative.

Save in the case of a hypothec with delivery (a pledge) over movable property, in order for a movable hypothec to be opposable against third parties, an application for registration with respect to the hypothec must be registered at the Register of Personal and Movable Real Rights of the Province of Quebec. Unlike in the other Canadian provinces and territories, registration can only be made after a hypothec is executed and dated (ie, pre-filing is not permitted). The best practice is to schedule the execution of hypothecs and adoption of the relevant corporate authorisations at least 24 hours prior to closing, in order to allow enough time for registration. Notwithstanding the fact that a pledge need not be registered at the Register of Personal and Movable Real Rights to be valid, registrations are commonly made.

If the assets forming part of the hypothecated property include deposit accounts, securities or securities entitlements, some additional steps must be undertaken by the creditor if it wishes to obtain control of such assets. A hypothecary creditor that fails to obtain control over any of such assets jeopardises the priority of its hypothecs over such assets in the event another creditor subsequently acquires such control. Please see questions 5.5 and 5.6 for further details on the acquisition of control over bank accounts and shares in Quebec.

5.3 What are the main types of collateral used as security in your jurisdiction and what specific points should be borne in mind regarding each?

The two main categories of collateral in which security is taken are personal property (movable property in Quebec) and real property (immovable property in Quebec). Since it is relatively simple to obtain and perfect (render opposable to third parties in Quebec) security against personal property, it is very common for security over this type of collateral to be granted in secured financing transactions from a wide variety of debtors. Depending on the jurisdiction and the nature of the financing, real property security will be taken only from entities that have sufficiently valuable real property assets.

5.4 Can security be taken over property, plant and equipment in your jurisdiction? If so, how?

Common law provinces and territories: Security can be taken over personal property and real property. Items such as ‘property, plant and equipment' may fall under either the personal property or real property categories, depending on the terms of the applicable real property statutes and the physical reality of the asset, which will determine whether the security should be taken by way of mortgage, debenture or security agreement.

All security interests sought over assets which unambiguously fall under the category of real property must be obtained by way of a mortgage or debenture, in the applicable prescribed form and perfected by way of registration in the applicable real property registry. All security interests which unambiguously fall under the category of personal property (as defined in each Personal Property Security Act) must be obtained by way of a security agreement and perfected by registration of a financing statement.

However, it is often necessary to analyse the properties of the asset in reference to the terms of the applicable Personal Property Security Act and real property statutes in order to determine whether the subject asset has become affixed to real property to such a degree that such asset is deemed real property rather than personal property. Due to ambiguities in the applicable legislation, this kind of analysis may not result in a definitive determination; in such cases it may be prudent to perfect the security interest under both the applicable Personal Property Security Act and real property statutes. In certain common law jurisdictions, there may also be options to register, under both the Personal Property Security Acts and real property statutes, a notice of security interests in collateral affixed to real property (or believed to be affixed).

Quebec: Subject to a few exceptions, a Quebec hypothec may charge any type of property and that charge can be universal or specific. For example, an individual or a trust cannot grant a hypothec over a universality of assets unless those assets relate to the individual's or trust's business. A hypothec also cannot charge property exempt from seizure.

5.5 Can security be taken over cash (including bank accounts generally) and receivables in your jurisdiction? If so, how?

Common law provinces and territories: Cash and receivables fall under the category of ‘personal property'. A security interest may be taken by way of security agreement or debenture and perfected by filing a financing statement in the appropriate jurisdiction. For clarity, there is no concept of perfection by control over cash and accounts in common law jurisdictions in Canada.

Quebec: In Quebec, a hypothec can charge cash and receivables. It is also possible for a creditor to obtain control over a grantor's monetary claim (ie, a deposit account) that is owed to the grantor by the creditor or a third party. A creditor obtains control of a monetary claim that the grantor of the hypothec has against it (a bank account maintained by the creditor) if the grantor consents to the claim securing the performance of an obligation owed to the creditor. A creditor obtains control over a deposit account maintained by another institution when:

  • it becomes the account holder; or
  • the creditor, the grantor and the third-party institution enter into a control agreement whereby the third-party institution agrees, with respect to the credit balance in the deposit account, to comply with the instructions of the creditor without any additional consent of the grantor.

If the creditor obtains control of a monetary claim in accordance with the foregoing requirements, the resulting pledge over the account need not be registered at the Register of Personal and Movable Real Rights. The Civil Code of Quebec grants the creditor of a hypothec on a monetary claim (deposit account) over which it has control, priority over all other hypothecary creditors who do not possess control, even if their hypothecs were published on an earlier date.

5.6 Can security be taken over company shares in your jurisdiction? If so, how?

Common law provinces and territories: Shares in a company are considered ‘investment property' under and as defined in each Personal Property Security Act. A security interest may be taken by way of security agreement, debenture or a form of securities pledge agreement. A security interest in a company's shares may be perfected by way of:

  • registration of a financing statement in the applicable common law jurisdiction;
  • possession of certificated shares by the secured creditor or an agent on behalf of the secured creditor (which is not the debtor); or
  • both registration of a financing statement and possession of certificated shares.

In order to determine whether perfection has been appropriately achieved over investment property, the terms of both the applicable Securities Transfer Act and Personal Property Security Act must be reviewed in tandem.

Quebec: In Quebec, security may be taken over company shares by way of a movable hypothec. As noted above, the hypothec can be rendered opposable to third parties by way of the registration of an application for registration at the Register of Personal and Movable Real Rights or by way of delivery of the shares to the creditor. Pursuant to the Civil Code of Quebec and the Securities Transfer Act of the province, a creditor obtains control of certificated shares by taking possession of the certificate and a transfer form endorsed in blank. In case of uncertificated shares, the creditor obtains control by having the shares registered in its name or by way of a ‘control agreement' being entered into, under the terms of which the issuer of the shares agrees to comply with instructions from by the creditor without the further consent of the registered holder of the shares.

Unlimited liability company shares: Several provinces allow for the creation of an unlimited liability company, whose shareholders are fully liable for all debts and obligations of the company. Secured creditors should therefore exercise caution when obtaining security over all personal (movable) property of a debtor or obtaining a pledge of the shares of an unlimited liability company to ensure that doing so or enforcing on the security does not result in the creditor being deemed a shareholder and attract any unlimited liability for the creditor. Special provisions are generally included in security documents to limit a creditor's exposure to these risks.

5.7 Can security be taken over inventory/moveables in your jurisdiction? If so, how?

Common law provinces and territories: Inventory and movables fall under the category of ‘personal property'. A security interest may be taken by way of security agreement or debenture and perfected by filing a financing statement in the appropriate jurisdiction.

Quebec: A Quebec hypothec may charge any type of asset, including inventory and other movable property, and be rendered opposable to third parties by way of the registration of an application for registration at the Register of Personal and Movable Real Rights or by way of delivery of the asset to the creditor.

5.8 What charges, fees and taxes (including notary and similar fees) arise from the perfection of a security interest? Do these vary depending on the type of assets used as collateral?

Common law provinces and territories: Nominal flat fees are payable upon registration of financing statements under each Personal Property Security Act. The fee for filing a financing statement under an applicable Personal Property Security Act is charged per registration without accounting for the type of assets or the value of the debt obligations, but may vary slightly depending on the term of the registration being made and the jurisdiction of registration.

The common law jurisdictions of Canada vary greatly in the costs to register a mortgage or debenture under the applicable real property statutes. For example, in Alberta the cost to register a mortgage or debenture includes a flat fee and a fee based on the principal amount of the mortgage or debenture; whereas in Ontario there is only a nominal flat fee for each instrument being registered.

Quebec: Registration costs are negligible in Quebec, for both movable and immovable property. A nominal flat fee is charged per registration and does not vary based on:

  • the assets charged;
  • the amount of the hypothec;
  • the amount of the underlying obligations secured; or
  • the length of the registration.

The hypothec that must be executed by way of a notarial deed (as detailed in question 5.2) will result in notarial fees being payable to the notary that receives the deed. These notarial fees vary by notary but not as a function of the amount of the hypothec granted or the underlying financing that is secured.

5.9 What are the respective obligations and liabilities of the parties under the security documents?

The obligations and liabilities of the parties under the security documents will depend on the terms contained therein and are commonly negotiated. A security document will typically contain representations, warranties and covenants of the obligors relating to the collateral and preservation of the liens purported to be created in favour of the creditors. In addition, in Quebec, the Civil Code of Quebec imposes an obligation on parties to conduct themselves in good faith and it is not possible to opt out of this contractually.

5.10 What other considerations should be borne in mind by all counterparties when perfecting a security interest in your jurisdiction?

The parties must have a clear understanding of the types of assets that make up the collateral and where those assets are located. This information will dictate:

  • which jurisdiction's laws will govern the creation, perfection (opposability to third parties in Quebec) and priority of a security interest in each asset or class of assets. Each Personal Property Security Act and the Civil Code of Quebec contain conflict of law rules, which determine the laws that govern (among other things) the validity, perfection (opposability to third parties in Quebec) and effect of perfection or non-perfection of security;
  • the best method of perfecting a secured creditor's security in each type of asset and whether it is possible for the creditor to obtain control over the asset; and
  • whether any actions, filings, notices or other actions are required under legislation in addition to the applicable Personal Property Security Act and the Civil Code of Quebec in order to protect the secured creditor's interest.

Certain websites allow users to conduct searches and register liens in each Canadian province, which may seem like a quick and cost-efficient solution. However, relying on such services is ill advised for creditors that wish to benefit from proper prior ranking liens. A seemingly small mistake in a registration form can render the publication void and the security unopposable to third parties (unperfected).

In Quebec, in order to determine whether prior-ranking security is registered against a debtor at the Register of Personal and Movable Real Rights, searches must be conducted against all prior names of a legal entity since there is no obligation to register a name change at that register. A professional with expertise in the area should be retained to assist with this process.

6 Guarantees

6.1 What types of guarantees are available in your jurisdiction? Which are most commonly used and which are recommended (if different)?

The most prevalent types of guarantees found in loan financings include the following:

  • a downstream guarantee, which is a guarantee from the parent of the borrower or primary obligor;
  • an upstream guarantee, which is a guarantee from one or more subsidiaries of the borrower or primary obligor; and
  • a cross-stream guarantee, which is a guarantee from an affiliate of the borrower or primary obligor.

Guarantees may be unlimited in that they guarantee all present and future liabilities of the borrower or primary obligor or group of obligors to the lender(s) of whatever kind and however incurred. Alternatively, guarantees may be limited to a maximum amount guaranteed by the guarantor in respect of the guaranteed obligations. A guarantor's obligations under a guarantee can be secured or not. When secured, a guarantee may also limit the creditors' rights to exercise recourses strictly to the assets subject to the security that the guarantor has granted in favour of the secured creditor, without any personal recourse against the guarantor.

The guarantor can be an individual or a corporation or other legal entity. If the guarantee is granted by a corporation or other legal entity (typically an affiliate, subsidiary or parent company of the borrower or primary obligor), the guarantee is a corporate guarantee. If the guarantee is granted by an individual guarantor (typically an individual shareholder or related person), the guarantee is a personal guarantee.

Each of these guarantees are quite common in the debt financing market and lenders can select one or more that suit the loan package for use.

More tailored guarantees are sometimes used in specialised financing transactions including completion guarantees in a project financing and equity support guarantees for debtors with special projects or liquidity challenges.

6.2 What are the formal, documentary and procedural requirements to perfect a guarantee?

Common law provinces and territories: There is no concept of ‘perfection' of a guarantee, unless there is a grant of a security interest embedded in the guarantee itself. Often, as a term of the guarantee, the guarantor assigns to the creditor the debts owing to it by the common debtor. This assignment of debts is deemed a security interest in an ‘account' and may be perfected by way of registration of a financing statement.

Unique procedural requirements arise in the province of Alberta, when a creditor is taking a guarantee from an individual. In such circumstances, the terms of the Guarantees Acknowledgement Act (Alberta) must be followed. This legislation, among other things, requires that a lawyer meet with the individual guarantor and confirm that such individual has read and understands the terms of the guarantee. At the time of this meeting the attending lawyer must complete a certificate, in the prescribed form, attesting to the individual guarantor's apparent understanding of the terms of the guarantee, among other things. If these formalities are not followed in the above-described circumstances, the guarantee may not be enforceable in Alberta.

Quebec: There are no particular requirements to perfect a guarantee. However, a few elements should be borne in mind when preparing or reviewing a Quebec law-governed guarantee:

  • If there is more than one guarantor, creditors will want to ensure that the guarantee agreement specifies that the guarantee is solidary and that the guarantors renounce to the benefits of division and discussion. This will allow the creditor to exercise its recourses against each guarantor individually for the full amount of the guaranteed obligations and not be obliged to exercise recourses first against the primary debtor.
  • If an individual is granting a guarantee, creditors will typically require the individual's signature to be witnessed by a lawyer, notary or commissioner for oaths to certify the identity of the signatory.

6.3 What charges, fees and taxes (including notary and similar fees) arise from the perfection of a guarantee?

Unless an assignment of debts is included in a common law-governed guarantee, which would trigger the requirement to register a financing statement as noted in question 6.2, no charges, fees or taxes are applicable in Canada.

6.4 What are the respective obligations and liabilities of the parties under the guarantee?

A guarantee is a promise given by a guarantor to assume responsibility for the due payment and performance of the obligations of the borrower or primary obligor or other loan party if the borrower or primary obligor or such other loan party fails to perform its obligations.

6.5 What other considerations should be borne in mind by all counterparties when taking the benefit of a guarantee in your jurisdiction?

Although a guarantee is a relatively simple instrument to obtain, by law there are many defences that may be available to a guarantor that would render the guarantee unenforceable. For example, a beneficiary of a guarantee can lose the benefit of a guarantee if the terms of the underlying financing are changed significantly without the knowledge or consent of the guarantor, such as a large increase in the payment obligations or extension of the maturity date of the financing. Most defences can be waived by a guarantor and it is customary to include in a guarantee a broad waiver to any and all defences that a guarantor might have at law.

7 Financial assistance

7.1 What requirements and restrictions apply with regard to the provision of financial assistance in your jurisdiction? What specific implications do these have for secured finance transactions?

Certain of the Business Corporations Acts in the common law provinces and territories restrict the ability of a corporation to grant financial assistance to others without the consent of, and/or notice to, its shareholders. Some exceptions exist (which vary from jurisdiction to jurisdiction), including that a corporation may guarantee the obligations of a parent that wholly owns the corporation (ultimate or direct) or its wholly owned subsidiaries (ultimate or direct).

8 Syndicated lending

8.1 Is the concept of an agent or trustee recognised in your jurisdiction? If not, how is security taken for multiple lenders?

Under Canadian laws, if there are two or several creditors in a financing, one of these creditors (or a third party) will typically act as the administrative agent on behalf of the group of creditors. The administrative agent will be responsible for the day-to-day operations and the administration of the credit facilities made available to the debtors (eg, advances, receipt of reports and notices, communication with other lenders). For all responsibilities relating to collateral and security, either the administrative agent itself or a collateral agent is designated to act for the syndicate of lenders or different groups of creditors sharing common security.

In the common law provinces and territories, the laws of agency permit security to be granted in favour of an agent for known and future creditors. In Quebec, the laws of agency do not permit this – which is why, as explained in question 5.2, security is granted in favour of a hypothecary representative, a function which is typically fulfilled by the financial institution that is the administrative agent or collateral agent.

8.2 What requirements and restrictions apply with regard to syndicated lending in your jurisdiction?

No particular requirements or restrictions exist, other than as regards the granting of security in Quebec, as explained in question 5.2.

8.3 What other considerations should be borne in mind by all counterparties when engaging in syndicated lending in your jurisdiction?

No particular considerations exist in the common law provinces and territories. In Quebec, if security is to be granted, a provision designating the administrative agent or collateral agent as hypothecary representative should be included in the primary financing documentation.

9 Taxes, charges and fees

9.1 What taxes and similar charges are levied in the secured finance context in your jurisdiction? Do these vary depending on whether the lender is a domestic or foreign entity?

Very generally, the Canadian domestic tax legislation imposes withholding tax at a rate of 25% in respect of interest payments made by Canadian borrowers to non-Canadian lenders with which they do not deal at arm's length (ie, to the extent that the parties deal with each other at arm's length, no withholding tax is imposed). The withholding tax rate is usually reduced to 10% or 15% under the income tax treaty between Canada and the lender's country of residence, with the exception of the Canada-US tax treaty, which reduces it to 0%. In the purely domestic context, no withholding tax is imposed in respect of interest payments made by Canadian debtors to Canadian banks or financial institutions.

9.2 Are any exemptions or incentives available?

Generally, there are no incentives or exemptions provided to foreign lenders. As stated above, interest payments made by Canadian borrowers to Canadian lenders with which they deal at arm's length are exempted from Canadian withholding tax.

9.3 What other significant costs will be incurred by the counterparties in entering into a secured finance transaction? Do these vary depending on whether the lender is a domestic or foreign entity?

Counterparties do not incur significant costs in entering into a secured finance transaction in Canada. No documentary taxes or stamp duties are applicable to secured finance transactions or payable upon the enforcement of security. The usual costs incurred are the registration or filing fees payable to the applicable registries in each province and territory to perfect (render opposable to third parties) security in each type of collateral, including real (immovable) property and personal (movable) property. In Quebec, when security is granted on immovable (real) property or in favour of a hypothecary representative (similar to an agent or trustee in the common law provinces and territories), for the benefit of several creditors, the deed creating the security must be executed before a Quebec notary, so notarial fees will be payable.

In light of the recent adoption of Bill 96 by the Quebec government, certain translation costs are to be expected where not all parties speak French or where the principal loan documents are in English. Please see question 13 for a more detailed explanation of Bill 96.

9.4 What strategies might the counterparties consider to mitigate their tax and other liabilities in the secured finance context?

Strategies are generally not required, given that registration fees are minimal and that no withholding taxes are imposed on arm's-length secured transactions. To mitigate risk, however, credit agreements between Canadian borrowers and non-Canadian lenders will generally provide for interest payments to be ‘grossed up', so as to account for any potentially applicable withholding tax (such that, after any applicable withholding, the lender receives an amount equal to the sum it would have received had no withholding been made).

10 Judicial enforcement

10.1 In the event of default, what options are available to enforce a security interest or guarantee? Is self-help available in your jurisdiction in connection with the enforcement of security (if so, in what circumstances) or must enforcement action be pursued through the courts?

Generally, a secured creditor is not entitled to enforce its security before giving its debtor reasonable time to pay following demand for payment.

Security is generally enforced in Canada by either:

  • taking possession and ownership of the assets securing the loan; or
  • seizing and selling said assets in satisfaction of the debt.

These are most often private proceedings pursuant to rights provided by law or by contract.

Default enforcement rights are set out in legislation and can often be modified in the primary financing documents. In Ontario, for example, the Personal Property Security Act provides that a secured creditor can enforce its security interest via any method permitted by law. This includes the ability, after giving notice where required to the proper parties and providing the opportunity to cure the default, to take possession of the collateral and appoint a receiver or manager either itself or by application to a court of competent jurisdiction. Assets may be disposed by private or public sale or sometimes by lease.

In Quebec, the enforcement rights of secured creditors are primarily set out in the Civil Code of Quebec. After providing notice where required to the proper parties, secured creditors may take possession of the hypothecated property in view of:

  • receiving it in payment of the debt;
  • selling the property by agreement, auction or a call for tenders; or
  • having the property sold under judicial authority.

In addition to the foregoing, secured creditors in Canada may enforce their security via Canadian insolvency legislation, including by seeking the appointment of a national receiver under the Bankruptcy and Insolvency Act (Canada).

10.2 How long does the enforcement process generally take and what steps does this typically involve? Do these vary depending on any applicable requirements or restrictions (eg, requirement for public auction or regulatory consents)? Do these vary depending on whether the lender is a domestic or foreign entity?

The amount of time required to enforce security may vary according to:

  • the province and territory in which the enforcement action takes place; and
  • the nature of the assets that are subject to enforcement.

Prior notice of 15 to 20 days to the proper parties is typically required before taking action to enforce security and disposing of the collateral, and longer notice can be required in the event of foreclosure proceedings. In Quebec, the notice period for enforcement is 20 days for movable (personal) property and 60 days for immovable (real) property. After providing notice of enforcement, the sale of assets in Quebec must also be carried out "without unnecessary delay". Specific notice must also be given under Section 244 of the Bankruptcy and Insolvency Act (Canada) prior to seeking the appointment of a national receiver.

While these requirements generally do not vary according to the entity enforcing the security, special rules respecting timeframes sometimes apply when action is being taken against consumer goods. Notice of disposition may also not be required in particular situations, such as where the collateral in question is perishable or will decline quickly in value.

10.3 What other considerations should be borne in mind when enforcing a security interest or guarantee in your jurisdiction?

Another salient consideration for creditors enforcing security in Canada is potential liability risk. Creditors should determine early on how much legal risk they are comfortable incurring before choosing the means by which they will undertake certain actions such as appointing a receiver or proceeding with an asset sale. In both of those instances, parties may be liable for the actions of their agents or mandataries.

While receivers appointed by the parties (commonly called ‘private receiverships') often come with the benefit of broader powers and loyalty to the secured creditor, they also expose the secured creditor to liability for the receiver's actions, such as in disposing of assets or operating the debtor's business. Proceeding with a court-appointed receivership, in which case the receiver is an officer of the court, does not carry the same risk or potential exposure to liability.

While a secured creditor may have contractual rights to accelerate the repayment of the amounts owed to it, demand their immediate payment and realise on its security without notice, such rights must be exercised in good faith. A secured creditor should not realise upon its security, take possession of assets or liquidate them before giving the debtor, depending on the circumstances of each case, a reasonable period of time to meet its obligations.

10.4 Are direct agreements with contractual counterparties well understood in your jurisdiction?

Direct agreements are well understood in Canada and are always used in secured project finance transactions to ensure that the creditors have certain rights afforded to them under the material contracts, including:

  • the right to remedy defaults prior to the counterparty terminating the contract;
  • the right to step into the contract in the place and stead of the debtor to complete the project; and
  • the right to have a new contract signed with a person designated by the secured creditor.

Direct agreements are sometimes used in corporate and acquisition financing transactions when certain contracts are evaluated as being material or critical to the business of the debtor, including in circumstances where the debtor has important supply or customer contracts that account for a significant portion of its supplies or sales or has leased premises or warehouse locations in which a significant portion of the debtor's inventory or other property is located. Given the inherent challenges and time required to negotiate these agreements with the third-party counterparties, bilateral and syndicated secured creditors in non-project finance transactions usually only require these in limited circumstances.

10.5 What other avenues are available to a lender to safeguard its position in connection with security or guarantees?

To maintain the priority of its security vis-à-vis other secured creditors, a secured creditor should ensure that its security is:

  • properly published in Quebec as required as soon as possible following the grant of the security; and/or
  • perfected in the common law provinces and territories prior to, if possible, or immediately following the grant of the security, and in each case, at all times thereafter.

While applicable rules vary from one province or territory to another and depend on the nature of the collateral, it is imperative to file the financing statement or application for registration with respect to the security granted in each appropriate provincial registry on a timely basis. Once perfected or published, security will rank according to the order of its registration or time of perfection (if it was not required to be registered).

To preserve the priority of its security after publication or perfection, a secured creditor should track the expiry date of its security registrations and ensure that they are renewed and maintained as required, since the failure to renew or update in due time can entail the cancellation of such registrations and the resulting loss of the security. Secured creditors should also be aware of material changes in the debtor's situation requiring its information to be updated in the registry or a new registration to be made. This notably includes a change to the jurisdiction in which the debtor or collateral is located or, in the common law provinces and territories, a change in the debtor's name. Until the completion of the required updates to registrations or filing of new registrations, as applicable, there may be a lapse in the perfection of a secured creditor's security in applicable collateral.

11 Bankruptcy

11.1 How (if at all) do bankruptcy proceedings impact on the enforcement of security by a creditor?

Bankruptcies do not stay enforcement proceedings instituted by secured creditors unless a court exceptionally orders otherwise. The policy underlying Canadian bankruptcy legislation is to refrain from interfering with the rights of secured creditors except as necessary to protect surpluses on the assets covered by the security. Trustees may exceptionally request a stay where they require an opportunity to consider whether anything may be realised on the security in question for the benefit of the bankrupt estate.

Upon bankruptcy, the debtor's assets vest in the bankruptcy trustee subject to the rights of secured creditors. If a secured creditor realises on its security and a balance remains owing on the debt, the creditor may submit its claim to the debtor's bankruptcy. Alternatively, the secured creditor may surrender its security to the trustee and prove the whole claim in the bankruptcy. A trustee may also redeem the creditor's security upon payment of the debt or the value of the security.

11.2 In what circumstances can antecedent transactions be unwound for preference? What other similar measures apply in this regard?

Preferential transfers (also called fraudulent preferences), including charges or obligations incurred or payments made by an insolvent debtor that subsequently becomes bankrupt to a creditor in view of giving that creditor a preference, are void or unable to be set up against the bankruptcy trustee if made within a certain period prior to the bankruptcy. For individuals dealing at arm's length with the debtor, this period is three months; for individuals not at arm's length, the period is 12 months. If the transfer is effectively preferential, the intent to provide the creditor with a preference is presumed.

Secured creditors may also, in certain circumstances, be able to benefit from recourses available under provincial legislation concerning fraudulent preferences. In order to make use of these statutes, it is generally required that the secured creditor's security be insufficient to satisfy the debt secured. This may occur, for instance, where there are multiple creditors with security in the same collateral.

11.3 Are any types of entities excluded from the bankruptcy regime in your jurisdiction? If so, what alternative regimes apply?

Canada's bankruptcy legislation does not apply to incorporated banks, savings banks, insurance companies, trust companies and loan companies. Certain aspects of the legislation also do not apply to individuals:

  • whose principal occupation is fishing, farming or tillage of the soil; or
  • who make under a certain amount per year.

None of these entities or individuals can be petitioned into bankruptcy.

Other relevant legislation includes:

  • the Winding-up and Restructuring Act (Canada), which applies to many of the entities listed above when they are insolvent; and
  • the Farm Debt Mediation Act (Canada), which allows farmers to access debt advisory services and provides protection against creditor enforcement during debt mediation.

12 Governing law and jurisdiction

12.1 What law typically governs secured finance agreements in your jurisdiction? Do any specific requirements apply in this regard?

There are no specific requirements for the governing law of a financing agreement. Often for public entities, Ontario law is chosen; but there is no need for this. The governing law is usually aligned to the jurisdiction of incorporation of the primary obligors.

12.2 Is a choice of foreign law or jurisdiction valid and enforceable? In the case of a choice of foreign law of jurisdiction, will any provisions of local law have mandatory application? Are submission to jurisdiction provisions that operate in favour of one party only enforceable?

In Canada, the parties to a secured financing agreement are free to choose the law that will govern the primary financing agreement and the jurisdiction to which they will submit their disputes. The applicable courts of competent jurisdiction in Canada will generally abide by those choices, subject to certain exceptions – including if:

  • the choice was not made in good faith; or
  • there is a reason for avoiding the choice of law on the grounds of public policy in the applicable province or territory.

12.3 Are waivers of immunity enforceable in your jurisdiction?

Waivers of state immunity are enforceable in Canada pursuant to federal and certain provincial legislation. These typically provide that a foreign state waives its immunity by either instituting or participating in legal proceedings.

12.4 Will foreign judgments or arbitral awards be enforced in your jurisdiction? If so, how?

Foreign judgments: Canadian courts will give judgments based upon final and conclusive in personam judgments of a foreign court exercising jurisdiction for the payment of a sum certain, obtained by a secured creditor against a debtor with respect to a claim arising out of a financing agreement or a guarantee without reconsideration of the merits, subject to a number of caveats, as discussed below.

The caveats in a common law court include the following:

  • The court has discretion to stay or decline to hear an action on the foreign judgment if it is under appeal or there is another subsisting judgment in any jurisdiction relating to the same cause of action;
  • The foreign court had jurisdiction over the relevant debtor as recognised under applicable legislation for the purposes of enforcement of foreign judgments;
  • The foreign judgment was obtained by fraud or in a manner contrary to the principles of natural justice;
  • The foreign judgment is for a claim which, under the applicable legislation, would be characterised as based on a foreign revenue, expropriation, penal or other public law; or
  • The foreign judgment is contrary to public policy, as such term is interpreted under applicable legislation, or to an order made under certain specific federal statutes.

The caveats in a Quebec court include the following:

  • The authority of the foreign jurisdiction where the decision was rendered had no jurisdiction under Quebec law;
  • The foreign judgment was rendered in contravention of the fundamental principles of procedure;
  • A proceeding between the same parties based on the same facts and having the same object as the foreign judgment is pending in the province of Quebec or has given rise to a judgment rendered in the province of Quebec or in another jurisdiction meeting the necessary conditions for recognition in the province of Quebec;
  • The outcome of the foreign judgment is manifestly inconsistent with public order as understood in international relations; or
  • The foreign judgement enforces obligations arising from taxation laws of a foreign country (unless there is reciprocity) or from other laws of a public nature such as penal or expropriation laws.

Foreign arbitral awards: Canadian common law courts will give effect to arbitration clauses in foreign law-governed documents, provided that the parties subject to the arbitration clause are domiciled in countries that are party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted by the United Nations Conference on International Commercial Arbitration in New York on 10 June 1958; they will enforce any foreign arbitral awards properly obtained pursuant to such clause.

Quebec courts may recognise and enforce an arbitration award made outside Quebec if:

  • the subject matter of the dispute is one which could be submitted to arbitration in Quebec; and
  • recognition and enforcement of the award would not be contrary to public order.

In interpreting the rules in this matter, consideration may be given to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted by the United Nations Conference on International Commercial Arbitration in New York on 10 June 1958. The court examining an application for recognition and enforcement of an arbitration award or a provisional or safeguard measure cannot review the merits of the dispute. A party against which an award or a measure is invoked cannot oppose its recognition and enforcement unless the party proves that an essential condition was not met including the following:

  • One of the parties did not have the capacity to enter into the arbitration agreement;
  • The arbitration agreement is invalid under the law chosen by the parties or, failing any indication in that regard, under the law of the place where the award was made or the measure decided; or
  • The party against which the award or the measure is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or it was for another reason impossible for that party to present its case.

13 Trends and predictions

13.1 How would you describe the current secured finance landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The Canadian secured finance market continues to adapt to the replacement of the London Inter-Bank Offered Rate with the Secured Overnight Financing Rate in all new transactions. Given the announcement in May 2022 that the Canadian Dollar Offered Rate – the Canadian benchmark – will no longer be published as of June 2024 and the Canadian Overnight Repo Rate Average is set to replace it, new benchmark replacement language will need to be included in new credit agreements and integrated into existing ones over time.

Sustainability-linked financings have grown in popularity in the Canadian market and this trend is expected to continue and intensify for the foreseeable future across many industries.

On 1 June 2022, the province of Quebec adopted Bill 96 – An Act respecting French, the official and common language of Quebec. As from 1 September 2022, applications for registration of any security in the province must be made exclusively in the French language. Deeds of hypothec that include immovable (real) property as part of the collateral will therefore need to be drafted in French, since these deeds are registered at the Land Register in their entirety. In the case of deeds of hypothec charging movable property only, since applications for registration rather than the deeds themselves are registered at the Register of Personal and Movable Real Rights, the deeds can be executed in English but it is recommended that a French version of the description of the hypothecated property be agreed between the parties so the registration can be made at the Register of Personal and Movable Real Rights without any dispute as to its accuracy. In order to mitigate the costs and risks relating to Bill 96, different options are being considered by the legal community. One option is to have all deeds of hypothec executed in French only, with an English translation available for the parties. It would also be possible to have a very simplified deed of hypothec containing only the essential elements for creation and opposability to third parties of the hypothec executed only in French for registration purposes, with more thorough typical security contractual provisions to be set out in a separate non-registered agreement.

14 Tips and traps

14.1 What are your top tips for the smooth conclusion of a secured finance transaction in your jurisdiction and what potential sticking points would you highlight?

The Canadian secured financing market is fairly deep and complex, and continues to evolve and be impacted by trends in the even larger US lending market across the border. As highlighted throughout this Q&A, it is but an overview of the Canadian secured financing market and legislation varies from one province and territory to another. Any creditor or borrower seeking to navigate this market would benefit and be wise to seek advice from qualified and specialised financing counsel.

Co-Authored by Gabrielle Motuz and Lu Chen

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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