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Security Interests (Jersey) Law 201- passed

August 2011 - Corporate & Commercial. Legal Developments by Ogier .

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The Security Interests (Jersey) Law 201- (the "new Law") has been passed by the States of Jersey and has now been sent to the Privy Council for approval. We anticipate that the new Law will come into effect in the early part of 2012.

The new Law represents a significant change to the way in which security will be taken over intangible movables under Jersey law and will introduce simpler methods of enforcement and the concept of registration.

The transitional provisions under the new Law provide that existing security will continue to be valid under the old Law (and have priority over security created under the new Law) provided that it is not "amended" (by which we mean a change is made in respect of the secured obligations, the duration of the security is extended or reduced or the collateral is in some way modified). Care should therefore be taken when making any changes to existing security once the new Law comes into force as additional steps may be required to ensure that any amended security is effective and perfected under the new Law.

The new Law provides for parties to agree that the new Law will apply to existing security agreements once it comes into force, which will enable existing lenders to impose new security agreements which take advantage of the new Law. Therefore it may be an option to consider amending current security agreements to include provisions to require the grantor to agree to such change.

In light of the above, it is suggested that consideration is given to taking the following steps in respect of any existing Jersey security:

  • Identify the current security and in particular the nature of the collateral secured.
  • Consider including further assurance language in current security agreements.
  • Consider whether amendments will need to be made to standard terms and conditions, custody agreements and security agreements to reflect the provisions of the new Law.

If you have any queries in relation to the new Law or are interested in Ogier giving a seminar on the key provisions of the new Law, please do not hesitate to contact Matthew Swan or Katrina Edge.


For more information please visit www.ogier.com

 

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