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1、Global Taking Security GuideGrow|Protect|Operate|FinanceJune 2024D 2IntroductionIn our interconnected global economy,banking and finance transactions are becoming increasingly complex and regulatory frameworks are constantly evolving.The act of taking security,that is,the creation and enforcement of

2、 proprietary rights to secure the payment of a monetary liability,requires creditors to continually keep abreast of relevant regulations and their developments.Cross-border transactions,in particular,demand careful consideration of the choice of law and security package structuring in order to manag

3、e risk.Our Global Taking Security Guide offers you a clear,practical Q&A style overview of the requirements and regulations on taking security in more than 40 countries across the globe.For each country,we provide you with an outline of:the types of obligations that can be secured the types of secur

4、ity that can be taken specific requirements relating to guarantees financial assistance restrictions applicable fees and taxes enforcement rightsThe Guide allows you to:keep abreast of local regulatory positions and developments compare your security position or options across multiple jurisdictions

5、 connect with Dentons banking and finance experts in more than 40 countriesThis Guide is intended to be an overview only and it does not serve as legal advice on taking security in the jurisdictions covered.If you have queries regarding a specific country,we encourage you to contact our local lawyer

6、s noted at the end of each section.If you have any general questions about the Guide or taking security,please contact our Global Banking and Finance Group leaders at AskBankingF.ContentsAfrica 4 Kenya 5 Mauritius 12 Nigeria 19 South Africa 27Asia Pacific 35 Australia 36 Indonesia 44 Malaysia 54 Mya

7、nmar 61 New Zealand 67 Singapore 74Central Asia 82 Azerbaijan 83 Kazakhstan 90Europe 97 Belgium 98 Czech Republic 105 England&Wales 113 France 121 Germany 130 Hungary 137 Ireland 144 Italy 152 Luxembourg 161 Netherlands 169 Poland 177 Romania 185 Scotland 193 Slovakia 201 Spain 207 Turkey 215 Ukrain

8、e 222Middle East 229 Jordan 230 Oman 236 Qatar 244 United Arab Emirates 250Central America 257 Costa Rica 258 Panama 264South America 271 Argentina 272 Brazil 280 Chile 287 Colombia 294 Peru 301 Venezuela 307North America 315 Canada 316 Mexico 326 United States 332D 3Africa Kenya 5 Mauritius 12 Nige

9、ria 19 South Africa 27Back to contentsSigee KoechPartner Kenya17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?18.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guar

10、antee or from enforcement proceeds?Enforcement 19.What is the bankruptcy/insolvency process?20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?21.Would a court recognise a foreign judgment without re-

11、examining the merits of a case?22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?Obligations1.What are the types of obligations that may be secured?Guarantees2.Can a company provide ups

12、tream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?3.Must a guarantor receive a corporate benefit to provide a guarantee?4.Are any government consents or filings required in connection with the delivery of a guarantee?5.Are there any solvency or net worth l

13、imitations/restrictions?Security/Collateral6.Over what type of personal property can security be granted?7.Are general security agreements permitted or must security agreements be tailored to a specific asset?8.Can security be taken over real estate?9.Can cash collateral be taken?How?10.Are pledges

14、of shares permitted?11.Are stamp or other duties imposed?12.Must documents be executed in front of a notary?13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Financial Assistance 14.Are there legal restrictions on“financial assistance”or“upstream guarantee

15、s”that must be considered?15.Are there lawful and reliable means of overcoming any limitations(e.g.whitewash)?Fees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customary and a

16、ccepted ways for legally deferring,minimising or eliminating them?QuestionsD 6KenyaObligations1.What are the types of obligations that may be secured?Under Kenyan law,virtually all obligations can be secured.For instance,present obligations and future or contingent obligations can be secured.Similar

17、ly,jointly held or severally held obligations can be secured.Obligations owed by a principal debtor and those accruing by virtue of guarantee or surety can be secured.The secured amounts may also be capped or uncapped.Back to questionsGuarantees2.Can a company provide upstream and downstream guarant

18、ees for its affiliates?Are foreign affiliates treated differently?Generally,yes.A company would be able to provide both upstream and downstream guarantees for its affiliates.Foreign companies are not treated differently in this regard.It is,however,important to point out that,where the guarantee bei

19、ng issued is for the purpose of financial assistance,the guarantee may face statutory restrictions as the statutory definition of financial assistance includes the issuance of guarantees.Back to questions3.Must a guarantor receive a corporate benefit to provide a guarantee?A corporate guarantor must

20、 demonstrate the corporate benefit it received by providing a guarantee.Corporate benefit is confirmed by showing that the guarantee is/was incidental to the carrying on of the companys business or its affiliate companys business and that it was made in the companys commercial interest or is in the

21、best interests of the business of the company.Corporate benefit is not required in the case of personal guarantees such as those given by directors or individual shareholders of a company.Back to questions4.Are any government consents or filings required in connection with the delivery of a guarante

22、e?There are no government consents or filings required in connection with the delivery of a guarantee.A Kenyan law guarantee will,however,need to be stamped with stamp duty in order to be capable of being presented as evidence before a Kenyan court.Back to questions5.Are there any solvency or net wo

23、rth limitations/restrictions?When a company is subject to insolvency procedures,a guarantee it has given may be challenged on the grounds that it is either a transaction at an undervalue or a voidable preference.There is also the possibility that,under its corporate constitution documents(the Memora

24、ndum and the Articles of Association),a company may have net worth limitations and restrictions which will limit the capacity of the company to give guarantees.A company cannot issue a guarantee to secure a loan made by any person to the companys director if the value of the relevant transaction exc

25、eeds KES 1 million unless the approval of the shareholders of the company is obtained.Back to questionsD 7KenyaSecurity/Collateral6.Over what type of personal property can security be granted?Security can be granted over any type of personal property,for instance:immovable property(land and building

26、s);movable property that constitutes tangible assets(meaning all types of goods including motor vehicles,crops,machinery and livestock)and intangible assets(including receivables,choses in action,deposit accounts,and electronic securities);cash and cash equivalents;receivables under a contract;and i

27、nterests such as trade names,licence rights and royalties,and intellectual property rights.Back to questions7.Are general security agreements permitted or must security agreements be tailored to a specific asset?Security must generally be tailored to a specific asset.For example,where the secured as

28、set is over real estate assets,the form of security document to be used is prescribed by law.Back to questions8.Can security be taken over real estate?Yes,security can be taken over real estate.The type of security created over real estate is a charge over the property and assets thereon.The chargin

29、g instrument must be in the prescribed form under the Land Laws.A charge over real estate does not transfer interest in the property from the borrower to the financier during the security period.The charge only grants the financier a security interest over the assets as a recourse if the borrower de

30、faults in making payment.Typically,long-term interest in land such as leasehold interests of more than 21 years and freehold interests can be charged in favour of a financier.Such security is registrable against the title to the property.Rental receivables from real estate can also be assigned as a

31、form of security.Real estate can also be used as security in the form of an equitable charge where the title documents are deposited with the financier to secure a loan without the security being registered against the title to the land.Back to questions9.Can cash collateral be taken?How?Yes,cash de

32、posits can be used as security.This is usually in an instance where the cash deposits are held in an account held by the financier extending the financing to the borrower.The cash deposit may be charged to the financier as security by creating a fixed or floating charge over the accounts.Cash placed

33、 with a lender can also be subject to express and implied rights of set-off.The cash may also be placed in escrow with a third-party bank(other than the financier)as security.Back to questions10.Are pledges of shares permitted?Yes,pledges of shares are permitted.Pledges of shares are perfected by th

34、e delivery of the share certificates representing the shares and depositing of pre-executed transfer forms in respect of the shares with the pledgee.Following the coming into force of the Movable Property Security Rights Act No.13 of 2017,a pledge of shares can be registered at the Collateral Regist

35、ry established under this Act as it entails security over a“movable asset”.For listed companies,a pledge of shares can also be registered with the Central Depository Settlement Corporation(CDSC).Once a pledge is registered,the CDSC will mark the shares as pledged and it will only allow a transfer of

36、 the shares once the pledgee discharges the pledge.Back to questions11.Are stamp or other duties imposed?Yes,there is a requirement under the Stamp Duty Act for the payment of stamp duty on security agreements with the exception of security agreements registrable under the Movable Property Security

37、Rights Act,which exempts security agreements created thereunder from stamp duty.The rate of stamp duty is dependent on the form of security being created.For instance the stamp duty on a first legal charge or debenture is 0.1%of the value of the security while a collateral charge is subject to stamp

38、 duty at the rate of 0.05%of the value of the security.A guarantee on the other hand is subject to a nominal stamp duty of about US$2.Back to questions12.Must documents be executed in front of a notary?Generally,documents do not have to be executed before a notary public unless the documents are exe

39、cuted outside Kenya and a specific requirement is in place in this regard.For instance,with respect to security over land,if execution of the security documents is done outside Kenya,the security document must be signed in the presence of a notary public and failure to do so will result in the docum

40、ents not being capable of registration.Back to questionsD 8Kenya13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Yes,security agreements may generally be invalidated by fraud.Enforcement of security over real estate may also be defeated if the security is

41、 over matrimonial property and the requisite spousal consent was not obtained at the point of creation of the security.Back to questionsFinancial Assistance 14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be considered?Yes,the Companies Act,2015 prohibits fin

42、ancial assistance in certain cases.Financial assistance is defined under the Companies Act 2015 to mean a gift,guarantee,security,indemnity,release or waiver,loan,novation,or assignment of rights under a loan.Financial assistance is prohibited in the following instances:if the company giving the fin

43、ancial assistance is a private company,and it is a subsidiary of a public company,then it will be prohibited from giving financial assistance for the purpose of the acquisition of shares in its public holding company or from reducing or discharging any related liability;and if the company giving the

44、 financial assistance is a public company,and it is a subsidiary of a private company,it will be prohibited from giving the financial assistance for the purpose of acquisition of shares in the private holding company or discharging any related liability.Back to questions15.Are there lawful and relia

45、ble means of overcoming any limitations(e.g.whitewash)?The provisions on financial assistance can be overcome where the company to receive the financial assistance is converted from a public company to a private company as there is no prohibition on financial assistance for the acquisition of shares

46、 in a private company.Back to questionsFees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customary and accepted ways for legally deferring,minimising or eliminating them?Yes,c

47、ertain security agreements are subject to the payment of stamp duty pursuant to the Stamp Duty Act.The rate of stamp duty is dependent on the form of security being taken as discussed in question 11 above.Failure to pay the applicable stamp duty will affect perfection of the security as the security

48、 cannot be registered unless it is stamped with the requisite stamp duty.Enforceability of the security will also be affected due to lack of registration(where necessary)and if enforcement is done before the courts,as a document liable to payment of stamp duty cannot be admissible before Kenyan cour

49、ts as evidence if the said document is not stamped.The Stamp Duty Act sets out certain transactions which are exempt from the requirement to pay the stamp duty.For example,a transfer of property between spouses or between a holding company and its wholly-owned subsidiary is exempt from stamp duty.Th

50、e Stamp Duty Act also provides that instruments registrable under the Movable Property Security Rights Act,2017 are exempted from payment of stamp duty.There are no other ways of legally deferring,minimising or eliminating stamp duty on security documents unless the entity liable to make the payment

51、 is exempted from paying stamp duty.Back to questions17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?There are fees incurred on the verification of the security(especially if it is land)and verification of the corporate ident

52、ity of the entity granting the security at the Companies Registry and at the Collateral Registry.The costs of conducting searches are as set out below:conducting an official search at the Companies Registry is approximately US$6.5 per search;conducting a search at the Collateral Registry created und

53、er the Movable Property Security Rights Act,2017 is approximately US$5.5 per search;and conducting a search at the Lands Registry is approximately US$5.5 per search.The cost of registration of a security agreement at the Companies Registry is dependent on the principal amount secured under the agree

54、ment,while the cost of registration of a security agreement at the Lands Registry is approximately US$10.There will be additional costs incurred to carry out post-registration searches at all registries to ensure that the interest of the financier was registered correctly.Back to questionsD 9Kenya18

55、.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guarantee or from enforcement proceeds?Yes,withholding tax is payable on interest earned in Kenya even where it is payable to a foreign entity.Withholding tax is also payable in respect of in

56、terest repayments under a loan from a Kenyan borrower to a foreign lender or in respect of amounts paid under a guarantee or from enforcement proceeds.Back to questionsEnforcement 19.What is the bankruptcy/insolvency process?The primary insolvency procedures for incorporated bodies are liquidation,a

57、dministration and company voluntary arrangement.Each of these is considered below:Administration Administration is a process where an insolvent company is placed under external management for the benefit of both the creditors as a whole and the company itself.It commences through the appointment of

58、an administrator,who may be appointed:(i)by court order on application by the company,its directors or its creditors;(ii)by the companys directors;or(iii)by the holder of a qualifying floating charge.Once the administrator is appointed,he/she will:announce his/her appointment to the company,the publ

59、ic and the creditors;give notice requiring the company to provide him/her with its statement of affairs;and make a statement setting out his/her proposal to achieve his/her objectives.The proposal,together with an invitation to the first creditors meeting,must be sent to every creditor of the compan

60、y of whose claim and address he/she is aware.This should be done not later than 60 days after the commencement of the administration.After the initial creditors meeting,there may be further creditors meetings if requested by creditors holding at least 10%of the companys debt or if it is ordered by t

61、he court.If the administration does not result in the recovery of the company,it may lead to liquidation.Company voluntary arrangement(CVA)A CVA is a voluntary agreement between the company and its creditors for a composition in satisfaction of its debts or scheme for arranging its financial affairs

62、.The process of the CVA is as follows:A proposal for a voluntary arrangement may be made either by the directors of the company,by the administrator if the company is under administration,or by the liquidator if the company is under liquidation.A meeting is then held between the company and its cred

63、itors to decide whether to approve the proposal,or to approve it with modifications,or to reject the proposal.A directors proposal(with or without modifications)takes effect as a voluntary arrangement by the company on the day after the date on which it is approved by the court by order or on such d

64、ate as may be specified in the order.Once approved by the parties and the court,the CVA binds both members and creditors of the company.A proposal made by an administrator or liquidator also takes effect on the date on which it is approved by the court by order or on such date as may be specified in

65、 the order.LiquidationLiquidation involves ascertaining the liabilities of a company and apportioning the assets of the company towards the discharge of those liabilities and the subsequent dissolution of a company.Liquidation may either be undertaken by virtue of a court order or be voluntary i.e.b

66、y the shareholders and creditors of a company.KenyaD 10Voluntary liquidation commences when a special resolution is passed by the shareholders of a company to liquidate the company.Once the special resolution is passed,the shareholders will appoint a liquidator.Upon appointment of a liquidator,the p

67、owers of the directors cease,except as sanctioned by the general meeting or the liquidator.Where the voluntary liquidation was initiated by the creditors,a creditors meeting will be convened not later than 14 days after the resolution of the company to liquidate,for the presentation of the companys

68、financial position.The creditors may appoint a liquidator and a liquidation committee of not more than five shareholders during the meeting.If the creditors do not appoint a liquidator,the liquidator may be nominated by the shareholders or directors of the company.Once the liquidator is appointed(wh

69、ether by shareholders or by creditors),a general company meeting should be held at the end of each year for the purposes of presentation by the liquidator of his/her acts,dealings and conduct of liquidation.There should be a final meeting prior to dissolution of a company,where the liquidator shall

70、present a statement of account of the liquidation(i.e.conduct of the liquidation and disposal of the companys property).This statement shall include a certificate by the liquidator that,to the best of the liquidators knowledge and belief,the statement is correct.The companys property in the voluntar

71、y liquidation is to be applied in satisfaction of the companys liabilities equally and without preference and,unless the companys Articles of Association provide otherwise,the remaining property will be distributed among the members according to their rights and interests in the company.Where the li

72、quidation is by virtue of a court order,the following process is followed:An application is made to court for liquidation.The application to court can be made by:the company or its directors,a creditor or creditors(including any contingent or prospective creditor(s);contributory(ies)of the company;a

73、 provisional liquidator,or an administrator of the company;or,if the company is in voluntary liquidation,the liquidator.Following a liquidation order by the court,the Official Receiver becomes the liquidator of the company and continues in office until some other person is appointed during the credi

74、tors and contributories meeting.A contributory means a person liable to contribute to the assets of a company if it is liquidated and any person claiming to be a contributory prior to determination of such claims.After ascertaining the debts of the company,the liquidator shall distribute the assets

75、of the company available for payment of creditors in accordance with the Second Schedule of the Insolvency Act.Thereafter,once the liquidation is complete,the liquidator will convene a final meeting for consideration of his report and subsequent release.Back to questions20.Who may act in enforcement

76、?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?A secured creditor can generally enforce its rights under a security document without having to institute proceedings to do so.Yes,administrative agents/trustees are recognised.B

77、ack to questions21.Would a court recognise a foreign judgment without re-examining the merits of a case?Courts in Kenya generally recognise foreign judgments only from a pre-selected list of countries as stated under the Foreign Judgments(Reciprocal Enforcement)Act,Chapter 43 of the Laws of Kenya(th

78、e Act).Where the judgment is from a country that is recognised under the Act,the court will not re-examine the merits of the case.The Act also clearly sets out the nature of proceedings which can be enforced under its ambit,such as bankruptcy and insolvency proceedings specifically excluded.Back to

79、questions22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?Yes.Courts in Kenya will apply the choice of law clauses in foreign agreements unless such application will be contrary to pub

80、lic policy.Back to questionsD 11KenyaBack to contentsSivakumaren MardemootooManaging Partner Mauritius 17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?18.Will withholding tax be payable on interest owing to a foreign lender o

81、r in respect of amounts paid under a guarantee or from enforcement proceeds?Enforcement 19.What is the bankruptcy/insolvency process?20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?21.Would a court

82、 recognise a foreign judgment without re-examining the merits of a case?22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?Obligations1.What are the types of obligations that may be secu

83、red?Guarantees2.Can a company provide upstream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?3.Must a guarantor receive a corporate benefit to provide a guarantee?4.Are any government consents or filings required in connection with the delivery of a guarante

84、e?5.Are there any solvency or net worth limitations/restrictions?Security/Collateral6.Over what type of personal property can security be granted?7.Are general security agreements permitted or must security agreements be tailored to a specific asset?8.Can security be taken over real estate?9.Can cas

85、h collateral be taken?How?10.Are pledges of shares permitted?11.Are stamp or other duties imposed?12.Must documents be executed in front of a notary?13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Financial Assistance 14.Are there legal restrictions on“f

86、inancial assistance”or“upstream guarantees”that must be considered?15.Are there lawful and reliable means of overcoming any limitations(e.g.whitewash)?Fees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarante

87、e)documentation?Are there customary and accepted ways for legally deferring,minimising or eliminating them?QuestionsMauritiusD 13Obligations1.What are the types of obligations that may be secured?All obligations,present and future,actual or contingent,joint or several,may be secured provided that th

88、e secured obligations are identified in the security document.Back to questionsGuarantees2.Can a company provide upstream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?A company can provide upstream and downstream guarantees for its affiliates provided,howev

89、er,that shareholders approval is obtained in the event the proposed transaction is likely to have the effect of the company incurring obligations and/or liabilities which may exceed 50%of the value of the assets of the company.Mauritian laws do not prohibit local companies from providing upstream an

90、d downstream guarantees for their foreign parent or subsidiary,respectively.Back to questions3.Must a guarantor receive a corporate benefit to provide a guarantee?No.In order to be able to provide a guarantee,a guarantor must be an entity/individual which/who has legal personality capable of being s

91、ued.If the guarantor is an individual,he/she must be at least 18 years of age and mentally sound.If the guarantor is a corporate entity,the entity should be solvent and,where the guarantee has or is likely to have the effect of the entity incurring obligations or liabilities which exceed at least 50

92、%of the value of the entitys assets,shareholders approval would be required.Back to questions4.Are any government consents or filings required in connection with the delivery of a guarantee?No government consents are required in respect of the delivery of a guarantee.However,Section 127 of the Mauri

93、tius Companies Act 2001 provides that every company shall,within 28 days of the creation by the company of any charge or of making any issue of debentures charged on or affecting any property of the company,file with the Registrar of the Companies of Mauritius(ROC)a statement of the particulars in r

94、espect of the charge and a certified copy of the instrument of charge in a form approved by the ROC.Back to questions5.Are there any solvency or net worth limitations/restrictions?Any insolvent person or company,including a company in the process of being wound up,is not legally capable of standing

95、as a guarantor and thus creating legal obligations.Moreover,in the event there is a commencement of insolvency proceedings against a grantor of security,the secured creditor will have to seek leave of court before enforcing any security interest granted to it by the company,which is subject to insol

96、vency proceedings.Back to questionsD 14MauritiusSecurity/Collateral6.Over what type of personal property can security be granted?A company in Mauritius can grant security over any type of assets it owns.It should be noted,however,that different legal regimes shall apply,depending on the type of asse

97、t which is subject to the security.Back to questions7.Are general security agreements permitted or must security agreements be tailored to a specific asset?Each security granted must be subject to a separate security document which shall indicate,inter alia,the collateral given as security.However,f

98、or floating charges,they allow the creation of a general security over all types of property and rights,present or future and wherever they are located,and there is no need to specify the assets in the deed.Back to questions8.Can security be taken over real estate?Yes.The nature of the security inte

99、rest in the real estate(immovable property)will usually determine who can legally hold that security interest.Where the security interest takes the form of a“mortgage”,the same may be held by any security party,whether it is a financial institution,domestic or foreign entity.The mortgage deed shall

100、be registered,within three months of its date of execution,with the Registrar General,who also act as Conservator of Mortgages of Mauritius.However,where the security interest takes the form of a “fixed and/or floating charge”,such security interest may only be created in favour of Institutions Agre

101、s(being entities involved in the provision of finance or banking services generally).Article 2202-9 of the Mauritian Civil Code provides that deeds relating to fixed and/or floating charges over the assets of a company shall be invalid,unless inscribed by the Registrar General.Back to questions9.Can

102、 cash collateral be taken?How?Yes.There are different ways to create cash collaterals,e.g.through a pledge/lien over a deposit bank account or a cash deposit by way of security.There is also the practice for the lender to create a security over a current account by way of floating charges.The holder

103、 of the security may,as a condition precedent,require that the moneys standing to the credit of the account may fluctuate but shall not,at all times during the duration of the collateral,fall below a certain amount.Back to questions10.Are pledges of shares permitted?Yes.Security over the shares of a

104、 company in Mauritius can be taken through a pledge or a fixed charge.There are two common forms of pledges and,in all instances,a pledge is taken by executing a written pledge agreement:Special Civil Pledge a pledge of shares under Articles 2129-1 to 2129-6 of the Civil Code,provided the beneficiar

105、y of the pledge is a bank licensed under Banking Act 2004.Special Commercial Pledge a pledge of shares under Articles 92-6 to 92-11 of the Commercial Code,provided the issuer holds a global business licence granted by the Financial Services Commission of Mauritius.Such pledges over shares do not nee

106、d to be registered with the Registrar General.However,the registration of the security interest is recommended to give the security document a date certaine(a date which cannot be challenged in court).Moreover,the Company shall keep a register in which:the transfer of shares or given in pledge may b

107、e inscribed;it shall be stated that the pledgee holds the share not as owner but in pledge of a debt(and,in the case of a civil pledge,the amount of the debt shall be specifically mentioned).Back to questions11.Are stamp or other duties imposed?Yes.Please refer to our responses to questions 16 and 1

108、7.Back to questions12.Must documents be executed in front of a notary?The only document that needs to be executed in front of a notary is a mortgage over land,which is a deed prepared by a notary public.Save for the above,no other document needs to be executed in front of a notary.Back to questions1

109、3.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?As per the provisions of the Insolvency Act 2009,a liquidator may apply to the court to set aside any transactions(voidable transactions)made by,or any charge or security granted over assets of,a company wit

110、hin two years of the commencement of winding-up proceedings and at a time when that company was insolvent.D 15MauritiusIt should be noted that some preferential creditors,including tax authorities and workers(remuneration due to employees),may in some cases have statutory priority over both secured

111、and unsecured creditors in respect of insolvency proceedings.Back to questionsFinancial Assistance14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be considered?A company may only provide financial assistance(which includes a loan or guarantee,or the provision

112、 of security)for the purpose of or in connection with the acquisition of its own shares if its board had previously resolved that:giving the assistance is in the interests of the company;the terms and conditions on which the assistance is given are fair and reasonable to the company and to any share

113、holders not receiving that assistance;and immediately after giving the assistance,the company shall satisfy the solvency test.If the amount of any financial assistance as approved above,together with the amount of any other financial assistance which is still outstanding,exceeds 10%of the companys s

114、tated capital,the company shall not give the assistance unless it first obtains from its auditor or,if it does not have an auditor,from a person qualified to act as its auditor,a certificate that:such person has inquired into the state of affairs of the company;and there is nothing to indicate that

115、the opinion of the board that the company shall,immediately after giving the assistance,satisfy the solvency test is unreasonable in all the circumstances.In relation to the“upstream guarantees”,please see our response to question 2 aboveBack to questions15.Are there lawful and reliable means of ove

116、rcoming any limitations(e.g.whitewash)?The above restrictions shall not apply to:a distribution to an existing shareholder approved by the board(subject to the company satisfying the solvency test upon the distribution being made)and,subject to the constitution,approved by the other shareholders;the

117、 issue of shares by the company;a repurchase or redemption of shares by the company;anything done under a compromise reached with creditors of the company(in accordance with part XVII of the Mauritius Companies Act 2001)or a compromise or arrangement approved by a Court of Justice(as per part XVIII

118、of the Mauritius Companies Act 2001);or where the ordinary business of a company includes the lending of money by the company in the ordinary course of business.Back to questionsFees/Taxes Withholding/Stamp/Other16.Do stamp duties or similar charges arise in respect of loan,security and/or other cre

119、dit-supported(e.g.guarantee)documentation?Are there customary and accepted ways for legally deferring,minimising or eliminating them?Under Mauritian laws,there is an obligation to pay registration duty pursuant to the Registration Duty Act 1804 in respect of a loan and security documentation at the

120、time of registration and/or inscription,as the case may be,with the Registrar General and Conservator of Mortgages of Mauritius.There are no customary and/or accepted ways to legally defer,minimise or eliminate the registration duties.Back to questionsD 16Mauritius17.What fees(excluding legal fees)a

121、nd taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?The applicable fees and duties are set out as follows:Search at the Registrar General/Conservator of Mortgages:MUR 200(approximately US$5);Registration duty pursuant to the Registration Duty Act 1984.-The duty le

122、viable on the registration of any document witnessing a transaction,other than a transfer of an immovable property or a movable property in Mauritius,between a non-citizen and a company holding a Global Business Licence,shall be 5%of the transaction subject to a maximum of MUR 50,000(approximately U

123、S$1,140),whichever is the lower.-Any deed witnessing a loan contracted by a citizen of Mauritius for the purchase,construction or renovation of his house and witnessing a mortgage,privilege or instrument creating a fixed or floating charge or a pledge in accordance with Article 2112 or 2119 of the C

124、ode Civil Mauricien shall be subject to the appropriate rate of duty specified hereunder.Under Article 2112:-not exceeding MUR 2.5 million Nil;-exceeding MUR 2.5 million but not exceeding MUR 5 million MUR 30,000(approximately US$680);-exceeding MUR 5 million MUR 50,000(approximately US$1,140).Under

125、 Article 2119:-not exceeding MUR 300,000 Nil;-exceeding MUR 300,000 but not exceeding MUR 500,000 Nil;-exceeding MUR 500,000 but not exceeding MUR 1 million Nil;-exceeding MUR 1 million but not exceeding MUR 5 million MUR 30,000(approximately US$680);-exceeding MUR 5 million MUR 50,000(approximately

126、 US$1,140).Administrative feeThere shall be levied on any deed deposited for registration an administrative fee as follows:-loan agreement in respect of each original or copy MUR 700(approximately US$16);-instrument of fixed charge,floating charge,pledge,gage sans dplacement or renewal of charge or

127、of gage sans dplacement in respect of each original or copy MUR 700(approximately US$16).Under the Transcription and Mortgage Act,the following fees shall be payable for inscribing a security document:-a mortgage or a privilege per bordereau by a notary MUR 700(approximately US$16);-a fixed or float

128、ing charge(sret fixe ou flottante)in accordance with Article 2202-10 or 2203-6 of the Code Civil Mauricien MUR 700(approximately US$16);-a pledge(gage sans dplacement)in accordance with Articles 2112 to 2119 of the Code Civil Mauricien MUR 700(approximately US$16).Back to questions18.Will withholdin

129、g tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guarantee or from enforcement proceeds?No.Back to questionsEnforcement19.What is the bankruptcy/insolvency process?The bankruptcy/insolvency legislation applicable in Mauritius is provided under the Insolven

130、cy Act 2009.BankruptcyA debtor is adjudicated bankrupt where:(i)a creditor of the debtor petitions the court for a bankruptcy order;or(ii)the debtor petitions the court for a bankruptcy order,and the court makes the bankruptcy order.The court shall not make a bankruptcy order on a creditors petition

131、 unless one of the following grounds of adjudication is established:failure to comply with a bankruptcy notice;departure from Mauritius with intent to defeat or delay a creditor;notification in writing by the debtor to a creditor that he has suspended,or proposes to suspend,payment of his debts;or a

132、dmission to creditors that the debtor is insolvent.Furthermore,the court shall not make a bankruptcy order on the petition of a secured creditor unless the creditor has established that the amount of the debt exceeds the value of the security claimed by at least MUR 100,000(approximately US$2,272).W

133、inding-upA company can be wound up:(i)upon an order made by the court;(ii)by a voluntary winding-up commenced by a resolution passed by the shareholders of the company;and(iii)by way of resolution of creditors passed at the watershed meeting(the creditors meeting called by the administrator to decid

134、e the future of a company,in particular whether the company and the creditors should execute a deed of company arrangement).Winding-up by the courtA petition to wind up the company may be presented by:the company;a contributory or any person who is the heir of a deceased contributory or the trustee

135、in bankruptcy of the estate of a contributory;a shareholder;a creditor,including a contingent or prospective creditor;a liquidator;the administrator;the Director of Insolvency Service or the Registrar of Companies;or the Financial Services Commission,where the company is a licensee or a past license

136、e.D 17MauritiusVoluntary winding-upA company may be wound up voluntarily where:the period fixed for its duration by its constitution expires,or the event occurs as provided by the constitution that the company is to be dissolved,and the company passes an ordinary resolution that it shall be wound up

137、;or the company passes a special resolution that it shall be wound up.Where an application for winding-up has been presented on the ground that a company is unable to pay its debts,the company shall not,without the leave of the court,resolve that it be wound up voluntarily.Where it appears to the di

138、rectors of a company that the company is insolvent,the directors may,before holding a meeting for the passing of the special resolution:lodge with the Director of Insolvency Service or the Registrar of Companies a declaration,stating that the company cannot by reason of its liabilities continue its

139、business,and meetings of the company and of its creditors have been summoned for a date not later than one month after the date of the declaration;and appoint a person to be the provisional liquidator,who shall,subject to such limitations and restrictions as may be prescribed,have and may exercise a

140、ll the functions and powers of a liquidator in a creditors winding-up.Back to questions20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?As a general rule,any creditor,whether secured or unsecured,ma

141、y act in enforcement.The enforcement process and the enforcer will depend upon:the type of security,if any;and the status of the debtor i.e.whether it is in liquidation or in administration or in receivership.In cases of secured creditors,the administrator or the receiver may enforce the security an

142、d/or charge.Enforcement against debtors that are already engaged in some form of bankruptcy or insolvency process may require prior judicial approval(i.e.leave of the court).Some security instruments,such as pledges over shares and/or account,contractual rights(e.g.assignment of rights)and fixed and

143、 floating charges,are directly enforceable and do not require judicial approval.Administrative agents and/or trustees(including security trustees)may act in lieu of the principal,subject to a proper mandate validating their standing to bring and enforce a claim.Back to questions21.Would a court reco

144、gnise a foreign judgment without re-examining the merits of a case?For any foreign judgment to be enforced in Mauritius,it needs to go through the procedure of exequatur before the Supreme Court of Mauritius.This is a process where the Mauritian court will examine the foreign judgment and determine

145、whether it passes the test for exequatur.This is not a retrial of the matter,but a mere examination of whether the test for exequatur is satisfied.The conditions for granting exequatur of a foreign judgment are as follows:the judgment must still be valid and be capable of execution in the country wh

146、ere it was delivered;the judgment must not be contrary to any principle affecting public order;the defendant must have been regularly summoned to attend the proceedings;and the court which delivered the judgment must have had jurisdiction to deal with the matter submitted to it.Furthermore,the enfor

147、cing court cannot re-examine the merits of the case.The role of the exequatur judge is limited to ensuring that the proceedings that took place in the foreign jurisdiction were correctly undertaken.Back to questions22.In a court proceeding for the enforcement of a foreign agreement,would a court app

148、ly the applicable foreign law in accordance with the parties choice of such law?Yes,in principle.Back to questionsD 18MauritiusBack to contentsOmolola CokerPartner Dr.Sanford MbaPartner Nigeria QuestionsObligations1.What are the types of obligations that may be secured?Guarantees2.Can a company prov

149、ide upstream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?3.Must a guarantor receive a corporate benefit to provide a guarantee?4.Are any government consents or filings required in connection with the delivery of a guarantee?5.Are there any solvency or net

150、worth limitations/restrictions?Security/Collateral6.Over what type of personal property can security be granted?7.Are general security agreements permitted or must security agreements be tailored to a specific asset?8.Can security be taken over real estate?9.Can cash collateral be taken?How?10.Are p

151、ledges of shares permitted?11.Are stamp or other duties imposed?12.Must documents be executed in front of a notary?13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Financial Assistance 14.Are there legal restrictions on“financial assistance”or“upstream gu

152、arantees”that must be considered?15.Are there lawful and reliable means of overcoming any limitations(e.g.whitewash)?Fees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customar

153、y and accepted ways for legally deferring,minimising or eliminating them?17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?18.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid u

154、nder a guarantee or from enforcement proceeds?Enforcement 19.What is the bankruptcy/insolvency process?20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?21.Would a court recognise a foreign judgment

155、without re-examining the merits of a case?22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?D 20NigeriaObligations1.What are the types of obligations that may be secured?There is no lim

156、itation on the types of obligations that may be secured under Nigerian law.Generally,any financial obligations(whether for credit or trade debt)may be secured,regardless of whether or not they are present or future,actual or contingent,or owed jointly or severally or in any other capacity.Non-financ

157、ial obligations may also be secured,for example performance of contractual obligations may be secured under a performance bond.Back to questionsGuarantees2.Can a company provide upstream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?Yes.A subsidiary can prov

158、ide upstream guarantees for its parent companies liabilities,and a parent company can provide downstream guarantees for its subsidiaries and affiliates,in each case where the constitutional documents of the relevant company permit it to do so.Such a guarantee may,however,be voidable where it is dete

159、rmined that there has been unlawful financial assistance.Under the Companies and Allied Matters Act(CAMA)2020(CAMA),a Nigerian company and its Nigerian subsidiaries are prohibited from providing financial assistance directly or indirectly for the purpose of acquiring shares in that company.The term“

160、financial assistance”is broadly defined and includes a guarantee.This is discussed under question 15 below.There are no Nigerian laws restricting the ability of a Nigerian company to provide upstream and downstream guarantees for its foreign parent or subsidiary,respectively.Back to questions3.Must

161、a guarantor receive a corporate benefit to provide a guarantee?There are no statutory requirements that mandate a guarantor providing a corporate guarantee to receive a corporate benefit for the provision of a loan facility.While it is typically the case that the guarantor always has an indirect int

162、erest in the liabilities of the guaranteed company,the Nigerian law requires that the directors of a company(who are responsible for the business and management of the company)act in good faith and in the best interest of the company/guarantor.Back to questions4.Are any government consents or filing

163、s required in connection with the delivery of a guarantee?Generally,government consents or filings are not statutorily required when delivering a guarantee.Where,however,the guarantee is secured against certain regulated assets(e.g.land,petroleum concessions etc.),government consent would be require

164、d to enforce such secured guarantees and vest legal title in the secured party.Back to questions5.Are there any solvency or net worth limitations/restrictions?While there are no stipulated net worth limitations,generally a bankrupt person lacks the legal and contractual capacity to stand as a guaran

165、tor.Similarly,an insolvent company or a company in the process of winding-up is legally incapable of creating new legal obligations as would be required of a guarantor.Such obligation created could be discharged by a liquidator as a fraudulent preference.Back to questionsD 21NigeriaSecurity/Collater

166、al6.Over what type of personal property can security be granted?Security may be granted over any chattels or choses in action of value to a secured party.Back to questions7.Are general security agreements permitted or must security agreements be tailored to a specific asset?Nigerian law permits gene

167、ral security agreements.However,some assets by their nature can only be secured pursuant to a particular type of security(e.g.the goodwill of a company can only be secured by a floating charge and not,for instance,a mortgage).Back to questions8.Can security be taken over real estate?Yes,security can

168、 be taken over real estate.Such security may be created by way of a pledge,a mortgage or a charge.A mortgage over real estate is required to be perfected in order to create a legal secured interest in favour of the mortgagee.The perfection of a mortgage over real estate will require the stamping of

169、the mortgage document,obtaining the consent of the governor of the state in which the land is located and registering the mortgage at the states Lands Registry.The remedies available to the creditor must be clearly set out in the mortgage/charge document and typically include a power of sale,appoint

170、ment of a receiver or foreclosure.The consent of the governor must be obtained where the security is to be enforced by way of a sale,lease or other means of disposition of the real estate.The consent of the state governor where the land is situated is generally required to transfer an interest in la

171、nd.However,a charge over real estate(which may be created by consensus of the parties or operation of law)does not require the consent of the governor,as a charge does not involve the transfer of either proprietary or possessory right/interest in land.The governors consent will,however,be required a

172、t the time of enforcement of a charge.The documents creating the charge must be stamped as a prerequisite for admissibility and enforcement in court.Thereafter registration is required at the Lands Registry in the state where the subject land is located.Furthermore,the governors consent will not be

173、needed in:the creation of an equitable mortgage;the conversion of an equitable mortgage into a legal one when the governors consent was voluntarily obtained;reconveyance of a mortgaged property where the governors consent was obtained during its creation;and when a party chooses to“upstamp”a mortgag

174、e deed.A mortgage or charge over the real estate of a company is required to be registered in such companys corporate file at the Corporate Affairs Commission i.e.Nigerias companies registry(within 90 days from the date when the security was created)and at the Lands Registry of the state in which th

175、e land is located.Back to questions9.Can cash collateral be taken?How?Yes,cash collateral may be taken.This is usually by way of a pledge and/or charge over a bank account balance or moneys in the possession of the secured party,or a third-party bank.Cash collaterals by way of pledge are also very c

176、ommon in cash-backed guarantees.The cash collateral can be placed(and pledged)with a third-party bank.Back to questionsNigeriaD 2210.Are pledges of shares permitted?Yes,pledges of shares are permitted under Nigerian law.Pledges of shares are usually created by a deed of share pledge under which a se

177、curity interest is created in favour of the secured party.To perfect a pledge over shares,the obligor is often required to deposit the share certificates with the secured party.In addition,and as part of the security package,the secured party is provided with a signed but undated share transfer form

178、 in respect of the shares executed in blank.These documents will also be accompanied by a signed and undated resolution of the board of directors of the company in which the shares are held,approving the transfer of the shares in the event of an enforcement.Back to questions11.Are stamp or other dut

179、ies imposed?Stamp duties and registration charges are required to be paid on any instrument executed in Nigeria or relating,wheresoever executed,to any property situated or to anything done or to be done in Nigeria.Stamping is required to be done within 30 days of the execution of such instrument or

180、 within 30 days of such instrument being brought into Nigeria.Any instrument not duly stamped is inadmissible in civil proceedings in court.Stamp duties chargeable may be a nominal amount or calculated at an ad valorem rate on the secured amount,depending on the nature of the transaction as assessed

181、 by the Stamp Duties Commissioner.Stamp duty rate can range from 0.375%to 1.5%depending on the nature of the security.In the case of a mortgage over real estate,an ad valorem fee is payable for obtaining the consent of the governor;such fee is charged at a rate of 1%to 13%of the secured amount,depen

182、ding on the state where the land is situated.Additionally,in a bid to manage the high transactional cost that may arise as a result of the requirement under Nigerian law to stamp security documents,parties(borrowers and lenders)can choose to stamp the security documents for a lesser amount than the

183、facility sum and then“upstamp”for an additional amount at a later date.In practice,stamping can be concluded in fewer than five working days.Back to questions12.Must documents be executed in front of a notary?There is no requirement for a security document to be executed in the presence of a notary.

184、However,certain documents emanating from a foreign jurisdiction may require notarisation for presumption of regularity.Back to questions13.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be considered?Yes.Under the CAMA,any security created by a company at any t

185、ime within:(i)any period of time ending with the onset of insolvency(in the case of a preference which is given to a person who is connected with the company other than by reason only of being its employee);or(ii)three months(in any other case)ending with the onset of insolvency(i.e.the time of pres

186、entation of a petition for winding-up in the case of a winding-up by or subject to the supervision of the court,or the passing of a shareholders resolution for winding-up in the case of a voluntary winding-up),which has the effect of giving a person,being one of the companys creditors or a surety or

187、 guarantor,undue advantage shall be deemed a fraudulent preference of that person and be invalid accordingly.Such secured assets can be clawed back by a liquidator.Back to questionsFinancial Assistance14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be conside

188、red?Yes.Under the CAMA,it is unlawful for a company or any of its subsidiaries to give financial assistance directly or indirectly for the acquisition of its shares before or at the same time as such acquisition takes place,unless such assistance is permitted under the CAMA.Furthermore,where a perso

189、n or company has acquired shares in a company and any liability has been incurred thereby for the purpose of the acquisition,it would be unlawful for the company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred in the acquisitio

190、n of its shares.Financial assistance includes a gift,guarantee,any form of security or indemnity,loan,any form of credit or any other financial assistance given by a company,the net assets of which are thereby reduced by up to 50%or which has no net assets.Back to questions15.Are there lawful and re

191、liable means of overcoming any limitations(e.g.whitewash)?Yes,the legal restrictions on financial assistance do not apply to funds provided to:(i)trustees under a scheme,to acquire fully paid-up shares of the company to be held for the benefit of employees of the company,including any director holdi

192、ng a salaried employment or office in the company;(ii)employees(not directors)by way of loans for the purchase of fully paid-up shares of the company;or (iii)any act or transaction authorised by law.The prohibition also does not apply in cases of loans made by a company which lends money in the ordi

193、nary course of its business.D 23NigeriaIn addition and pursuant to the CAMA,a company shall not be prevented from rendering financial assistance where:(i)it is done in pursuance of an order of the court under a scheme of arrangement,a scheme of merger,or any other scheme or restructuring of a compan

194、y done with the sanction of the court;or(ii)its principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company,or the reduction or discharge of any such liability,but an in

195、cidental part of some larger purpose of the company,and the assistance is given in good faith in the interests of the company.Transactions structured under any of the above exemptions are less likely to be challenged.Back to questionsFees/Taxes Withholding/Stamp/Other16.Do stamp duties or similar ch

196、arges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customary and accepted ways for legally deferring,minimising or eliminating them?Yes,please see our response to question 11 above.In practice,where two or more security documents are to be sta

197、mped based on a percentage of the loan amount,the Stamp Duties Commissioner may at his discretion(where all the documents are in respect of the same transaction)assess the principal security document at a specified percentage,while a nominal flat fee will be paid on each of the other documents.Stamp

198、 duty is typically assessed and paid on the principal security document(i.e.the composite security document)at the rate of 0.375%of the amount sought to be registered,while counterpart documents are often stamped at a nominal flat fee of 50 Nigerian Naira per copy.NigeriaD 24In addition,in order to

199、minimise or reduce the cost of stamping and registration of the security documents,it is not uncommon for lenders and borrowers to agree to“understamp”and secure a sum less than the full aggregate of the lenders exposure.The security documents can then be“upstamped”in the event of default or before

200、enforcement.Please note that there are no penalties payable on the amount outstanding on the lenders exposure.Back to questions17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?The fees and taxes payable for the perfection and

201、enforcement of security are dependent on the nature of the security givers industry of operation,and are as follows:consent fee for obtaining the governors consent for perfection of security over real estate is between 1%and 13%of the security amount or value of the secured real estate(where a valua

202、tion is conducted)depending on the state where the real estate is situated;registration fee at the Lands Registry is a percentage of the value of the secured amount and varies from state to state;stamp duty is the same as stated in question 11 above;registration fee payable to the Companies registry

203、 shall not exceed 0.35%of the secured amount;industry-specific fees and charges may be payable for the perfection of the security where the applicable laws and regulations so require.For instance,registration fees are payable to the Shippers Registry for the registration of security over a ship,whil

204、e consent fees are payable for obtaining the consent of the Minister of Petroleum Resources where the security involves the transfer of interest in an oil and gas asset.The fees and taxes payable for the enforcement of security include court fees/charges(where enforcement is through the courts),cons

205、ent fees,stamp duties and registration fees,where applicable.Back to questions18.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guarantee or from enforcement proceeds?Yes.Generally,withholding tax is payable at the rate of 10%.However,wher

206、e the interest is paid under a loan to lenders in countries with a concessionary withholding tax arrangement with Nigeria,the withholding tax rate is 7.5%.As at the end of 2023,these countries were South Africa,China,Singapore,Spain and Sweden.Back to questionsEnforcement19.What is the bankruptcy/in

207、solvency process?Generally,Nigeria does not have specific insolvency legislation detailing bankruptcy or insolvency procedures and processes like the US Chapter 11(relating to reorganisation under the Bankruptcy Code)and the Canadian Companies Creditor Arrangement Act.Under Nigerian law,bankruptcy/i

208、nsolvency processes are largely undertaken by winding-up.A creditor may petition a court to wind up the affairs of a company where:(i)the debt owed to the creditor is unpaid;(ii)the creditor has provided the company with a written demand to pay the outstanding debt;and(iii)the company fails or negle

209、cts to pay or secure the payment of the debt three weeks from the date on which the creditor made the written demand.The winding-up petition must be made to the Federal High Court.A petition for the winding-up of the company can also be made by the debtor/guarantor company itself(where a special res

210、olution has been passed by a debtor/guarantor company for its activities to be wound up by the court),an official receiver or a contributory(i.e.a person who is liable to contribute to the assets of a company in the event of winding-up).The court,upon entertaining the petition,can dismiss the petiti

211、on,adjourn the hearing conditionally or unconditionally,make an interim order,or any order that the court deems fit.Where the court allows the petition,it will then appoint an official receiver or liquidator,and a statement of the companys affairs will be submitted to the official receiver/liquidato

212、r,which will show the particulars of the companys assets,debts/liabilities,the names,residences and occupations of its creditors,the securities held by the creditors,the dates when the securities were given,the list of shareholders and the list of charges and any other information as required.Upon t

213、he commencement of winding-up by the court,the court may order that the property of the company be vested in the appointed liquidator.The board of directors of the company shall cease to function upon the appointment of a liquidator.Where a company is being wound up by the court,any attachment,seque

214、stration,distress or execution put in force against the estate or effects of the company after the commencement of the winding-up is void except in relation to a fixed charge or any other validly created and perfected security interest other than a floating charge.Back to questionsD 25Nigeria20.Who

215、may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?Security may be enforced by the entity to which the security is granted.Such secured party may act directly or may appoint and act through a security agent

216、or security trustee(this is most common when the secured party does not reside or operate in Nigeria).Generally,where a security agreement empowers a person(e.g.an agent or trustee)to enforce the security created under the agreement,such agent or trustee may enforce the security as provided under th

217、e contract.Such agent or trustee must,however,comply with the winding-up proceedings under Nigerian law.Back to questions21.Would a court recognise a foreign judgment without re-examining the merits of a case?Generally,Nigerian courts will recognise and enforce foreign judgments without further revi

218、ew of the merits,where such judgments and orders qualify for enforcement under Nigerian law.The Foreign Judgment(Reciprocal Enforcement)Act,1961 provides the grounds and administrative processes under which a foreign judgment can be registered and enforced in Nigeria.For a foreign judgment to be rec

219、ognised and enforced in Nigeria,such judgment must:have been given by a court of competent jurisdiction;be a judgment of a superior court of the country of the original court;be for a specified amount of money,where it is a monetary judgment;be in respect of neither a tax nor a penalty;be final and

220、conclusive between the parties thereto;and not have been obtained by fraud.Back to questions22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?Yes.Nigerian law and courts recognise parti

221、es choice of foreign law as stipulated in their contracts.Nigerian courts will,as a general rule,give effect to the parties choice of a foreign governing law and will,accordingly,apply such law in the determination of any claims that come within their jurisdiction.This is,however,subject to whether

222、such foreign law is genuine,bona fide,legal and reasonable.Notwithstanding the above,where the security asset is necessarily governed or regulated by Nigerian laws,Nigerian courts are inclined to apply the laws of the land which regulates such assets.Assets typically regulated under local laws inclu

223、de shares in a Nigerian company,land in Nigeria,upstream petroleum assets,etc.Back to questionsNigeriaD 26Back to contentsShahid SulaimanPartner Alishka SinghPartner South Africa QuestionsObligations1.What are the types of obligations that may be secured?Guarantees2.Can a company provide upstream an

224、d downstream guarantees for its affiliates?Are foreign affiliates treated differently?3.Must a guarantor receive a corporate benefit to provide a guarantee?4.Are any government consents or filings required in connection with the delivery of a guarantee?5.Are there any solvency or net worth limitatio

225、ns/restrictions?Security/Collateral6.Over what type of personal property can security be granted?7.Are general security agreements permitted or must security agreements be tailored to a specific asset?8.Can security be taken over real estate?9.Can cash collateral be taken?How?10.Are pledges of share

226、s permitted?11.Are stamp or other duties imposed?12.Must documents be executed in front of a notary?13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Financial Assistance 14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that m

227、ust be considered?15.Are there lawful and reliable means of overcoming any limitations(e.g.whitewash)?Fees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customary and accepted

228、ways for legally deferring,minimising or eliminating them?17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?18.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guarante

229、e or from enforcement proceeds?Enforcement 19.What is the bankruptcy/insolvency process?20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?21.Would a court recognise a foreign judgment without re-exam

230、ining the merits of a case?22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?D 28South AfricaObligations1.What are the types of obligations that may be secured?Generally,all obligations

231、 can be secured,including obligations arising out of a loan agreement,whether present or future,actual or contingent,or quantified or unquantified and one or more parties(acting jointly or severally)can secure such obligations.Back to questionsGuarantees2.Can a company provide upstream and downstrea

232、m guarantees for its affiliates?Are foreign affiliates treated differently?Yes.However,additional corporate approvals may be required.By way of example,providing financial assistance under the South African Companies Act,No.71 of 2008(Companies Act)(which includes guarantees)to an affiliate generall

233、y requires:(i)a special resolution of the shareholders,satisfying the prescribed requirements;as well as(ii)a board resolution.In addition,the board must be satisfied that,immediately after providing financial assistance,the company would satisfy the solvency and liquidity test(as described in quest

234、ion 5 below)and that the terms under which the financial assistance is proposed to be given are fair and reasonable.In order to provide upstream or downstream guarantees to foreign affiliates,exchange control approval from the Financial Surveillance Department of the South African Reserve Bank is al

235、so required.Back to questions3.Must a guarantor receive a corporate benefit to provide a guarantee?It is preferable that the guarantor receives corporate benefit,as this decreases the risk of the guarantee being declared a disposition without value.Back to questions4.Are any government consents or f

236、ilings required in connection with the delivery of a guarantee?Generally,no government consents or filings are required for the delivery of a guarantee(provided that the requisite exchange control approval was obtained for the granting of financial assistance to any person outside South Africa).Back

237、 to questions5.Are there any solvency or net worth limitations/restrictions?Yes,if provision of the guarantee constitutes financial assistance under the South African Companies Act.Before authorising a guarantee,the board must be satisfied that,immediately after providing financial assistance,the co

238、mpany would satisfy the solvency and liquidity test.A company satisfies the solvency and liquidity test at a particular time if,considering all reasonably foreseeable financial circumstances of the company at that time:(i)the assets of the company exceed or equal the liabilities of the company;and(i

239、i)it appears that the company will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months.Back to questionsD 29South AfricaSecurity/Collateral6.Over what type of personal property can security be granted?Security can be granted over the following pro

240、perty:movable assets;immovable assets;shares and negotiable instruments;receivables and income;cash deposits and bank accounts;personal rights;and other intangible property(such as goodwill,trade names,intellectual property and licence rights).Back to questions7.Are general security agreements permi

241、tted or must security agreements be tailored to a specific asset?Under South African law,there are no general security agreements and the documentation required depends on the type of security provided.For example,security over immovable property can only be obtained by a mortgage bond as set out in

242、 the Deeds Registries Act,No.47 of 1937.A general notarial bond can be registered against all of the assets of the security provider.However,a general notarial bond only gives preference over secured claims upon perfection by way of court order.Before perfection,preference is only given over unsecur

243、ed claims.In respect of the above,the ownership in the asset(usually referred to as“bare dominium”)is retained by the party providing the security under the mortgage bond,general notarial bond or special notarial bond(as the case may be).Back to questions8.Can security be taken over real estate?Unde

244、r South African law,real estate is defined as“immovable property”.This includes land,minerals in the soil,trees,a building annexed to the land and an object which is attached to land.However,please note that there is no exhaustive list as to what constitutes immovable property.Immovable property can

245、 be given as security by way of a mortgage bond duly registered against the title deed of the borrowers property at the deeds registry.In addition,any personal and contractual rights relating to land can be given as security by,for example,way of cession in security.Back to questions9.Can cash colla

246、teral be taken?How?Yes.However,we must distinguish between cash and bank accounts being provided as security.In respect of bank accounts,once a person deposits money into a bank account,the money mixes with other money and becomes the property of the bank.The effect of this is that the account holde

247、r loses the real right of ownership of the money but only has a personal right to receive payment of that money from the bank.This personal right can be given as security by way of cession in security over the borrowers bank account.In addition,it is possible to open a bank account with the specific

248、 intention of establishing security and to pledge the specific amount in such bank account.Back to questions10.Are pledges of shares permitted?Yes.Shares,as a bundle of rights,can be given as security by way of pledge and cession in security.In terms of a cession in security,certain rights in the sh

249、ares are transferred to the cessionary(while the cedent retains ownership of such shares and,for example,the right to receive dividends in respect of those shares).Simultaneous with the cession is a pledge of the shares,which establishes quasi-possession over the shares by the cessionary.Quasi-posse

250、ssion enables the cessionary to enforce its security in the event of a default by the cedent.This is the construction generally applied in the market to certificated shares.In the case of uncertificated security,the Financial Markets Act,No.19 of 2012(FMA)requires that an annotation be made in the b

251、orrowers securities account that the shares have been pledged to the lender.This annotation is made by the Central Securities Depository Participant.Back to questions11.Are stamp or other duties imposed?There are no document taxes payable with respect to the granting or taking of security.There are

252、nominal registration fees payable for the registration of mortgage bonds,general notarial bonds,special notarial bonds and other costs related to trademarks,designs and patents.With respect to mortgage bonds and notarial bonds,the conveyancers will charge fees for preparing the bonds according to th

253、e prescribed tariffs.Back to questionsD 30South Africa12.Must documents be executed in front of a notary?Generally,no.However,a general notarial bond,special notarial bond or mortgage bond must be executed by a notary for the purposes of registration at the deeds registry.In addition,if a document i

254、s not authenticated and was executed outside South Africa,the South African High Courts may require evidence to prove the authenticity of such signatures and/or documents.13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?The risk of claw-back exists where

255、the security holder exercises its rights in the security in respect of a company which is:in business rescue;or insolvent.Business rescueChapter 6 of the Companies Act,71 of 2008 makes provision for business rescue proceedings in respect of any company which is in financial distress but has prospect

256、s of being financially rehabilitated.Business rescue involves the restructuring of companies with a view to rehabilitating them to a solvent position.Business rescue proceedings have a far-reaching effect on creditors in that a business rescue practitioner,who has been appointed to oversee a financi

257、ally distressed company,can suspend any contract or the payment of monies to creditors until the business rescue process has been completed(either in rehabilitation of the business or liquidation).Accordingly,a holder of security would not be able to enforce any rights they have over a company subje

258、ct to business rescue.D 31South AfricaInsolvencyIn terms of section 32 of the Insolvency Act,the courts may set aside certain dispositions(particularly fraudulent transactions)made of property in an insolvents estate prior to liquidation proceedings.The effect of setting aside a disposition is that

259、the trustee of the insolvents estate may recover any property alienated under the disposition or the value of such property.The dispositions capable of being set aside by the court include:(i)disposition of property not made for value;(ii)disposition of an insolvents property within six months befor

260、e the date of liquidation and which disposition has the effect of preferring one creditor above another;(iii)dispositions in which there was collusion with another person in a manner that prejudiced the insolvents creditors or preferring one creditor over another;or(iv)fraudulent dispositions.Fraudu

261、lent transactionsOther than as discussed above,fraud is a common law offence and is also governed by certain legislation aimed at combatting corporate crimes,which include fraud.These legislations include:Prevention and Combating of Corrupt Activities Act 2004,Banks Act No.94 of 1990,Prevention of O

262、rganised Crime Act No.121 of 1998 and Financial Intelligence Centre Act No.38 of 2001.The courts may make orders to preserve and seize assets related to an ongoing fraudulent case,or that proceeds from a fraudulent transaction to be confiscated from a person convicted of fraud.These are in addition

263、to criminal sanctions that may be imposed on a person convicted of fraud.Back to questionsFinancial Assistance14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be considered?Yes.Section 44 of the Companies Act,No.71 of 2008 applies to a company that provides fi

264、nancial assistance(including providing guarantees)to any person whether natural or juristic for the purpose of purchasing securities in that company,or in a company related or interrelated to that company providing such financial assistance.According to section 44 of the Companies Act,a board of dir

265、ectors of a company may not pass a board resolution to grant financial assistance for the purposes of the provision of a loan,guarantee or security in connection with the purchasing of its own securities(including shares)or those of a related or interrelated company unless:(i)the financial assistanc

266、e is pursuant to a special resolution of the shareholders adopted within the previous two years approving such assistance;(ii)the company passes the solvency and liquidity test contained in the Companies Act;(iii)the terms of the financial assistance are fair and reasonable to the company;and(iv)any

267、 restrictions in the security providers constitutional documents have been satisfied.Unlike section 44,section 45 of the Companies Act is concerned more with to whom financial assistance is provided,and less with the purpose of such assistance.Section 45 applies to a company that provides financial

268、assistance(which includes providing guarantees)to certain persons(specified below).These include the directors/prescribed officers of the company or its related/interrelated companies.According to section 45 of the Companies Act,a board of directors of a company may not pass a resolution to grant di

269、rect or indirect financial assistance to:(i)a director or prescribed officer of the company or of a related or interrelated company;or(ii)a person related to any such company,director or prescribed officer unless:(a)it is pursuant to a special resolution of the shareholders adopted within the previo

270、us two years approving such assistance;(b)the company passes the solvency and liquidity test contained in the Companies Act;and(c)the terms of the financial assistance are fair and reasonable to the company.Back to questions15.Are there lawful and reliable means of overcoming any limitations(e.g.whi

271、tewash)?Only through compliance with the aforementioned provisions of the Companies Act,which are peremptory.Back to questionsFees/Taxes Withholding/Stamp/Other16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there

272、customary and accepted ways for legally deferring,minimising or eliminating them?No,South African law does not impose any stamp,registration duty or similar taxes or charges in respect of loans and/or other credit-support documentation.Back to questionsD 32South Africa17.What fees(excluding legal fe

273、es)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?Registration fees,such as in relation to a notarial bond(in respect of movable property)or mortgage bond(in respect of immovable property),fees payable to the registrar in respect of uncertificated securities

274、 entered into a central securities depository for the purposes of securing a debt(see pledge of shares above)under the FMA.With respect to mortgage bonds,the conveyancers will charge fees for preparing the bonds according to the prescribed tariffs.Apostilles or Certificates of Authentication may be

275、required in respect of certain documentation for use of those documents outside South Africa and this will entail notary fees.Nominal search fees may be payable for company reports and property searches.Back to questions18.Will withholding tax be payable on interest owing to a foreign lender or in r

276、espect of amounts paid under a guarantee or from enforcement proceeds?Yes,withholding tax is payable on interest owing to a foreign lender.However,subject to certain limitations,certain companies are exempted from withholding taxes,such as banks.Withholding tax on interest is charged at a rate of 15

277、%on interest paid(on or after 1 March 2015)by any person to or for the benefit of a foreign person(which includes individuals,companies,etc.)from a source within South Africa.Foreign persons making loans in South Africa which are subject to interest are therefore subject to withholding tax.The forei

278、gn person is responsible for the tax,but it must be withheld by the person making the interest payment to or for the benefit of the foreign person.Back to questionsEnforcement19.What is the bankruptcy/insolvency process?Insolvency proceedings are governed by the Insolvency Act,No.24 of 1936(the Inso

279、lvency Act)and the Companies Act,1973(the 1973 Companies Act)read together with the Companies Act 2008.The Insolvency Act read with the 1973 Companies Act provides for two processes by which the estate of a debtor can be sequestrated or,in the case of a company,how the company can be wound up.The fi

280、rst process is voluntary winding-up,where an insolvent company voluntarily initiates the winding-up process by way of special resolution by the shareholders or by the creditors of the company.The resolution(together with the prescribed forms and supporting documents)must be registered with Companies

281、 Registrar.The second process is winding-up by court order.An application to wind up an insolvent company may be brought by the company itself,the creditors or the shareholders of the company on any of the grounds recognised in the 1973 Companies Act.Grounds for the winding-up of a company include t

282、he inability to pay debts when such debts become due.Sequestration means that an individual is declared insolvent and is divested of control over their estate.Winding-up or liquidation has a corresponding meaning but with specific reference to companies and close corporations.The estate is administe

283、red by a trustee or liquidator who is responsible for ensuring that creditors who prove their claims are paid in the order of preference as provided for in the Insolvency Act.Secured creditors are ranked the highest and general creditors are ranked equally in respect of the free residue after paymen

284、t of secured creditors.Under the Companies Act:(i)the board of directors of the company may by way of board resolution voluntarily begin business rescue proceedings if the board is of the belief that the company is in financial distress and that there appears to be reasonable prospects of rescuing t

285、he company;or(ii)if no such resolution has been adopted by the board,any affected person may apply to court for a company to be placed under business rescue.Affected persons include shareholders of the company,creditors of the company,registered trade unions representing the employees of the company

286、,or employees not represented by trade unions.Business rescue means that the companys property and the management of its affairs are placed under temporary supervision by a business rescue practitioner,and there is a temporary moratorium on the rights of all creditors(including secured creditors)in

287、respect of the company and its property,unless the written consent of the business practitioner is obtained,or with leave from the court to do so.The purpose of business rescue is to attempt to place the company back in a position whereby it is financially stable,able to manage its business affairs

288、independently again and able to continue to do business.Back to questions20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?Since security is a secondary obligation,the person to whom security has bee

289、n granted will be able to enforce the security upon the default of the principal obligation.South African law does not traditionally allow agents to hold a security interest on behalf of another.Security agents or security trustees are thus not recognised under South African law.However,certain lega

290、l structures have evolved under South African law over time allowing for agents or trustees to hold security on behalf of a principal,such as the parallel debt structure.D 33South AfricaThe parallel debt structure creates an additional primary obligation owed by a South African borrower in the conte

291、xt of a trustee structure.In addition to a primary obligation to repay loans to the lenders,the borrower assumes an additional obligation(being a parallel obligation)to the trustee.Although this is a popular approach for taking security from South African obligors in international syndicated financi

292、ngs,the parallel debt structure has not been tested in the South African courts.Back to questions21.Would a court recognise a foreign judgment without re-examining the merits of a case?Enforcement of Foreign Civil Judgments Act,No.32 of 1988 recognise a foreign judgment without re-examining the meri

293、ts if the judgment is final.A judgment is presumed to be final even if an appeal is pending or the time for such appeal to be lodged has not expired.A South African court can,however,stay the execution of the foreign judgment if the court,on application by the judgment debtor,is satisfied that an ap

294、peal is pending in a court of competent jurisdiction or that the applicant is entitled or intends to appeal against the judgment to a court of competent jurisdiction.Back to questions22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in

295、 accordance with the parties choice of such law?Yes,a South African court does recognise a choice of law clause contained in a contract between parties and will deal with any dispute arising from the contract in terms of the law chosen by the parties.Back to questionsSouth AfricaD 34Back to contents

296、Asia Pacific Australia 36 Indonesia 44 Malaysia 54 Myanmar 61 New Zealand 67 Singapore 74Back to contentsCraig ChapmanPartner Anthony WalshPartner AustraliaQuestionsObligations1.What are the types of obligations that may be secured?Guarantees2.Can a company provide upstream and downstream guarantees

297、 for its affiliates?Are foreign affiliates treated differently?3.Must a guarantor receive a corporate benefit to provide a guarantee?4.Are any government consents or filings required in connection with the delivery of a guarantee?5.Are there any solvency or net worth limitations/restrictions?Securit

298、y/Collateral6.Over what type of personal property can security be granted?7.Are general security agreements permitted or must security agreements be tailored to a specific asset?8.Can security be taken over real estate?9.Can cash collateral be taken?How?10.Are pledges of shares permitted?11.Are stam

299、p or other duties imposed?12.Must documents be executed in front of a notary?13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Financial Assistance 14.Are there legal restrictions on“financial assistance”or“upstream guarantees”that must be considered?15.Ar

300、e there lawful and reliable means of overcoming any limitations(e.g.whitewash)?Fees/Taxes Withholding/Stamp/Other 16.Do stamp duties or similar charges arise in respect of loan,security and/or other credit-supported(e.g.guarantee)documentation?Are there customary and accepted ways for legally deferr

301、ing,minimising or eliminating them?17.What fees(excluding legal fees)and taxes are payable(e.g.for searches,notaries and registration,as well as enforcement)?18.Will withholding tax be payable on interest owing to a foreign lender or in respect of amounts paid under a guarantee or from enforcement p

302、roceeds?Enforcement 19.What is the bankruptcy/insolvency process?20.Who may act in enforcement?(Are there restrictions on the type of parties that may exercise remedies?)Are administrative agents/trustees recognised?21.Would a court recognise a foreign judgment without re-examining the merits of a c

303、ase?22.In a court proceeding for the enforcement of a foreign agreement,would a court apply the applicable foreign law in accordance with the parties choice of such law?D 37AustraliaObligations1.What are the types of obligations that may be secured?Australian law is very flexible as to what obligati

304、ons can be secured,provided the drafting of the security document is sufficiently precise.Secured obligations can include those which:(i)are present,future,actual or contingent,capped or uncapped,quantified or unquantified;(ii)arise in favour of future creditors under future transactions with future

305、 debtors;and(iii)are direct and personal,joint or several or those of a principal debtor or a guarantor or surety.Back to questionsGuarantees2.Can a company provide upstream and downstream guarantees for its affiliates?Are foreign affiliates treated differently?Yes,whether the affiliates are Austral

306、ian or foreign.However,the guarantee may be unenforceable in some circumstances,including where:(i)the giving of the guarantee involved a breach of directors duties by the guarantor companys directors;or(ii)the guarantee is set aside during the voluntary administration or the winding-up of the guara

307、ntor.Regarding(i),please see our answer to question 3 below.Regarding(ii),when a company has entered into an insolvency procedure of voluntary administration or liquidation,the main grounds upon which a guarantee may be challenged are that the guarantee is an uncommercial transaction or a voidable u

308、nfair preference.Uncommercial transactionsA liquidator of an insolvent company can apply to court to have any transaction(including a guarantee)set aside if:(i)it may be expected that a reasonable person in the companys circumstances would not have entered into the transaction,having regard to a num

309、ber of factors including the benefit of entering into the transaction;(ii)the company was insolvent when it entered into the transaction or as a result of it;and(iii)the transaction was entered into in the two years immediately before the company became insolvent.Unfair preferenceSimilar rules apply

310、 where the company has entered into a transaction that gives a creditor a preference over other unsecured creditors.Only transactions entered into in the six months before the onset of insolvency(or four years if the parties are connected,or 10 years if it involved a deliberate attempt to interfere

311、with the rights of creditors on the companys winding-up)are vulnerable to a challenge on this basis.Back to questions3.Must a guarantor receive a corporate benefit to provide a guarantee?Yes.A director of an Australian company has a duty to exercise its powers in good faith and in the best interests

312、 of the company.If a beneficiary of a guarantee knows,or ought to know,that the guarantors directors are breaching this duty in approving a guarantee(e.g.because the guarantor will receive insufficient corporate benefit),the beneficiary may not be able to enforce that guarantee.D 38AustraliaIf a bor

313、rower is a subsidiary of the guarantor,the corporate benefit will usually be clear.In other situations,the benefit may be less obvious especially if the lenders are taking a guarantee from a subsidiary of the borrower.Well-drafted board minutes setting out the perceived benefits of the guarantee tra

314、nsaction(sometimes coupled with a shareholder resolution approving the guarantee)may help to minimise the risk of a successful challenge.Back to questions4.Are any government consents or filings required in connection with the delivery of a guarantee?No.However,in appropriate cases,parties should ch

315、eck that consent is not required under a potentially applicable sanctions regime.Back to questions5.Are there any solvency or net worth limitations/restrictions?As to net worth limitations/restrictions,No.As to solvency,please see part(ii)of our answer to question 2 above.Back to questionsSecurity/C

316、ollateral6.Over what type of personal property can security be granted?Security can be granted over personal property which is tangible or intangible.Tangible personal property includes goods,machinery,equipment,hard and soft commodities,ships,aircraft and other vehicles and major plant,such as gas

317、turbines.Intangible personal property includes shares and other securities,intellectual property,and statutory,contractual,equitable or other rights to the payment of money,the performance of obligations or the possession or use of tangible assets owned by others.Back to questions7.Are general secur

318、ity agreements permitted or must security agreements be tailored to a specific asset?A company can grant a general security agreement over all of its present and after-acquired property.Additional tailored security over specific high-value,long-term assets(such as land,aircraft,major contracts or in

319、tellectual property)by way of a mortgage or specific security agreement is also typically taken.This is because the Australian priority rules tend to favour a creditor who holds and has fully perfected and registered a tailored,specific security.Back to questions8.Can security be taken over real est

320、ate?Yes.Real estate can either be mortgaged or charged in favour of a lender or other creditor.Under a common law mortgage,title to the mortgaged asset is transferred to the lender,subject to an obligation to retransfer when the secured obligations are discharged.Under a charge,the charged asset is

321、appropriated to the discharge of the secured obligations without a transfer of title to the charged asset to the chargee.Most Australian real estate is registered under the Torrens system and mortgages and other major dealings with real estate are governed by Australian state or territory legislatio

322、n and must be registered with the appropriate titles office in each Australian state or territory.Increasingly,settlement and registration in respect of transactions involving real property is occurring electronically such that physical certificates of title,settlements and registration of paper mor

323、tgages are gradually becoming obsolete.Under the provisions of the various real property acts,a registered mortgage of Torrens land is more in the nature of a charge than a common law mortgage,taking effect under the relevant state or territorys real property legislation as a security but not operat

324、ing as a transfer of the land.An Australian law charge Is broadly similar in concept to an English law charge and a US civil law pledge or security agreement.Back to questions9.Can cash collateral be taken?How?Yes.Cash placed with a third-party bank can be either assigned(mortgaged)or charged.Where

325、the cash is in an account with a security holder that is an authorised deposit-taking institution under the Banking Act 1959(Cth),under Australian law the security interest will automatically be perfected by control.Cash on deposit with a lender can also be subject to express and implied rights of s

326、et-off in favour of the lender.Back to questions10.Are pledges of shares permitted?A company can grant a specific security agreement over marketable securities,including shares.Back to questions11.Are stamp or other duties imposed?No stamp duty(or similar fee or charge)is payable on the creation of

327、a security interest,charge or mortgage.On a transfer of real estate or shares,stamp duty is generally payable by the purchaser or transferee.Back to questionsD 39Australia12.Must documents be executed in front of a notary?Not under Australian domestic law.If the security provider or secured assets a

328、re situated outside Australia,it is prudent to seek advice on the taking of security and notarisation requirements under the law of the place where the security provider or secured assets are situated.For various reasons,most Australian law security is created by deed.This involves slightly more com

329、plex execution procedures than are required for execution of a simple contract,but notarisation is not required.In respect of real property security,the introduction of electronic conveyancing for real property transactions means there are verification of identity requirements for a mortgagor that m

330、ust be completed in respect of mortgage documentation.This requires steps to be taken to ensure a person is who they claim to be,usually in accordance with a prescribed verification of identity standard which requires the production of identifying documents(such as passports,driving licences,birth c

331、ertificates etc.),a face-to-face interview between the verifier(being the mortgagee or an agent on its behalf)and the person being identified(being the mortgagor or,in the context of a corporate mortgagor,the persons signing on its behalf),and retaining a copy of the original identity documents of t

332、he person being identified.Where undertaken outside Australia,this may require utilisation of the services of an Australian embassy,high commission or consulate.In some circumstances,the personnel of an international financial institution or law firm may be able to conduct the verification.Back to q

333、uestions13.Is there ever a risk of claw-back and/or fraudulent transactions in the taking of security?Please see our answer to question 2 above regarding voidable uncommercial transactions and unfair preferences.Void circulating security interestsAnother basis under Australian insolvency law for setting aside the grant of security applies to circulating security interests(being a security interest