Securities Account Control Agreement Template for the United Arab Emirates

A Securities Account Control Agreement is a specialized legal document that establishes a secured party's control over a securities account held by a borrower or debtor. In the United Arab Emirates, this agreement serves as a critical mechanism for perfecting security interests in securities accounts, ensuring lenders have enforceable rights over valuable collateral while maintaining compliance with UAE securities and banking regulations.

When do you need this document?

You need this agreement when entering secured financing arrangements where securities accounts serve as collateral. Banks and financial institutions commonly require these agreements when providing corporate loans, margin financing, or credit facilities secured by investment portfolios. The document is essential for asset-based lending transactions involving publicly traded securities, mutual funds, or other investment instruments held in custody accounts. Private equity firms and institutional investors also use these agreements when securing acquisition financing or leveraged transactions. Additionally, you need this document when restructuring existing debt arrangements that involve securities collateral or when establishing new custody relationships that require third-party control mechanisms.

Key legal considerations

The agreement must clearly establish the secured party's control rights while preserving the account holder's ability to conduct legitimate business operations. Key provisions include defining the scope of control, specifying when control rights can be exercised, and establishing procedures for releasing control upon satisfaction of obligations. The document should address priority issues with other creditors and ensure compliance with regulatory notification requirements. Important clauses cover the securities intermediary's obligations, including responding to control instructions and maintaining accurate records. The agreement must also address scenarios involving corporate actions, dividend payments, and voting rights on securities. Liability allocation between parties requires careful drafting, particularly regarding unauthorized transactions and compliance failures.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 4 of 2000 (Securities Law) and SCA Board Resolution No. 3 of 2001, securities account control agreements must comply with specific regulatory requirements for market functioning and custody arrangements. The UAE Federal Law No. 14 of 2018 (Central Bank Law) governs banking aspects of securities custody and control mechanisms, requiring compliance with central bank regulations for financial institutions. The agreement must incorporate provisions from UAE Federal Law No. 18 of 1993 (Commercial Transactions Law) regarding security interests in commercial contexts. Additionally, UAE Federal Law No. 5 of 1985 (Civil Transactions Law) provides the contractual framework for obligations and enforceability. The Securities and Commodities Authority (SCA) requires specific disclosures and procedural compliance for control arrangements involving public securities. The document must also comply with anti-money laundering regulations and know-your-customer requirements applicable to securities transactions in the UAE.