Uncertificated Securities Control Agreement Template for Germany

An Uncertificated Securities Control Agreement is a crucial legal document that establishes control over electronic securities accounts under German law. This agreement enables secured parties to obtain legal control over securities that exist only in electronic form, providing essential protection in lending arrangements and other financial transactions where securities serve as collateral.

When do you need this document?

You need this agreement when entering into secured lending arrangements where electronic securities serve as collateral. It's essential for asset-based lending transactions, margin lending facilities, and repo agreements involving uncertificated securities. Investment managers and hedge funds require this document when pledging securities portfolios to secure credit facilities. Financial institutions use it when providing custody services that involve granting security interests to third parties. The agreement is also necessary for structured finance transactions and derivative arrangements where electronic securities need to be pledged as collateral.

Key legal considerations

The agreement must clearly establish the secured party's control rights over the securities account, including the right to direct dispositions and receive account statements. Control provisions should comply with the German Electronic Securities Act's requirements for effective security interests. The document must specify the securities intermediary's obligations, including acknowledgment of the secured party's interest and agreement to follow their instructions. Termination provisions should address the return of control rights and the handling of remaining securities. The agreement should include representations and warranties from all parties regarding their authority to enter the arrangement and the validity of the underlying securities.

Legal requirements in Germany

Under German law, uncertificated securities control agreements must comply with the Electronic Securities Act (eWpG), which governs the creation and transfer of electronic securities. The Securities Trading Act (WpHG) provides additional requirements for securities transactions and custody arrangements. The German Civil Code (BGB) governs the contractual aspects and assignment provisions within the agreement. The Safe Custody Act (Depotgesetz) regulates the custody and administration obligations of financial institutions holding the securities. Additionally, the EU Financial Collateral Directive, as implemented in German law, provides the framework for financial collateral arrangements involving securities. The agreement must be in writing and properly executed by authorized representatives of all parties. German courts require clear evidence of the parties' intent to create a security interest and the secured party's control rights over the securities account.