Collateral Agreement for the United Kingdom

Collateral Agreement Template for England and Wales

A Collateral Agreement under English and Welsh law is a legally binding document that establishes security interests over specific assets to secure the performance of obligations. It sets out the terms under which assets are pledged as security, the rights and obligations of the parties, enforcement mechanisms, and the scope of secured obligations. The agreement must comply with English law requirements for creating valid security interests and includes provisions for perfection, maintenance, and enforcement of security.

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What is a Collateral Agreement?

A Collateral Agreement is essential in secured lending and financial transactions where assets are pledged as security. Under English and Welsh law, these agreements must meet specific requirements to create enforceable security interests. The document details the assets being secured, the secured obligations, and the rights of the secured party. It includes mechanisms for enforcement and typically incorporates provisions required by the Financial Collateral Arrangements Regulations where applicable. This type of agreement is commonly used in lending transactions, financial services, and corporate finance arrangements.

What sections should be included in a Collateral Agreement?

1. Parties: Identification of parties entering into the agreement

2. Background: Context and purpose of the collateral arrangement

3. Definitions: Key terms used throughout the agreement

4. Grant of Security: Core provisions creating the security interest

5. Secured Obligations: Definition of obligations being secured

6. Representations and Warranties: Statements of fact and assurances from the parties

7. Covenants: Ongoing obligations regarding the collateral

8. Enforcement: Rights and procedures upon default

9. Governing Law and Jurisdiction: Choice of law and dispute resolution provisions

What sections are optional to include in a Collateral Agreement?

1. Parallel Debt: Required for certain cross-border transactions where concept of trust is not recognized

2. Financial Collateral Provisions: Specific provisions for financial collateral when collateral consists of financial instruments or cash

3. Regulatory Compliance: Additional regulatory requirements when parties are regulated entities

What schedules should be included in a Collateral Agreement?

1. Schedule of Secured Assets: Detailed description of collateral assets

2. Form of Notice: Template notices for perfecting security

3. Rights and Remedies: Detailed enforcement procedures

4. Securities Account Details: Details of relevant accounts where applicable

5. Power of Attorney: Form of power of attorney for enforcement purposes

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Financial Collateral Arrangements (No. 2) Regulations 2003: Primary UK legislation implementing EU Directive 2002/47/EC that governs the creation and enforcement of security over financial collateral. Key consideration for any financial collateral arrangement under English law.

Law of Property Act 1925: Fundamental legislation governing real property and security interests in England and Wales. Essential for understanding the creation and registration of certain types of security interests.

Companies Act 2006: Primary legislation governing company matters including requirements for company charges, their registration, and corporate authority matters relevant to collateral arrangements.

Insolvency Act 1986: Crucial legislation dealing with the impact of insolvency on collateral arrangements and security enforcement in insolvency scenarios.

Financial Services and Markets Act 2000: Regulatory framework legislation establishing requirements for regulated entities and compliance with FCA/PRA requirements in relation to collateral arrangements.

Bank Recovery and Resolution Directive: UK implementation of EU directive providing special considerations for financial institutions in relation to collateral and security arrangements.

Consumer Credit Act 1974: Legislation governing consumer credit arrangements, relevant if the collateral agreement involves retail customers.

Financial Services (Banking Reform) Act 2013: Reformed banking legislation affecting collateral arrangements involving financial institutions.

Common Law Principles: Established case law and legal principles regarding security interests and collateral arrangements in England and Wales.

Conflict of Laws Rules: Legal principles determining which jurisdiction's laws apply to cross-border collateral arrangements.

Post-Brexit Regulations: Various regulations and statutory instruments implementing former EU law into UK law, affecting cross-border collateral arrangements after Brexit.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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