Security Account Control Agreement Template for Ireland
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What is a Security Account Control Agreement?
A Security Account Control Agreement is a crucial document in secured financing transactions under Irish law, used when a lender requires security over bank accounts as collateral. The agreement establishes the secured party's control over the specified accounts while allowing the account holder to continue operating them under agreed conditions. It complies with Irish financial collateral regulations and EU directives, addressing perfection requirements for security over financial collateral. The document is typically used alongside credit facilities, security agreements, or broader financing arrangements, particularly in corporate lending, project finance, and structured finance transactions. It includes detailed provisions on operational procedures, control mechanisms, and enforcement rights, ensuring the security interest is both legally robust and practically workable.
About the Security Account Control Agreement
A Security Account Control Agreement is a specialised financial document that establishes a secured party's legal control over bank accounts in Ireland. This agreement creates a security interest over specific accounts while allowing the account holder to continue operations under defined parameters, providing lenders with enhanced security in financing transactions.
When do you need this document?
You need this agreement when entering secured lending arrangements where bank accounts serve as collateral. It's essential in corporate credit facilities, project finance deals, and structured finance transactions where lenders require control over cash flows. The document is particularly important in acquisition financing, where the lender needs security over the borrower's operating accounts, and in real estate development projects where construction loan proceeds must be controlled. Asset-based lending facilities also frequently require these agreements to secure revolving credit lines against account balances.
Key legal considerations
The agreement must clearly define the scope of the secured party's control rights and the account holder's operational permissions. Critical clauses include notification procedures for account instructions, sweep mechanisms for fund transfers, and enforcement triggers that activate full control. The document should specify the deposit bank's obligations, including compliance with secured party instructions and restrictions on account closure. Payment waterfall provisions determine priority of fund distributions, while default provisions outline when operational control transfers completely to the secured party. The agreement must balance the lender's security requirements with the borrower's business needs for account access.
Legal requirements in Ireland
Under Ireland's Financial Collateral Arrangements (No 2) Regulations 2003, security over bank accounts as financial collateral must meet specific perfection requirements. The agreement must establish the secured party's control through arrangements with the deposit bank, often requiring tripartite acknowledgment. Companies Act 2014 may require registration of charges depending on the security structure, particularly for fixed charges over specific accounts. The Central Bank Act 1997 governs the deposit bank's regulatory obligations, while EU Capital Requirements Regulations 2014 may affect security arrangements involving regulated financial institutions. The agreement must comply with EU Directive 2002/47/EC on financial collateral arrangements, ensuring enforceability across EU jurisdictions. Proper documentation and bank acknowledgment are essential for legal effectiveness under Irish law.
GOVERNING LAW
Applicable law
This Security Account Control Agreement is drafted to comply with Ireland law. Key legislation includes:
Companies Act 2014: Primary legislation governing corporate entities in Ireland, including provisions on creation and registration of company charges and security interests
European Communities (Financial Collateral Arrangements) Regulations 2010: Regulations governing financial collateral arrangements and security interests in financial assets
Central Bank Act 1997: Legislation governing regulation of financial institutions and banking activities in Ireland
European Union (Capital Requirements) Regulations 2014: Regulations implementing EU capital requirements directives, relevant for bank account control and security arrangements
Bankruptcy Act 1988: Legislation governing insolvency and enforcement of security interests, relevant for understanding priority of claims
Consumer Credit Act 1995: Relevant if any of the parties involved are consumers, governing consumer protection in financial arrangements
Criminal Justice (Money Laundering and Terrorist Financing) Act 2010: Regulations concerning anti-money laundering requirements that may affect account control arrangements
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