Business Security Agreement for India

Business Security Agreement Template for India

A Business Security Agreement under Indian law is a comprehensive legal document that establishes and defines a security interest over specified assets of a borrower in favor of a lender. The agreement complies with Indian security and banking laws, particularly the SARFAESI Act, and creates enforceable rights for the secured party over the collateral. It details the nature of security, secured obligations, representations, covenants, and enforcement mechanisms, while ensuring compliance with Indian registration requirements and stamp duty regulations.

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What is a Business Security Agreement?

The Business Security Agreement is a fundamental document in Indian secured lending transactions, used when a business entity needs to provide security over its assets to secure financial obligations. This agreement is essential for both lenders and borrowers in India, as it creates legally enforceable security interests that comply with Indian legislation, particularly the SARFAESI Act 2002, Companies Act 2013, and relevant state laws. The document details the assets being secured, the obligations being guaranteed, and the rights and remedies available to the secured party. It includes crucial provisions for perfection and enforcement of security interests, ensuring compliance with registration requirements at various authorities like the Registrar of Companies and CERSAI. The agreement is particularly important in commercial lending scenarios where lenders require robust security structures to protect their interests while providing financial facilities to businesses.

What sections should be included in a Business Security Agreement?

1. Parties: Identification of the secured party (creditor) and the debtor (including full legal names, registration details, and addresses)

2. Background: Context of the security arrangement, reference to any underlying credit facility or loan agreement

3. Definitions and Interpretation: Definitions of key terms used in the agreement and rules of interpretation

4. Grant of Security Interest: Description of the security interest being created and the assets being charged

5. Nature of Security: Whether the security is fixed or floating charge, or both

6. Secured Obligations: Definition of the obligations being secured, including principal, interest, and other amounts

7. Representations and Warranties: Statements of fact and assurances given by the debtor regarding their authority, ownership of assets, etc.

8. Covenants: Positive and negative obligations of the debtor regarding the secured assets and business operations

9. Events of Default: Circumstances that constitute default under the agreement

10. Enforcement Rights: Rights and remedies available to the secured party upon default

11. Power of Attorney: Appointment of the secured party as attorney for specific enforcement purposes

12. Further Assurance: Obligation to execute additional documents and take necessary steps to perfect security

13. Notices: Process and requirements for serving notices under the agreement

14. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

15. Miscellaneous: Standard boilerplate provisions including severability, amendments, and counterparts

What sections are optional to include in a Business Security Agreement?

1. Intercreditor Provisions: Required when multiple creditors are involved, establishing priority and enforcement rights among creditors

2. Currency Provisions: Needed for cross-border transactions or when secured obligations are in foreign currency

3. Insurance: Detailed insurance requirements when secured assets require specific insurance coverage

4. Environmental Compliance: Required when secured assets include land or industrial property with environmental risks

5. Intellectual Property: Needed when security includes intellectual property rights

6. Bank Accounts: Required when security includes fixed or floating charge over bank accounts

7. Registration Requirements: Specific provisions for registration with multiple authorities (e.g., ROC, CERSAI)

8. Cross-Security: When security is shared across multiple facilities or agreements

What schedules should be included in a Business Security Agreement?

1. Schedule 1 - Secured Assets: Detailed description and identification of all assets subject to the security interest

2. Schedule 2 - Secured Facilities: Details of the underlying credit facilities or obligations being secured

3. Schedule 3 - Existing Security Interests: List of any existing security interests or encumbrances on the secured assets

4. Schedule 4 - Forms of Notices: Standard forms for various notices required under the agreement

5. Schedule 5 - Addressees for Notice: Contact details for all parties for notice purposes

6. Schedule 6 - Required Registrations: List of all required registrations and filings for perfection of security

7. Appendix A - Conditions Precedent: List of conditions to be satisfied before security becomes effective

8. Appendix B - Security Enforcement Procedure: Detailed procedure for enforcement of security in case of default

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

India

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

Manufacturing

Real Estate and Construction

Information Technology

Healthcare

Retail and Consumer Goods

Infrastructure

Agriculture and Agribusiness

Logistics and Transportation

Energy and Utilities

Telecommunications

Hospitality

Relevant Teams

Legal

Finance

Risk Management

Compliance

Corporate Banking

Credit

Treasury

Company Secretarial

Business Development

Documentation

Relevant Roles

Chief Financial Officer

Legal Counsel

Corporate Lawyer

Finance Director

Risk Manager

Credit Manager

Compliance Officer

Security Trustee

Corporate Banking Manager

Relationship Manager

Treasury Manager

Company Secretary

Credit Analyst

Documentation Specialist

Business Development Manager

Industries
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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